OpenText is on a buying spree.
Yesterday, just hours before it officially closed on its acquisition of Detroit-based identity management and IoT platform provider Covisint, OpenText announced it has reached a definitive agreement to buy Pasadena-Calif.-based Guidance Software for approximately $222 million.
Guidance Software is best known for its EnCase digital investigations software. Its product line centers around four markets: digital forensics, endpoint security analytics, cybersecurity incident response and e-discovery.
Some of Guidance Software partners include Box, Cisco, Dropbox and Intel.
Though OpenText officials are not able to comment on the Guidance Software acquisition before it is complete, they did provide a statement:
"The acquisition of Guidance is expected to complement the OpenText Discovery portfolio of software and services that provide search, extraction, classification, review and analysis of information (from documents) and to broaden OpenText Information Security capabilities through the addition of digital investigation, forensic security, and endpoint solutions."
Building on Existing Capabilities
One way to view the Covisint and forthcoming Guidance Software acquisitions is through an Enterprise Content Management (ECM) lens.
Covisint solutions, for example, are deeply embedded in automotive companies like Ford. Ditto for OpenText via Ford TC Connect. The two combined give OpenText a larger footprint and operational efficiencies from which to benefit.
The Guidance Software acquisition will add to OpenText's eDiscovery Suite and provide opportunities to further secure content in the Cloud, as it does for Box and Dropbox. It will also give companies insights as to when, why and by whom content is accessed.
Deep Analysis analyst Alan Pelz-Sharpe told CMSWire he is impressed with Guidance Software's "strong forensics capabilities that can augment the Recommind technology OpenText already has — and there is a good overlap with existing OpenText customers, so a strong cross-sell potential, as well."
OpenText Shakes Off the ECM Stereotype
While OpenText has traditionally been viewed as an ECM firm, it is moving beyond that moniker. Though its Content Suite, and now Documentum, are its flagship products, its artificial intelligence and big data platform Magellan was the star of its Enterprise World user conference. Covisint, which the company described as an IoT play, also loomed large on the keynote stage.
In a blog post announcing the acquisition, OpenText CEO Mark Barrenechea wrote that with Covisint, "we can help our customers listen to their information at the scale of the Internet of Things."
When OpenText describes itself as an Enterprise Information Management company, it's time to take that literally, not using "information" as a substitute for "content."
CMSWire asked Constellation Research analyst and vice president Holger Mueller how the Guidance Software acquisition might fit in with Covisint at OpenText.
"Covisint is more for vertical expertise and applications.Guidance software is more for a horizontal new business area in forensic software."
He added that while basic document capabilities are getting commoditized and OpenText moves its product to the cloud, “these acquisitions not only give OpenText revenue growth, but also know-how for future growth areas.”
OpenText Moves Toward Enterprise Software Leadership
Ray Wang, principal analyst and founder Constellation Research told CMSWire that, "OpenText has had a long-term strategy to dominate enterprise software. They've been investing in the non-core CMS side of the house."
He added that, security is "The #1 priority in board rooms. The Guidance Software acquisition is a smart play."
OpenText's articulated strategy of growing via acquisition has played out well for them thus far as well. With Covisint and Guidance Software under its umbrella, OpenText's vision of becoming a dominant enterprise software provider nears realization.
As long as it does a good job of integrating everything, that is.
But as Mueller told CMSWire, Barrenchea has acquired many companies during his tenure, "So OpenText should be getting good at integrating acquired assets."