A lot of excitement and speculation followed OpenText's recent acquisition of HP Exstream, as pundits jumped in with thoughts on what this deal means for the marketplace.
Lexington, Ky.-based HP Exstream is one of the top three customer communication management (CCM) software products, and the acquisition is a big move for OpenText.
Overall, this is a good choice for OpenText. It gives it a chance to expand its CCM footprint both in terms of geography — its current CCM offering, StreamServe doesn't have a large presence in the US — and industry — its primary market to date has been heavy industry, especially energy. HP Exstream customers fall primarily under the realm of financial services and insurance.
Actions for OpenText Moving Forward
But in order to fully leverage this acquisition beyond simply buying existing Exstream maintenance revenue, OpenText needs to do a number of things in the next 18 months:
- Develop sales force
- Develop professional service resources
- Determine the division of labor between Exstream and StreamServe
- Determine who the CCM buyer is
- Define the CCM value proposition for customers
Let’s dig into each of these in more detail.
Develop Sales Force
Buying market leading software is one thing, having the sales force to sell it is another.
Although OpenText has sold StreamServe for some years now, Exstream is a completely different beast. The differences in industries — financial services and insurance vs. heavy industry — and use cases — high volume transactional content vs. structured internal documents — requires different types of expertise and experience in the sales force.
Assuming that the Exstream sales force doesn't move en masse to OpenText, it will have a long row to hoe to build sales capability to effectively leverage Exstream.
Develop Professional Service Resources
Another challenge lies in the availability of professional services resources to support Exstream by implementing it, maintaining it and developing content to be delivered by it.
Over the nearly hundred CCM engagements my company has done over the last 15 years, nearly all of the clients struggle with finding resources to support the implementation. Software vendors have tried to fill the gap to some degree with professional services organizations, but they haven't succeeded as a long term option for clients.
And almost all clients struggle to secure long-term technical resources to support their CCM program, even in big markets like New York City or Los Angeles, let alone mid- or low-tier markets.
To actually grow the Exstream business, Open Text will need to build up the professional services ecosystem to support their clients' — existing and prospective — success.
Determine the Division of Labor Between Exstream and StreamServe
This is a big one. Rationalizing a software portfolio is critical in order to increase sales and drive revenue (and eventually profits).
OpenText now owns two CCM platforms, with different customer bases, aimed at different uses cases, that solve different business needs.
Running both of these products in parallel makes little sense — twice the overhead for development, marketing, sales and support. So, OpenText faces some hard decisions about what to do: merge the two? Sunset one and support the other? Determine a way to support both? Some other option?
Without defining a well thought out approach, executing it quickly and clearly communicating it to the market, the acquisition will quickly become a liability once the buzz dies down.
Determine Who the CCM Buyer Is
One of the biggest challenges in the CCM marketplace is figuring out who the ultimate buyer is. In large part, this stems from the fact that CCM has no single owner: it spans departments (from print and mail and IT to marketing and customer service) and ultimately, no single enterprise owner emerges for the domain.
One department such as customer service, feels the CCM pain, while another department — often IT — needs to pay for the solution. This makes it difficult for organizations to succeed with CCM, but also makes selling CCM software challenging because the decision makers are hard to find … or non-existent.
Define the CCM Value Proposition for Customers
Related to the ownership challenge is defining the value proposition of CCM for an organization. As mentioned above, CCM spans nearly the entire organization, and so the benefits unsurprisingly are equally diverse.
From cutting print and mail spend, reducing the cost of indexing inbound documents, lowering the cost of IT systems, to improving the customer experience, lowering customer service costs, or strengthening the corporate brand — CCM can impact all of these.
Which is great, in theory. But in practice — especially when trying to show the value of CCM software — you need a laser focus on the client problem you’re solving and the value doing so provides.
All the CCM vendors have struggled with accomplishing this over the years. OpenText will join their ranks and need to get cracking to find a crisp, clear way to communicate the value proposition Exstream has for its current and prospective customers.
Time Will Tell
If I had a dime for every technology acquisition that went south, I’d be writing this from my beach house in Key West rather than a Starbucks in a mall.
So while I’m excited and hopeful that the Exstream acquisition means good things not only for OpenText but also the marketplace and ultimately, clients, only time will tell whether it can execute successfully and gain the full value from the buy.