I have been on vacation the two weeks camping on the west coast of North America from San Francisco up to Vancouver. I brought along an iPod for catching up on old podcasts here and there, but for new news, I mainly listened to local news on the radio. Radio stations in Coos Bay, Oregon did not report on the changes in the ECM market, but I certainly noticed them when I got back.
I was aware that OpenText had made a bid for Hummingbird before I left. The Hummingbird saga has been going on for a couple of months. The latest iECM face to face, which I missed due to the vacation, was originally to be hosted by Hummingbird, but moved since the standards meeting coincided with the share holder vote. News today seems to reinforce that the $489M offer will go through.
What I missed was the IBM acquisition of FileNet. This was a bit of a surprise only because there was no hint of this in any of the standards discussions I have had with both companies. Not that they would explicitly share this with me, but in both the JSR-283 and iECM meetings one would expect some clues as to what was going on and I saw none. Still with FileNet as the largest of the independent ECM vendors, it is not a surprise that it would be purchased. Still nothing is certain until the deal is done.
What do these acquisitions mean for the ECM industry? It means that consolidation is truly on its way, regardless of what happens to Hummingbird. FileNet was the leader in imaging, which is the area where IBM got started in ECM. IBM is now the undisputed leader in ECM and by far the dominant force in imaging and records management. OpenText potential merger with fellow Canadians Hummingbird brings a similar dominance to document management. Supposedly according to Gartner Dataquest, OpenText is the leader in ECM with a 13.2% market share. If so, they have a very poor market cap to prove it. The merger, however, should help to sustain them toward that market position.
From a practical perspective for the companies themselves, this exacerbates an on-going problem that all the ECM companies have had -- too many repositories that don’t interoperate. OpenText already have a problem with their existing iXOS repositories and will have a bigger problem with the more overlapping capabilities of Hummingbird as well as Hummingbird’s Red Dot acquisition. OpenText’s announcement that it will incorporate Oracle’s repository can only increase the complexity. IBM also has multiple repositories, especially if you count Notes and Domino. Oracle too has said that they need to rationalize their various content repositories. EMC also has issues of multiple repositories, although they seem to be collapsing them all into the Documentum repository.
Clearly, the reason for these mergers is not for technology, but for market share and customer base. With the level of overlapping technology in these systems, the problems inherent in consolidating the repositories must be outweighed by the desire to consolidate customers. This is very similar to what happened in the late 80s and early 90s in the relational database industry when Oracle took on DEC’s RdB products and IBM purchased Informix.
These acquisitions can only accelerate the continuing consolidation of the industry. The dynamic is not driven by technology anymore, but by the need to get market share to survive. I can’t imagine that Interwoven or Vignette can be long for this world in their present shape or form. Also, I certainly wouldn’t want to be in Stellent’s shoes right now. Having just acquired Sealed Media for DRM, they are a half decade off the current trend. Is it only a matter of time before Oracle buys OpenText? Oracle has made dozens of attempts to get into this market since the early 1990s never to get very far. An OpenText acquisition could help them to finally succeed.
What will probably happen (fingers crossed) is an acceleration of the standardization process. All the major vendors - IBM, Oracle, and EMC - have a reason to create a standardized way of accessing their repositories. It shows in the faster (but still not fast enough) pace that JSR-283 and iECM are taking. Not only does it help customers to access each other’s repositories, it help provides a consistent way of accessing their own repositories. In the relational database world, standardization preceded consolidation, but in the content management world, it seems to be happening the other way around. No matter - it will be beneficial for everyone.
I share my colleague Matt Asay’s opinion that the IBM/FileNet merger is good for Alfresco. It forces an upgrade that the customers didn’t want in the first place. Since they need to change, we have already seen that they will explore the open source alternatives. Also the necessary standardization that will occur will mean that we are the free, open source alternative for exploring those standards.