OpenText is acquiring Dell EMC's enterprise content division, including Documentum for $1.62 billion.

The Waterloo, Ontario enterprise information management provider announced it signed a definitive agreement to acquire EMC's Enterprise Content Division (ECD) this morning.

Under the terms of agreement, the software, associated services and employees of ECD will be integrated into OpenText. OpenText CEO and CTO Mark J. Barrenechea noted in a statement that the acquisition "further strengthens OpenText as a leader in Enterprise Information Management, enabling customers to capture their digital future and transform into information-based businesses."

Dell: No Place for Documentum

The deal comes less than a week after 37-year-old EMC ceased to be a publicly traded, independent company and officially became part of Dell. As CMSWire explained last week, the EMC/Dell conglomerate will focus on five specific areas: modern data center, all flash, converged infrastructure, hybrid cloud and big data.

EMC’s ECD did not fit into that mix. As one former EMC executive noted, “There are no synergies (between ECD and the Dell EMC conglomerate).”

EMC Wasn't Good for Documentum Either

EMC acquired Documentum in 2003 for $1.7 billion. The enterprise content platform was renamed several times: CMA (Content Management and Archiving Division, EMC), IIG (Information Intelligence Group), ECD (Enterprise Content Division.) But most people still stubbornly called it Documentum.

Documentum was always an odd fit for EMC and never moved the needle for it in terms of either innovation or hardware sales. As Marko Sillanpaa, co-founder of the Big Men On Content blog and former EMC and Documentum employee, put it, the synergies between Documentum and ECM were just never realized.

But not everyone is happy to see Documentum land at OpenText, either. Days before the deal was announced, there was already (unhappy) speculation about the likelihood of Documentum's fate — and the mixed reactions continued today.

Thoughts on the OpenText Buy

But will Documentum and EMC's other EDC businesses thrive at OpenText?

Tony Byrne, founder of Olney, Md.-based Real Story Group, told CMSWire the acquisition "confirms like never before OpenText’s strategy of becoming a convalescence center for aging technologies.” 

“Customers will want to understand that — although OpenText will try to align product naming and branding — the firm now sells ECM tooling from three broad product families (its own, Hummingbird, and now Documentum), each in turn assembled via multiple acquisitions.  Enterprises should be extra careful to know the provenance of any OpenText solution — now more than ever," Byrne said.

In a blog post today, Digital Clarity Group analyst Alan Pelz-Sharpe characterized the deal as a "good move" that "makes a great deal of sense for both parties." He explained:

  • "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."

Last week Technology Services Group, which develops enterprise-level software for Documentum, Alfresco or Hadoop, also speculated on the future of Documentum. Documentum and the rest of the ECD division, TSG noted, "do not line up with the Dell/EMC strategy" and predicted that Dell/EMC would sell if a buyer could be found.

OpenText was one of multiple companies TSG speculated might have an interest in buying. Along with IBM/FileNet, an OpenText buy is the easiest from a sales channel with ECM consolidation. But it noted that both IBM and OpenText already have a confusing mix of different ECM products, and "IBM has announced a tight partnership with Box so that might disqualify them."

It also issued a soft warning to Documentum customers: 

  • "Given the erosion of the Documentum brand over the last 10 years, any buyer will experience some difficulties in reestablishing Documentum as a growth company most likely continuing to treat it as a 'Cash Cow' division and milk the maintenance stream for the foreseeable future. We are recommending that current Documentum customers have a 'wait and see' attitude but look into alternatives and have a strategy identified if they are concerned about the potential buyer."