We now know OpenText’s Information Exchange portfolio was beefed up when it bought GXS for $1 billion this month. But how much better did it get? Who is OpenText going after — and where are they now in this space?
First things first — this is a serious acquisition for the now 8,200-employee Waterloo, Ontario-based enterprise information management software provider. Its investment into GXS represents about a third of the total price for nearly 50 previous acquisitions during the past 20 years.
The move is so significant, one industry analyst said, that she now puts OpenText ahead of IBM and TIBCO, two of its major competitors in the B2B integration services space. TIBCO offers “B2B Next,” and IBM has "Sterling B2B Integrator."
"OpenText’s Information Exchange portfolio was somewhat limited in its capabilities, so this acquisition will greatly increase its capabilities, putting it ahead of IBM and TIBCO," Sue Clarke, senior analyst at Ovum Research, told CMSWire.
OpenText's Big Vision
The reasoning for the acquisition, simply, was all in the numbers, Clarke said.
"I believe one of the main drivers for the acquisition will have been an immediate increase in market share in the B2B integration space, with the combined cloud managing over 16 billion transactions per year, approximately 600,000 trading partners and 40,000 customers, according to OpenText,” Clarke told CMSWire. “With 2,889 employees in 20 countries with 40 locations serving customers in 60 countries, GXS is a big company with a global presence. The buy will have a huge impact on OpenText’s market share in this area.”
So where will OpenText go with the new B2B integration capabilities? Try and upsell GXS customers to ECM Suite components, Clarke said.
“And I wouldn’t be surprised to see OpenText creating solutions combining elements of B2B integration services with parts of the ECM Suite,” she said. “For example catalog creation and management or its web experience management capabilities for building websites.”
Catching Up to Giants?
IBM has had this functionality for years, and now OpenText is gearing up to compete.
“I think it's more that OpenText has a basic problem in that it is the last remaining independent major ECM player, and it is much smaller than the other Tier 1 players, who are all infrastructure vendors with vast portfolios of products that can be integrated to provide additional capabilities,” Clarke said. “These are EMC, HP Autonomy, IBM, Oracle, and, to a certain extent, Microsoft.”
OpenText also faces competition from open source vendors such as Alfresco, who are receiving support from the government sector in countries such as the UK.
“OpenText needs to keep growing itself,” Clarke said, “in order to remain a force against these large vendors, who themselves keep expanding their portfolios. It also needs to expand the range of products it offers, hence the move away from a traditional ECM product.”
Clarke wouldn’t be surprised to see other organizations make similar acquisition moves.