Open Text, the makers of Livelink and the new owners of the ECM application formerly known as Hummingbird (now Livelink ECM – eDOCS) released their fiscal 2007 results today. To the surprise of many, profit was up, license revenue was up and debt was down. The result of all of this is an uptick of 10%+ on their share price in after hours trading.
I say ‘to the surprise of many’ because there has been a lot of speculation about the impact that SharePoint would have on incumbent ECM vendors. This very blog predicted a couple of challenging quarters for incumbent ECM vendors through the middle part of 2007 as organizations considering ECM figured out whether SharePoint was up to the task. Based on my observations here in Calgary I stand by my earlier comments about organizations delaying their purchasing decisions about ECM tools. If this is true elsewhere, as I suspect it is, how is it that Open Text has managed to post such impressive results?
My take on this is that Gartner’s predictions about the growth in the ECM market are accurate and that there is enough to go around for everyone. Microsoft reports that SharePoint revenues topped $800 million in 2007 which exceeds Open Text’s revenues by more than $200 million. My math tells me that this gives Microsoft about 28% market share in the ECM space and Open Text 20% (that’s $800 million and $595 million of the $2.9 billion that Gartner predicted). I may be wrong about how long organizations are delaying their purchasing decisions or it may be that they’re approaching their ECM solution as an “and” when it comes to SharePoint instead of an “or”. I’d appreciate any comments you, my loyal readers (both of you), might have about this one.
In terms of the overall ECM market, for companies that have already deployed a non-SharePoint ECM solution the question is how and where does SharePoint fit in (if at all in some cases). For those that have not yet deployed an ECM tool, the question is, firstly, why the heck not and second, does SharePoint give me everything I need? To me, the more important issue is to identify what problems your organization is trying to solve. It is very easy (and very common) to start talking technology before figuring out the business problem you are expecting an ECM tool to help address.
While it is difficult to distil a complex discussion about the ECM market into a single blog post, my view on this hasn’t changed. Incumbent ECM vendors will very likely continue to have success meeting the needs of organizations with a heavy regulatory requirement to manage their content and also in areas where they own mature vertical markets. SharePoint will gain ground in these areas over time as third party applications providing strong compliance management, engineering drawing management, legal matter management etc. are developed and bolted on to SharePoint. Maturing integrations between traditional ECM apps and SharePoint will also help. SharePoint clearly owns the collaborative space and will continue to dominate the desktop. It’s easy to use and viral in nature and is hard to stop once it gets a toehold in an organization. Whether this is a good thing or not is a topic for another day, but again the bottom line is to identify your business need and find the tool (or tools) that fit the bill.
I’ll give another plug to my friends at AIIM who have recognized that many organizations both inside and outside the world of ECM are asking these very questions. Their SharePoint Meets ECM sessions are scheduled for this fall and I suggest you attend if you can. For those of you in and around Calgary, I’ll be speaking more on this topic this fall as well.
*I see no date on this post; apologies if I’m poking a dog that’s well asleep*
“Incumbent ECM vendors will very likely continue to have success meeting the needs of organizations with a heavy regulatory requirement to manage their content and also in areas where they own mature vertical markets.”
I can’t disagree, and don’t demean regulatory pressures as motive. But I have to wonder if this doesn’t bode a conservative design philosophy. And I don’t mean conservative in any fine sense.
Are vertical markets “where it’s at”?
I can’t but return again and again to BPM … and BCM, if that fit the bills.
Without meaning to be cryptic here (Flying in stealth-mode gives me plenty of opportunity to be cryptic intentionally!) I have to wonder if ECM of this sort doesn’t amount to lining information silos with brocade.
BTW: I apologize for the fact of my blog being so dusty; over a decade of posting has left me somewhat jaundiced.
–bentrem
p.s. “SharePoint clearly owns the collaborative space and will continue to dominate the desktop.” … how does that affect OpenText, for whom I have always felt an affection that has not ramified to *cough* those behind SharePoint.
Comment by Ben Tremblay — November 5, 2007 @ 8:34 pm
“Reactionary” is the word that came to mind the moment I posted. You’ll indulge me with “take 2″?
Following my nose through your fine BlogRoll in moments I found myself reading this: “>Customers Pave The Way to ECM’s Future”
“This week at our LiveLinkUp 2007 conference, there’s been a lot of talk about the future of Enterprise Content Management and what exactly it’ll look like over the next few years. [...] The big picture for ECM looks good, as Open Text CEO John Shackleton points out in his blog post earlier this week, in part because more customers are looking at the big picture when thinking about ECM.”
Right. Just so. That.
Keeping the ship afloat is necessarily a prime consideration. But having a capable navigator aboard with a well identified port of call is, well, right up there too!
Comment by Ben Tremblay — November 5, 2007 @ 9:02 pm
Hi Ben,
Thanks for your comments. In response to your first point, I see Open Text’s strategy as largely giving up on the desktop. As you pointed out in your second post, they do need to keep things running. Given recent results, I’d say they’re doing a reasonably good job of it. Their Enterprise Connect product, if it works as warranted, will allow Livelink to become the repository of record regardless of the content source (SharePoint, SAP, other ECM systems, what have you). I blogged about this a couple of weeks ago: http://www.c3associates.com/2007/10/22/a-shift-in-focus-but-open-text-still-a-serious-player-in-ecm/
Regardless, it is an interesting time in the ECM space and I’d say that while SharePoint is definitely a game-changer, the importance of “deep” ECM products like Livelink, EMC Documentum and FileNet has never been greater.
Comment by Greg Clark — November 6, 2007 @ 10:48 pm
*changed link to a less formal setting where the layer of dust isn’t quite so deep*
“Giving up on the desktop” … accepting your premise, I shudder to think how many meetings that decision required!
If it happens to be so, even if not absolute, then I can only congratulate them and wish them well. (I keep KlipFolio on my desk as a momento; I haven’t used it in weeks whereas my NetVibes page is an ever-fresh work in progress.) Seems to me this is the sort of tectonic shift that neither requires nor produces loud proclamations and yet the implications and ramifications are general. (Perhaps the mechanisms of the shift don’t entail any sort of tipping point?)
I’ll reply to something in your “Still a Serious Player” here:
(My own bias against things M$ move me to wonder at your optimism; I’m suspicious of that entity’s capacity for anything like bridging.)
What you see as happening I agree is what should come to pass. I appreciate OpenText’s work … perhaps this “bridging” will lead to increased vigour for them as well as for such as Xythos?
“… the importance of “deepâ€? ECM products like Livelink, EMC Documentum and FileNet has never been greater.”
I agree. More: I suggest we (the community of principled practitioners) are letting down the front-line troops, be it the managers who are making complex decisions in situations of information glut and uncertainty or the bureaucrats who are calling audibles with regards to issues of national security, international relations, and domestic policy.
Comment by Ben Tremblay — November 7, 2007 @ 2:26 pm