Today’s announcement that OpenText bought Documentum (a.k.a. Dell) EMC – ECD) was really not a surprise. It was pretty much a prewritten story with just the details missing. The question is does it really matter? It is not a huge win for Documentum, as would have been the case with private equity money allowing independence. So let’s look at the deal.
OpenText took out a competitor. Had Documentum gone with private equity, it would have continued as a competitor to OpenText. If we look at the HPE deal with Micro Focus, as many as four private equity firms were interested in the old Autonomy assets. These private equity companies could have easily been interested in EMC – ECD too.
With private equity, competition would have come to management. We now know from the announcement call that ECD had revenues of $600m of which $300m was maintenance. That could have been some strong competition. This merger is going to make for some interesting calls as these two have competed fiercely for over 20 years.
Documentum will need to be maintained as a platform. Both OpenText and Documentum are platforms that require customization before customers can use them. Those numbers have been often described as 6:1 in services dollars to every software license dollar. The new ECM market includes vendors like Hyland OnBase and M-Files that are low-code options with services ratios closer to 2:1. When existing Documentum customers soon begin to look at their options, they will have a choice to redeploy a Documentum solution on OpenText or look at other solutions. Cloud only solutions, like Box, and low-code solutions,like Hyland Onbase and M-Files, will be front and center. It then becomes a question of total cost of ownership.
Other Vendors’ Win
I think the big opportunity is for other vendors, especially the new ones. In most new deal opportunties, smaller vendors are nothing but column fodder. The prospect has a couple of vendors chosen and they need more than two for a good selection set. Those opportunities have usually been battles between IBM, EMC, and OpenText. In cases where one vendor was truly disliked, it opened the door to a third player.
With EMC and OpenText being one and the same, it opens up all of these deals to other vendors. The usual suspects become IBM and OpenText, with a third vendor to be determined. This also opens these opportunities to new ways of thinking. IBM and OpenText are legacy platforms. This opens the door to Cloud, OpenSource, Low Code and Content Enabled Solutions.
Who is the Leader?
Too much has changed in ECM. Only hours before the announcement, I speculated on Documentum and also recapped the investments in ECM. In my post, the opening section recaps how this was not the only deal in the last year.
OpenText did nothing but lock down legacy content management. FileNet is all but gone, leaving IBM with Content Manager and a relationship with Box. The Meanwhile:
- Cloud solutions have always been on the edge of ECM. Box’s relationships with IBM move it closer to a real ECM message.
- Low code ECM solutions have emerged that are faster to deploy, like M-Files and Hyland OnBase, which are already competing with Documentum and OpenText. These solutions don’t require months or years of coding to deploy, they take a few weeks of configuration.
- Overseas Niche Players are also starting to move onto the global stage. Nuxeo is following in M-File’s footsteps into the U.S. and other global markets.
- Content Enabled Solutions have all but been missed by ECM players. Many of these content enabling back office solution vendors have started to cross horizontal business units. Some of these are major vendors, like SAP with Ariba and Success Factors.
One thing is certain. The leader of ECM will not be in any report in the coming months. Leaders will be emerging by what actions they are taking in the coming year.