Feature
It seems like everyone is talking about consolidation in the enterprise content management (ECM) business, particularly into OpenText.
Several recent events — OpenText's acquisition of Documentum and IBM’s ongoing flirtation with Box — have increased the confusion.
OpenText's Feeding Frenzy
My friend Laurence Hart outlined all of the ECM companies that have disappeared. But on what I consider to be the key driver, he had this to say, “I’m not forgetting SharePoint but Office365 is in its own unique grouping and is likely to be around until Microsoft implodes.”
Implosion is not dominance.
In a related article, he outlined how Box and OpenText are continuing to gobble up all of the ECM ecosystem.
Except for one thing.
The State of the ECM Market
SharePoint and Office 365 are adding capabilities and capacity and customers at a ferocious pace.
In the recent announcements, Microsoft indicated SharePoint (including SharePoint Online) now has:
- 160 million licensed users
- 75,000 companies
- 1,000,000 developers
- 200 percent year-over-year (YoY) usage growth
- 500 percent YoY content growth
OpenText has brilliantly executed in its role as the designated consolidator of legacy ECM businesses, acquiring such ECM stalwarts as Hummingbird (PCDocs), Documentum, Vignette, the remnants of Autonomy’s multiple acquisitions through Hewlett-Packard and its spawn, Hewlett Packard Enterprise, the remnants of Wang and ViewStar and Kodak Imaging through Global360, and IXOS.
In this business model, OpenText works to migrate customers to its primary platforms, Content Server and Archive Server, and its shareholders have been well rewarded.
Open the Box
At BoxWorld, Box announced a renewed focus on taking out legacy ECM customers.
According to Rand Wacker, vice president of Enterprise Products at Box, “Take workflow as an example. In traditional ECM tools workflow is a component, but they are not well suited to broad use throughout the enterprise. The OpenText, the Documentum, the SharePoint tools always require IT to set something up. The users don’t find them very useful or attractive and only use them if they have to.”
For Box, this is their cross-repository lightweight workflow tool, Relay. For an Office 365 user, it sounds just like the Microsoft description of Flow.
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ECM Realities
From 35 years in the ECM trenches, I have learned that there are several impediments to a migration to a new ECM platform.
- Unless the old ECM platform has expired or costs too much to keep, most of these systems continue to be used. They were expensive systems to build, usually required extensive customization and integration, and they usually contain the best-managed content in an organization. This is because the management of content in email stores, file shares, and cloud EFSS repositories does not set a high bar for governance.
- The return on investment from an ECM system replacement project is usually low.
- Mainly, users are loath to change from a system that is working for them.
In a recent CMSWire article, I argued that the winner in this cloud consolidation is likely to be Microsoft because the underlying trends are so favorable to the Microsoft stack, not just SharePoint.
- With reasonable precautions, the cloud is more secure than on-premises data centers
- Scalability matters, and Amazon and Microsoft become co-dominant in the cloud
- Microsoft Office is foundational because so many people use it
- All information needs to be governed, and much of it is contained in Office formats
- Managing documents in the Microsoft stack will make them easier to govern
- Hybrid SharePoint is a requirement because millions of SharePoint sites need to be available in Office 365
- SharePoint add-ins are needed, because it is easier and cheaper to buy components than building and maintaining SharePoint customizations
Will Documentum Users Move to Content Server?
So when OpenText tries to convert Documentum users to Content Server, in many cases, they are just opening the door to a review of migration to an alternative ECM platform.
All Documentum customers have SharePoint and Office 365. I expect that many of them will use this acquisition to accelerate toward the Microsoft stack as opposed to the OpenText visions of ECM.
I also expect many of these customers will continue to use Documentum. And by harvesting the maintenance and subscription revenue streams, OpenText can still make this a winning acquisition.
Overall, I think Box and OpenText suffer from not having their own equivalent of the Azure and Office 365 cloud, so that they are dependent on others.
OpenText has bought and built some cloud scale. And Box has partnered with Amazon Web Services and IBM, and is arguing that they are more of a layer above the dominant clouds.
My bet here is that we get to the same sort of market consolidation as Microsoft Office in the 1990’s. One big winner. Guess who.
