The Summer Of Consolidation

If you are a frequent reader of this blog, you have likely noticed that I tend to avoid news-related topics. My focus is on questions and issues that arise as I work with my customers to help them streamline their businesses to achieve maximum profitability from their business processes. But I would be remiss if I did not assess the two recent major consolidations in the Enterprise Content Management (ECM) space.

Here are my thoughts.

Open Text Buying Humminbird for $489M
While the shareholders still must vote, Hummingbird has accepted Open Text's takeover bid. This after Symphony Technology Group offered $465M, a bid many financial analysts felt was too low. I am not very familiar with these two organizations, although I have experience with RedDot, but I know that they have been staunch competitors. I suspect the motivation here is to remove a formidable competitor from the market. For Humminbird customers, hopefully they will not be forced to switch platforms and they will continue to be supported. Open Text would be wise to do so. While Open Text offers WCM, it is targeted at a different market and is not nearly as easy to use and feature rich as Red Dot. I would imagine that Red Dot will remain untouched.

IBM Purchases FileNet for $1.6B
Forrester is quite bullish on the acquisition, while Gartner has a more skeptical take. Funny how the two highest-regarded technology analyst firms can disagree like that. For years, everyone from customers and employees, to Wall Street have been speculating on who would buy FileNet. With a long history, large customer base, and a large amount of cash, they were ripe for the picking. Oracle, HP and IBM were always the contenders and it is not surprising that IBM was the winner. Given that most of the senior management, including Lee Roberts (CEO), spent years at IBM, it is a natural fit. I believe it is the closest cultural fit as well... an important consideration for any successful acquisition.

There is a great deal of conflict, however, as to the true motivations of IBM for the purchase, and the impact on Filenet customers. Ultimately only time will tell. Whether for the customer base, technology, or to eliminate a strong IBM competitor, acquisitions are not easy, and IBM has a shaky history (think Rational, Informix, Crossworlds, etc.). While WebSphere makes up a significant portion of the market, the majority is not standardized on WebSphere. It is unlikely that IBM will continue to support non-IBM platforms that FileNet offers. Furthermore, FileNet relies on a strong partner organization for sales and implementation...where does this leave them? IBM Global Services is no friend to a FileNet partner. For FileNet customers, I doubt they will see major changes within 12-18 months. I believe that the acquisition does open a great deal of opportunity, albeit uncertain, for FileNet employees and upward mobility that they never had.