IT-Analysis.com
IT-Analysis.com Logo
Business Issues
Business Issues Channels Enterprise Services SME Technology
Module Header
Craig WentworthMWD Advisors
Craig Wentworth
16th April - Egnyte the blue touchpaper...
Louella FernandesLouella Fernandes
Louella Fernandes
11th April - Managed Print Services: Are SMBs Ready?
Louella FernandesLouella Fernandes
Louella Fernandes
11th April - The Managed Print Services (MPS) Opportunity for SMBs
Simon HollowayThe Holloway Angle
Simon Holloway
11th April - Intellinote - capture anything!
David NorfolkThe Norfolk Punt
David Norfolk
11th April - On the road to Morocco

Opinion

IBM to acquire FileNet - a major shift in the ECM market.
Bharat Mistry By: Bharat Mistry, Associate Analyst - BCM, Bloor Research
Published: 15th August 2006
Copyright Bloor Research © 2006
Logo for Bloor Research

IBM strengthened its software portfolio with the announcement last week of the proposed acquisition of rival enterprise content management (ECM) vendor FileNet Corporation. The deal is subject to FileNet shareholders approval and will see IBM pay roughly $1.6 billion in cash or $35 per share. It represents the third software acquisition announcements by IBM in two weeks—the other two being Webify Solutions and MRO Software.

At first sight there appears to be a lot of overlap between IBM and FileNet's products that should be a cause for concern to customers. Whilst this is true for document management, electronic forms, records management and email archiving, there are also a lot of synergies between the two companies that make the acquisition beneficial to customers.

With this acquisition IBM is building on its Information On Demand initiative announced earlier this year. Using technology from both the companies, it will provide a broader selection of enterprise content management capabilities and solutions that capture and deliver content as part of the business process for its clients as well as providing opportunities and benefits of its significant partner resources for its ISV and partner channel.

The acquisition also addresses a gap in IBM's Business Process Management (BPM) strategy combining content focused BPM with its business integration and compliance solutions. My colleague Terry Schurter has written about this in his article and so I will not cover it here.

FileNet's customers also benefit from document archival and retrieval capabilities, expanded regulatory compliance capabilities such as e-mail archiving, integration with process-centric BPM, as well as broader benefits of a global reach, vertical industry expertise, service, support and delivery.

IBM currently plans to preserve and enhance FileNet's existing products although once the acquisition is completed in Q4, customers should look for definitive and detailed product road maps and product strategies that may affect them. IBM also plans to retain all of FileNet's 1700 employees as part of its Information Management group within the larger IBM Software Group.

ECM Market dynamics

This acquisition is a further sign of the renewed interest in the ECM market space. The market has traditionally been characterised by point solutions from pure play vendors offering document imaging, storage, document management, records management, workflow, collaboration, web content management and, more recently, email archiving products and services. Over the last few years it has grown at a fast pace. According to IDC, the ECM market is reportedly worth $3.2 billion and has seen recent growth rates of over 10% and is forecast to grow at the same rates. The growth is driven by companies forced to comply with a host of new regulatory and corporate governance requirements in all sectors of industry.

The growth has also led to many of the smaller vendors merging or being acquired by bigger companies who have broadened their product capabilities to capture a larger share of the market. Some of the major player included OpenText, FileNet, Documentum, and Hummingbird. Documentum was snapped up by EMC in 2003 and Open Text seems to have won the contest with Symphony Technologies for Hummingbird.

IBM has been a player in the ECM market for a long time, but its acquisition of FileNet is a sign of the rapidly consolidating market that looks increasingly likely to be dominated by large IT infrastructure companies like IBM, Microsoft and Oracle, SAP and EMC.

One could argue that IBM grabbed FileNet to prevent it being acquired by its infrastructure rivals; however there appears to be a lot more synergy between the two companies that will benefit both sets of customers, as explained above.

The question then remains as to which of the remaining handful of pure play vendors such as Interwoven, Vignette, Stellent, Hyland Software and Mobius is likely to fall under the gaze of the bigger players. Watch this space.

Advertisement



Published by: IT Analysis Communications Ltd.
T: +44 (0)190 888 0760 | F: +44 (0)190 888 0761
Email: