OpenText acquires Documentum
Today we got confirmation that OpenText is buying Documentum (aka Dell EMC’s Content Management Division). Let’s say right up front we think this is a good move. Though some upheaval is to be expected, it makes a great deal of sense for both parties.
Though Documentum was acquired by EMC in 2003 for $1.7B (and today’s deal 13 years on was for almost exactly the same amount), it was a deal that was immediately overshadowed by EMC’s acquisition of VMWare. Quite why EMC ever bought Documentum in the first place has been the subject of much speculation over the years as the business model of Documentum was always at odds with a storage firm like EMC. ECM (Enterprise Content Management) is all about focusing on and tightly controlling the most essential files and documents within an organization, separating out and ideally disposing of the rest (the duplicates, the non-business critical, the junk). A storage firm on the other hand, wants the exact opposite: they want an organization to keep everything forever, in as many storage devices as possible. In retrospect, EMC-Documentum was never going to work. Yet despite the struggle for relevance within EMC, the Documentum team has remained stoic, somewhat autonomous and most importantly, continued to deliver solid if unexciting revenue and profits to their owners over the years.
Hence it was no secret that EMC has been trying for the last few years to find a buyer for Documentum. Realistically there was only ever the option of OpenText – the ultimate consolidator in the content management space – or a private equity firm stepping in. Now the deal is done it sets the stage for an interesting two-way battle at the top of the ECM food chain, with OpenText taking on IBM head to head. Or to be more accurate, taking on IBM and IBM’s best friends at Box.
Indeed all eyes are on Box, for it is Box that has totally disrupted the ECM market over the past 5 years and it is Box that is turning up in competitive ECM situations left, right and center. Led by the charismatic Aaron Levie, Box the firm has an almost cult-like following and it is winning major enterprise deals on a regular basis.
Frankly, Box represents the future of ECM – cloud native, easy to use and built for enterprise needs. Though it seems obvious that IBM will step in and buy Box, there is a strong argument that they should leave them be for the time being. Box has a youthful culture of innovation that could easily be lost within IBM, and many Box people would quickly move on if they were to become IBM employees. Best buddies and co-developers may be the best of both worlds for the two firms, and follows a path IBM has taken with their close friends at SugarCRM, remaining separate but working very closely together.
We wish the folks at Documentum well in their new home at OpenText. For the first time in over a decade, they will be in a place that understands what they do and appreciates both their technology and the strength of the Documentum brand. Hopefully Documentum will remain semi-autonomous within OpenText and be provided the support needed to return to strong growth. Of course only time will tell how it all works out but if nothing else a period of worrying uncertainty is over for Documentum and the real battle for supremecy in the ECM world can get underway.