The merger between Ektron and EPiServer announced Tuesday forms a tech alliance that could compete with web content management system giants like Adobe and Sitecore, according to industry analysts.
Or, as one analyst said, it could be "another venture capitalist effort to milk software license maintenance revenues out of an ailing vendor."
"It’s not the first time we’ve seen a struggling software vendor taking a private equity bailout," Boston-based Nucleus Research Vice President Rebecca Wettemann told CMSWire after Accel-KKR bought Nashua, N.H.-based Ektron last month.
Days later, the investment firm bought Stockholm-based EPiServer. This week, it confirmed reports it was merging the entities.
Ektron customers "at least have a clearer view of where the company actually stands," Wettemann said, adding that the first 90 days will be critical to both customer bases as the new executive team lays out its strategy.
Knock, Knock Adobe, Sitecore?
Wettemann said "slow turnarounds" may have worked in the CMS space a few years ago. But today the industry sees increasing consolidation and commoditization.
"And with cloud options out there with faster time to value, customers have more modern technology options. A lot of content management vendors have tried to jump on the customer experience bandwagon, with varying degrees of success. KANA was ultimately unable to compete on its own -- and EPiServer faces much larger, formidable competitors."
Some think a CMS force can emerge, though.
R "Ray" Wang, principal analyst and founder of Cupertino, Calif.-based Constellation Research, said the merger puts them more in competition with Sitecore and Adobe.
"But it will take a bit of time to catch up," Wang added.
Seth Ulinski, senior analyst for Hampton, N.H.-based Technology Business Research, said Ektron, assuming product integration, can further round out EPiServer's already robust Software-as-a-Service (SaaS) offerings. He even threw in IBM as a competitor, saying, "This paves the way for a more complete enterprise-level solution, and the new entity will be a more formidable challenger to CMS larger vendors such as Adobe, Sitecore and IBM."
The move combines companies of fairly similar size/scale, Ulinski added, and includes "immediate synergies" between EPiServer's e-commerce capabilities and Ektron's audience segmentation/persona management tools.
Tim McLaughlin, CEO of Siteworx, a Reston, Va., digital experience agency, called the merger a "great move for EPiServer and Ektron customers."
"EPiServer," McLaughlin told CMSWire, "has always been the stronger product in our view. That being said, EPiServer and Ektron both have some very talented people and putting the two together will make most of their customers happier and in the end will make a very robust offering in the marketplace."
EPiServer, Ektron Confidence
A media representative for the merger did not return CMSWire's questions for this story. However, Ektron and EPiServer officials are talking.
Bob Egner, vice president of product management for EPiServer, blogged about the merger Tuesday, saying the organization "embraces the power that has made the Internet an unstoppable force of change -- openness and productivity," noting:
Both companies have been pursuing a strategy of connectivity rather than chasing the enterprise legacy of an 'all-in' monolith and the associated lock-in that enterprise software vendors have pursued for years. It's an essential element for organizations that are evolving their own digital strategy, or need the flexibility to adapt and change as their business and customers change over time."
Jon Kee, who oversees new opportunities for Ektron in North America, noted in his LinkedIn post Wednesday that clients of each company will get improved access technology and new capabilities.
"The reality," Kee continued, "is that the ideal digital marketing technology is going to provide both a strong feature set out of the box and tight integration with other leading tools -- combining EPiServer’s capabilities with Ektron’s offers customers the best of both worlds, in a single product."
Super CMS? Not Quite
With mergers come thoughts of superpower technology. Ektron CMS plus EPiServer CMS = one grand CMS?
A former Ektron employee doesn't see that happening.
Nej Gakenyi was with Ektron from early 2007 until 2010. He and current business partner Norman Graves opened Ektron's first international office, and they ran the Europe, Middle East and Africa (EMEA) operation until 2010. Gakenyi left to start Green River Media, a Maidenhead, England, company that provides development services to many Ektron partners and clients.
"It doesn't come as a surprise to any of us in the CMS community," Gakenyi said of the merger. "It's evident that Ektron is soon to be a 'thing of the past' and that EPiServer is looking to increase its client base as well as market share.
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"I believe that a merger of the technologies into a super CMS is not a realistic or feasible idea and would inevitably fail."
As for management, the merger basically features an Ektron executive cleanout -- former Ektron CEO and founder Bill Rogers and President Tim McKinnon are gone.
Gakenyi called that a good thing. There have been "several major overhauls in senior management at Ektron over the past few years which has resulted in a lack of clear focus and growth on the European scene," Gakenyi said.
"On the other hand," Gakenyi added, "I've heard many positive things about EPiServer's strategy and in particular partner support model from some of our agency partners so I do think that EPiServer as a brand does have the potential to succeed and prosper."
Ex-Ektron Employees 'Hardworking'
Members of the executive team at Ektron were not the only ones ousted this week. Sources close to the merger told CMSWire about "massive" layoffs for the company that had between 125 to 150 employees heading into the merger.
Mike Provencher, former vice president of client services for Ektron who worked at the company from 2003 to 2011, said, "I feel horrible for all of the people who were laid off."
"They are good, hardworking people and didn't deserve this," he told CMSWire. "I only hope that this new company puts some focus on the employees and makes them feel appreciated. In addition I am hopeful there is a renewed focus on the customer and ensuring that their needs are addressed which is something that has been lacking."
Competitor Chimes In
In his blog post Jan. 27 on LinkedIn, Tom Wentworth, chief marketing officer at Burlington, Mass.-based Acquia and former CMO at Ektron, predicted that Ektron customers "now face a future where their web content management platform won't keep pace with the massive pace of change needed to deliver exceptional digital experiences."
Wentworth also cited other failed CMS mergers in his post, writing, "In an industry full of consolidation, I can't think of a single example of a merger or acquisition where overlapping products continued to thrive."
Though he never cited Wentworth specifically in his LinkedIn post, Kee wrote, "Some competitors will try to talk to you about failed mergers, instability associated with change, etc., but the reality is that if they are bringing that up, it tells you that they are even more concerned about the new EPiServer."
Ektron Clients Concerned
What's on the minds of Ektron clients?
Derek Barka, former chief software architect at Ektron and now the director of client services at Manchester, NH-based SilverTech, a marketing technology company, said his company has a half-dozen or so currently active customers on Ektron.
"We have many Ektron clients who are wondering what the future looks like and have been asking us to advise them on their options," Barka told CMSWire. "If they are already rebuilding their website, then it’s a good time to re-evaluate their CMS platform and look at all their options."
Barka sees EPiServer as having an "opening" in e-commerce.
"There is no clear e-commerce platform for the .NET world," he said. "You have leaders like Demandware, Magento, Digital River, but no good story for those on the .NET platform. If EPiServer can combine good web experience management with a high-end e-commerce offering, they can fill a big void in the industry."
Title image by chefranden.