When I stated that OpenText would not be “THE” leader in Enterprise Content Management (ECM), I mentioned that there were three groups from which a leader would emerge. I’ve seen a change as I moved from working with the Documentum platform to working with OnBase in both the industry and customers that have three solutions groups emerging to take the place of Legacy ECM. The areas that are putting pressure on Legacy ECM are Open Source ECM, Low-Code ECM, and Content Enabled Solutions.
What Driving This Change in Leadership
The whole point comes down to total cost of ownership. How vendors look at the purchase and accounting of an ECM solution has always bothered me. When a vendor tells a customer how to make the deal fit they company’s budget, to me it’s much like a car salesman saying, “What can I do to get you into this car?” The fact that software is a depreciable asset and that services work is an expense line item should not matter.
Total cost of ownership should matter to a department that has a specific dollar amount allocated to solve a simple ECM problem. Its budget didn’t look at the perspective of software assets and services expenses. It was approved for a certain dollar figure through its annual budget cycle. So splitting the services over years to fit into budgets is just playing games. That is especially true when it’s done to cover costs of a simple content solution, which has more options today than it did in the 1990’s.
The problem is that for too long, ECM has been a custom solution game. Many of the vendors still see it that way. The times have changed and solutions and platforms have changed. The strength of an API-first platform, like Documentum, is less important. To most users, the concepts of ECM are common place even if the recognition of an ECM market is not. Customers are expecting software vendors to bring more to the table. This is why we see content solutions being addressed by many different vendor markets, like Electronic File Sync and Share, Contract Life Cycle Management, etc.
ECM Challenges have Many Variations and Many Solutions
Not all ECM problems are the same. Solutions like Human Resources On-Boarding and Contracts Management are pretty standard across most organizations. For some, their process may be more unique. Then there are those systems that will only be viable to a small number of companies because they are only a few companies have large or complex document problems. For example, there are less than a dozen major companies that build commercial and general aviation aircraft in the world.
There’s a ratio that is often discussed in ECM deals that is rarely visible in general before the deal is made. For every dollar of software there is usually a multiple of dollars that goes to the services to build that solution. In legacy ECM platforms the number was often eight dollars of services to one dollar of software – 8:1. It is currently roughly 6:1 or 5:1 services to software ratio. With $100,000 software platforms, that means that the total cost of ownership is $600,000 to $700,000. This makes sense for a custom solution for an aircraft manufacturer maintenance manual solution or a pharmaceutical new drug application. It gets to be a little pricy for a compliance tracking solution for food producing company or a new accounts application in commercial banking.
It is total cost of ownership for a solution that is causing the ECM landscape to evolve and become fragmented.
OpenSource solutions replace Legacy ECM Platforms for Custom Solutions
I see Open Source platforms taking the place of Legacy ECM platforms in solutions that are very unique to a specific company or small industry. If features cannot be easily used across organization or industries, this becomes an ideal opportunity for a custom solution. In some cases a solution may be a competitive advantage. This is another opportunity for a Custom Solution. Industry solutions like aircraft maintenance manuals, new drug submissions, engineering document management, will continue to be custom solutions for now. I say for now because even these challenges have had out-of-the-box solutions at times, like CSC FirstDoc for drug submissions.
The use of an Open Source platform almost eliminates the costs of the software. These platforms significantly reduce if not eliminate software costs. The budget for these solutions is all about the services to develop these custom solutions. This value of using Open Source verses Legacy ECM is something that Dave Giordano at TSG promotes. He has expanded his company’s focus to include Alfresco and Hadoop in addition to Documentum.
The Open Source category includes Alfresco, Hadoop, and Nuxeo.
Low-Code ECM solutions replace Legacy ECM Platforms in Configured Solutions.
End users of standard processes like accounts payable, human resources, or corporate counsel are demanding that their solutions be developed faster and cheaper. They look at these common solutions and rightfully expect that vendors have developed these before and will not require weeks of requirements gathering followed by months of development to complete. With legacy ECM platform, these solutions are often addressed by frameworks, but still often have lengthy timelines.
To address this there has been an emergence of Low-Code ECM platforms. These low-code platforms focus on configuration of objects and workflow rather than customizations. This speeds up the development process and reduces the services to software ratio down to 2:1. In our earlier scenario, that $100,000 software purchase needs only an additional $200,000 to get an end solution. Legacy ECM platforms have seen this change too which is one reason why Documentum developed D2.
Vendors in the Low-Code ECM category include M-File, OnBase and Lexmark.
Content Enabled Back Office Solutions replace Legacy ECM Platform in Common Solutions
There’s a whole new emerging market of content solutions that solve one specific business problem. Often these are in areas like Contract Life Cycle Management or Human Resources On-Boarding. Across organizations in common jurisdictions or geographies, these processes and their documentation requirements remain the same. This has allowed for vendors to emerge that solve these specific problems. These solutions also exist in areas like Compliance. Though there may be differences in the processes, the general complexity has been simplified with specific solutions.
I’m currently addressing this in my research. My Buyer’s Guide for Contract Life Cycle Management (CLM) identifies 35 vendors. I’m doing similar research in Human Resources and Compliance. These vendors offer ready to use solutions that can be configured in a short period of time and integrate to line of business applications. What they do not do is address the use of content across the enterprise or records management. Because they solve one business problem their costs are often significantly less than an ECM platform.
While there are individual leaders by solution, there is not one vendor that climbs to the top as we look at ECM. SAP has solutions in CLM, with Ariba, and On-Boarding, with SuccessFactors, but does not address the enterprise nature of accessing content.
In addition to SAP, ones to watch are Gimmal and Flatirons Solutions. Both offer specific solutions across multiple departments on ECM platforms as a partner solution.
The ECM Market has Changed
Legacy ECM strengths have been its ability to be molded to fit into any solution. As end users start to see that content solutions are more and more common, they are expecting price points and deployment schedules to reflect these common solutions. The era of spending weeks of discovery followed by months of custom coding to develop standard content solutions is coming to an end. It can be seen in the growth of niche content solutions. With all the Legacy ECM solutions now being supported by two big vendors, OpenText and IBM, these new options will continue to grow in strength.