OpenText finalizes the Documentum deal—and weaves a new tapestry in the process
Last week, OpenText finalized yet another acquisition, which is pretty much par for the course for this vendor. OpenText’s growth strategy depends heavily on acquisitions and this was no exception, although this specific purchase was an unusually important addition to the OpenText stable of products. Since the company began, OpenText has made 55 acquisitions, and the Dell EMC Documentum deal that just closed makes it an auspicious number 56.
In April 2016, CEO Mark Barrenechea told analysts that a new information market was being born that supersedes the disparate ECM piece parts and the BPM/case management market. OpenText calls it the enterprise information management (EIM) market. At that time Barrenechea claimed that four major EIM market leaders had emerged–or more correctly stated– were left standing: OpenText (of course), plus IBM, Lexmark and EMC. These remaining three competitors would be clearly in OpenText’s sights. All other players, like Alfresco and Hyland, were, in his view, point solutions rather than fully fledged EIM vendors. (Hmm, I wonder where that leaves Microsoft, other than left behind?) I agreed with that overall analysis last spring. There’s definitely something much bigger and better than the ECM market that is coalescing, and OpenText is clearly onto something.
In broad terms, these so-called EIM vendors offer ECM in all its flavors, along with business process management (BPM) and its kissing cousin—case management—plus analytics, and collaboration. Taken together and integrated into a complete platform, this becomes the launching pad for industry and horizontal business solutions which my friend, Andy Bartels, and I– while at Forrester, coined as the Smart Process Applications market. In a nutshell, it means that vendors will create solutions on the EIM or smart process apps platform and also partner with services firms to build previously hard to automate, next generation solutions that leverage the combination of content, process, collaboration and analytics. I wholeheartedly agree with that direction for ECM/BPM vendors.
Now that OpenText has bought Dell EMC’s Enterprise Content Division, including Documentum, and the deal is sealed, that brings CEO Barrenechea’s list of vendors down to three (with two major competitors): OpenText, plus IBM and Lexmark. (OpenText has also thrown Oracle Stellent into the mix of competitors it is targeting.) Interesting. The continued market consolidation is one gigantic reason why the Dell EMC Documentum acquisition is so important—OpenText is busy weaving a new tapestry for its new market, so by buying Documentum it just knocked out a powerful competitor and, at the same time, added a lot of interesting new products to its EIM mix.
Here’s what to expect:
- Documentum products and OpenText Content Suite will remain strategic offerings for OpenText. Unlike some of its other acquisitions (three separate BPM companies spring to mind) in which OpenText mainly bought the installed base and maintenance revenues and eventually discontinued some of the offerings, the Documentum acquisition was a highly strategic purchase aimed squarely at the EIM market. Although there is some overlap, the two ECM/document management product lines were always positioned differently. For years the two competitors pursued different industry sectors; now the two product portfolios won’t cannibalize sales going forward. Instead, this deal will be accretive–good for customers and good for OpenText.
Customer investments in Documentum should be safe, given that OpenText plans to make continued enhancements in the core Documentum platform. From a high-level view, enhancements will include improvements to information archiving, improved functionality and better usability. Also expect to see analytics added liberally into the mix as enhancements are rolled out. OpenText Content Suite will also remain strategic. OpenText has said that current roadmaps and commitments remain stable and will be delivered.
The focus for the two product families will be on targeting and cross-selling industry solutions. The Documentum product family will continue to be targeted at industry solutions for energy, engineering, and life sciences, as well as cross selling into OpenText’s established industries, such as manufacturing and government. For Documentum, OpenText plans to invest in LEAP; Documentum-as-a-service; file synch and share; and integration with enterprise software solutions such as Salesforce, Workday, and SAP’s ERP, HANA, and Success Factors. Integrating ECM and BPM with packaged business applications is a core competency for OpenText and should be a strong addition to the Documentum line. OpenText also intends to cross-sell its EIM offerings– Process Suite, Experience Suite, analytics and discovery– into industries that Documentum has opened up for it.
Analytics and cloud will be two main areas of investment. Unlike other ECM vendors, OpenText has made a big play in analytics and it is time to leverage that move. Now, it will seek to monetize the Actuate acquisition by embedding and integrating analytics in virtually all its products. This could range from content analytics to predictive analytics and could be a huge differentiator as the company seeks to create the EIM market. Similarly, OpenText has made a big bet on cloud and hybrid cloud, and will seek to cloud-enable its new and old flagship products.
It will be interesting to watch OpenText over the next 6-12 months. And it will be fascinating to see the EIM market (or whatever name it will acquire) unfold as we mark the end of one era and the beginning of another.