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Who Is Left to be Next

Last week’s Open Text and Vignette news gave us all a great deal to think about but now that this long awaited shoe has finally dropped we are left to wonder – who is left? Vignette had been on the ropes for so long it was only a matter of time but are any of the remaining players of any size attractive acquisition targets.

And Then There Were Three

If you look at the Gartner Magic Quadrant from last year there were only four likely targets outside of the ‘Niche’ category. Vignette, Interwoven and Day were all listed as Visionary. Hyland (OnBase) was in the Challenger category and only Open Text was listed among the Leaders. (IBM, Microsoft, EMC and Oracle

Revisiting this makes it even more evident that the Vignette/OT thing did nothing to improve the OT position in any area other than its install base for maintenance revenue. There are no technology wins here.  The Autonomy/Interwoven deal however does enhance both positions and you can expect the new parent’s relative strength and deep pockets to help the Interwoven suite (under the Autonomy name of course) possibly join the leaders next year.  Much the same occurred when Oracle acquired Stellent, filling in enough bubbles in the feature matrix to get them a promotion.

So for the remaining three (OT, Day and Hyland) who is next?  After pondering this a while the obvious front runner to me for the next big splash in the ECM acquisition pool is NOT Open Text. We have speculated on that many times for quite a while.  The simple reason is that the lawyers are too busy. There are too many unresolved deals in the pipeline and too much internal instability from the other acquisitions.

When it does happen (and it will one day) the obvious buyer for OT is still SAP.  This idea though is based soley on the importance and relative strength of their old IXOS position and their continued partnering relationship. The varied menu that OT has been dining from will probably not sit well on the decidely conservative stomach of SAP.  SAP is a company that is more disciplined than most when it comes to selecting who and what to integrate with much less buy. They are not likely to be too enamored with the overlapping catalog the Canadian company has collected over the years. 

I don’t recall a move SAP has made in the last ten years that was not explicitly directed at focusing their technology on business scenarios as opposed to enterprise technologies that have a face of their own like ECM. Does that mean that when cash gets tight, OT starts to splice the pie up and serve the parts back out? Who knows but it is something to consider given that platform consolidation seems not to be the priority it once was.

One Down – Two to Go

So if OT remains a bridesmaid for a while – will there be other moves?   The other two (Hyland and Day) are both interesting and attractive in their own rights but they have issues. In at least once case subsequent moves (or obstacles) may indeed have more to do with culture than some other techno/economic synergies the M&A people start the spout.

Open Text crows a lot about being the largest independent ECM vendor. This in my opinion says nothing about a company’s ability to execute when, as in this case, they a publicly traded company. The “real” independent ECM vendor of note is Hyland. While controlling interest is now held by a private equity firm,  it is still managed by the family of the founders. I work for a big public company and am very happy but I have a great deal of admiration for a “family business.” 

By all measures (that we can see at least) they do a good job. At some point though the right thing to do for the company may be acquisition – but the decision will be just as much about their passion for the business as the balance on the books. With the depressed value of most companies today I would say that passion can carry though until times (and the offer) are better.  That being said – I doubt they will be next.

And then there was one

Apart from OT, Day is probably the strongest from a pure technology standpoint. At least in reputation, their very active participation in driving numerous standards initiatives over the years has made them well thought of in certain circles. Unfortunately that hasn’t necessarily translated into stellar financial performance. 

The real question is – who needs them? The short answer – probably nobody.  They make themselves relevant by injecting themselves into the conversation with really good ideas but at the end of the day (no pun intended), despite the thought leadership it is hard to think of the product as more than just another WCMS.  But this doesn’t mean they won’t have a buyer. 

Who’ll buy them? – you guessed it – Open Text.

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