OpenText and EMC’s Documentum are both Enterprise Content Management (ECM) industry giants and pioneers. On September 12 2016, OpenText announced that it is acquiring Documentum. This acquisition highlights some key points about the ECM industry:
The legacy ECM industry is facing consolidation.
This is likely because challengers like Google Drive, Dropbox and Box are taking away market share from the big players.
This is causing ECM technology, like most other enterprise technologies, to become consumerised
I started my career at IBM doing Documentum implementations for large enterprise customers. I have also had the benefit of working with other industry leading software like IBM’s own FileNet and Alfresco. Since starting EisenVault I have been working closely with customers to understand what makes them purchase and what makes them love an enterprise software system.
What makes a customer buy ECM software? The buyer is usually the IT department or the Admin department (especially when physical files need scanning or storage). These folks come to the meeting armed with a list of features which they have got from the web or from other ECM vendors. Since they are not the end users, they mainly care for a large feature list and a low price (two qualities which often tend to be in conflict with each other). Very often a big name vendor is considered a safe bet. No one ever got fired for buying IBM. This adage still holds and works to help sell an aging ECM system which does nothing to delight the user, but is a safe bet for the buyer. Or if the company’s budget is low, the buyer settles for a small name player, without fully understanding if the user’s goals will be met. On acquiring Documentum, OpenText has pushed itself even deeper into the first “safe bet” category – and that will be good for sales at least in high price customer segments.
What makes users love an ECM system? Ease of use is King. An end user might never even know of the 100s of features that a large expensive system might have. All they care for is that their work becomes easier. Companies like Box, Dropbox and Google Drive have mastered usability, at the expense of feature lists. So very often when a user wants Dropbox, a Documentum is what they get. But users are getting more of a say in enterprise software purchases and this is leading to consumerisation, and hence the consolidation among large ECM vendors.
But what about Cloud? Besides consumerisation, the two other major trends in enterprise software are a) Cloud and b) Subscriptions. Gone are the days when each large company had their own data centres and large server rooms. Today’s enterprise relies largely on secure and easy to deploy cloud based services. OpenText seem to be building their own data centres, which is contrary to the wisdom of specialising in your core business. But it is good that they appear serious about the Cloud. Cloud allows easier deployment of subscription pricing. Traditionally a large ECM vendor would sell licenses to software and then an annual maintenance contract (AMC). Many customers still prefer this model and we at EisenVault are guilty of offering this model as well, in addition to our cloud based subscription pricing. But the problem is that in this licensing model it is difficult to provide ongoing software updates with latest features, something that can be done easily on the cloud with subscription pricing. Subscription pricing helps the vendor maintain cash flows to do continuous innovation and spreads the customer’s cost over a number of years. Let’s hope large ECM vendors embrace subscription pricing seriously.
Consolidation at the top end may be a mixed bag for customers, but probably a good thing for a highly fragmented industry like ECM. The future of our industry lies in embracing the user’s needs and in providing continuous innovation at reasonable prices. We at EisenVault hope to do exactly this.