Alan Pelz-Sharpe thinks it's time for EMC to get rid of Documentum.
The 451 Research Director has published a well-sourced six page paper making his case, and it’s a good one -- namely, that EMC and EMC IIG (the group that owns Documentum) make neither beautiful music nor buckets of cash working together.
In the paper. he writes:
At 451 Research, we believe it's time for EMC to divorce itself of IIG, a product division that never really fit into EMC as a whole, and has continued to disappoint CEO Joe Tucci. There are two very good companies here, the storage and cloud giant EMC, and the business application wannabe IIG, aka Documentum. Both groups are trying to do the right thing, but find themselves pulling in different directions."
I’m Not into You
If you look at EMC’s website, even as its content changes from time to time, Documentum, is rarely (if ever) mentioned. Instead, the headlines and images center around things like data protection, Hybrid Cloud, ITaaS and so on.
To be fair, this shouldn’t come as a big surprise. After all, as Pelz-Sharpe notes, IIG generates just 3 percent of EMC’s revenue.
I’m So (Not) into You
I spent more than eight years on my blog taunting EMC CEO and Chairman Joe Tucci to say the word “Documentum” in his public appearances. And while I doubt he ever read my blog, he may have actually said the word a few times. Once was when, during a press conference, I asked him why he wasn’t offloading Documentum since sales were flat or declining.
EMC was a stranger to me before it bought Documentum and then, for a while, it became its wrecking ball. In fact, at EMC World 2009, we were even asked to stop calling Documentum, “Documentum”.
Most people still refer to IIG as Documentum, in spite of the fact that IIG has purchased companies that complement the technology. This is largely because most Documentum enthusiasts don’t identify with the “IIG” or EMC; so much so, in fact, that at EMC World their sessions are on different floors, they have different places to check in and have a party of their own.
Pelz-Sharpe, while talking about the EMC and Documentum’s internal cultures, pretty well pegs what’s happening externally too. He writes that:
The cultures of EMC and Documentum could not have been further apart, the former a hard-nosed, sales-oriented and successful East Coast firm, the latter a consultative, relatively laid back, West Coast Silicon luminary. Neither the business cultures, nor the sales approaches, of the firms ever gelled.”
In other words, as Pelz-Sharpe and I wrote separately (he was working with the Real Story Group at the time), way back in 2007, the business strategy of a hardware company will conflict with the wins that a software solution provides. In Pelz-Sharpe’s words: Documentum follows a consulting-oriented sell designed to reduce the amount of enterprise information to core essentials, while EMC wants to store as much of that information (that Documentum wants to eliminate) as possible.”
In the report, Pelz-Sharpe notes that Documetum’s growth has been stunted. “It’s in much the same place as it was in 2006” since EMC acquired it, despite the fact that IIG has made acquisitions , like Kazeon and Document Science since then.
That is not the case for other ECM vendors, Hyland Software and Open Text (which has made acquisitions), which are in the same space, he adds.
We should note here, that EMC IIG (Documentum) reportedly experienced (probably single digit) growth in 2013. Since there are conflicting reports on the web, we invited EMC to discuss the figures, but they wrote back, “Unfortunately, it's against our policy to comment on speculation. This applies to all IIG spokespeople and executives …"
We weren’t speculating at the time of the request, just looking for facts and a conversation.
Won’t a Turnaround and a Little Growth Be Enough?
As we have noted, more than once, EMC IIG’s current President Rick Devenuti, and his team, have done an amazing job of turning the company around. He has taken Documentum’s business strategy back to what it was in its glory days- providing world-class solutions to select vertical markets and he has made those solutions repeatable by configuration and composing rather than coding. He’s also reduced the margin for error in implementation considerably by providing skilled EMC employed experts. Those impressive efforts are well documented here on CMSWire.
Even so, Pelz-Sharpe doesn’t think that Tucci will be happy with that kind of growth, especially when it’s compared to VMWare which was purchased around the same time as Documentum and now provides 22 percent of EMC’s revenues.
Sell it Off or Spin it Off?
EMC should do anything but stay the course with EMC IIG. Though Documentum isn’t a big weight to for the mega firm to bear, Pelz-Sharpe doesn’t think it’s worth holding onto. Besides, Documentum may very well be better off if it were acquired or spun off.
“A newly independent Documentum would not be guaranteed to thrive – the market has moved on massively since it was acquired,” writes Pelz-Sharpe. But, he continues, “In the long run, its chances would likely be better than continuing to underperform within EMC.
We’ve reached out to EMC to get its reaction to Pelz-Sharpe's paper, but as we mentioned earlier, it's offered to discuss other matters, but not this. Which makes us wonder whether EMC has actually taken the analyst's advice, which would explain its silence because silence is golden when you’re negotiating.
What’s Your Bet?
Will EMC keep Documentum where it is, sell it, spin it off, or maybe offer it to Paul Maritz over at red hot Pivotal, which might be the easiest choice because it is a software company and EMC owns a good chunk of it.