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Will Alfresco's New Round of Funding Generate Returns?

It’s hard to know if Alfresco CEO Doug Dennerline knew what he was getting into when he took the helm at the open source enterprise content management provider 19 months ago. He was brought in to take the company public, and needless to say, that hasn’t happened.

And while for companies like Box, which filed for an IPO in March but has not even started its road show thus far, the state of the stock market might be an impediment, with Alfresco, it’s something else. They don’t yet have the right stuff.

So it’s no surprise that today they announced that they have raised a new round of “growth funding,” $45 million “to increase velocity of its Go-to-Market (GTM) strategy globally — focused on adding sales people, investing in marketing, and expanding development to drive the SaaS-ification of the content market,” according to a press release.

And if getting more feet on the street, more messaging to its target market, and a move to the cloud is what it will take to make it valuable as a public company, then Alfresco now has the money it needs to execute on its formula.

It was certainly missing one of these ingredients in the past — namely the right sales strategy. According to a conversation I had with Dennerline not long after he first stepped into his role, the company hadn’t really had one before. It seems that in the past there was a belief that if you build a quality, open source product and a strong developer community, customers would come.

It turns out that you have to knock on doors too, according to Dennnerline.

An Uphill Climb

That insight seems to have improved things thus far. In a blog posted today, Dennerline says that Alfresco’s sales are up 30 percent annually and that it’s on a growth trajectory that is triple the growth rate of the ECM industry overall. While that’s admirable, it’s also worth noting that the competitors own most of the market, and that for them to grow at that rate, the market would literally have to get bigger.

Add to that that a good number of the enterprises that are willing to pay for ECM solutions already have them.

Consider that when I asked EMC IIG (a.k.a. Documentum) CEO, Rick Devenuti, if it was more important for him to win new customers or to keep the ones he has, he commented that while both are important, the answer is easy, when you own the market you keep the customers you have.

And if the market is only so big (and it’s huge, almost 6 billion according to Gartner) and customers who need and are willing to spend on sophisticated ECM technologies have already chosen their solutions, for Alfresco it’s a bit of an uphill battle.

It has to innovate and convince highly regulated companies which are reluctant to make changes to do so. 

Trying to Stand Out in a Crowded Field

Alfresco isn’t the only player in that game. Box is a lighter weight solution that is after that market as well — in fact just yesterday they announced that they had won a 23,000 seat engagement at Boston Scientific.

That being said, according to Gartner, Alfresco may have some of the right stuff. It’s in the “Visionaries” quadrant where it has been for five years.

While Dennerline and company point to the aforementioned fact as a point of pride, it begs us to question why it hasn’t been able to move into the Leaders quadrant in half of a decade.

The answer is simple, it’s rate of adoption. In other words, it doesn’t have enough customers.

It will be interesting to see if $45 million — Alfresco’s biggest round of funding ever — and Dennerline’s strategy will change that.
 

 
 
 
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