The shifting sands of ECM
The sprawling ECM sector is going through major upheaval, driven by consolidation, specialisation and innovation
The expectations for the broad set of technologies that comprise the enterprise content management (ECM) sector have never been higher: ECM needs to render an organisation’s collection of content – its office documents, web content, emails, reports and more - into a searchable, manageable, useable and compliant whole.
With the amount of information stored by enterprises doubling every year, fulfilling those expectations is no small undertaking, and can involve the provision of numerous content management components, at a cost that can run into many millions.
According to Gartner, organisations spent around $2.9 billion on ECM technologies in 2008, with the industry watcher predicting demand will continue to rise rapidly: by 2010, the market will be worth $4.2 billion.
But in many ways, the ECM category itself is more of an analyst’s construct than a user’s one: few organisations set out to buy an ECM solution per se. Rather, they could be looking for products as diverse as a paper document scanning capability, an email archiving product, a web content management system, an enterprise search/e-discovery toolset or a Web 2.0 knowledge capture and collaboration ‘wiki’. As a result of that vast span, the ECM industry has been going through a period of rapid consolidation as some of the IT industry’s largest players have tried to create a focal point for customers’ diverse ECM needs.
Key acquisitions – by IBM (FileNet), EMC (Documentum), Oracle (Stellent) and Microsoft (FAST), among others – have reshaped the sector, and have been accompanied by hundreds of smaller ones. While the sector has been consolidating, it has also been defined by innovation, especially in the mid-market. The impact of Microsoft’s SharePoint 2007, with its intuitive browser-based collaboration and keen pricing, has undercut much of the competition and commoditised the market for basic content services. As the managing director of AIIM (the international association of ECM companies), Doug Miles, observes, the arrival of SharePoint 2007 was “one of the biggest things to hit our industry.”
“[SharePoint] 2003 had discrete apps and little integration with Outlook. With SharePoint 2007 users are moving from an Office environment to a SharePoint environment, often without even knowing it,” Miles said at last year’s AIIM conference.
“The ECM category itself is more of an analyst’s construct than a user’s one: few organisations set out to buy an ECM solution per se”
Few traditional ECM architectures win points for user-friendliness, and many IT managers working within large companies report that users at department or team level often bypass expensive ECM products in favour of the more accessible (and typically cheaper) SharePoint environment. Any organisation with a Windows Server Client Access License (CAL) already has Windows SharePoint Services (WSS), a pre-existing investment that can be easily deployed as a Microsoft environment familiar to users. “Users have day jobs. They don’t want to become experts in ECM,” Miles argues.
But that kind of uncoordinated introduction of ECM technologies can in itself cause problems, creating fractured, incompatible content systems spread across separate departments, precisely the kind of situation organisations are keen to avoid.
The market consolidation and the influence of SharePoint have forced many of the specialist vendors to seek clear differentiation.
A common survival tactic, such as that deployed by mid-market ECM suite vendor Hyland Software, is to use SharePoint and add functionality catering to specific vertical markets. Hyland’s OnBase suite is popular with healthcare, financial and insurance companies, where compliance is at a premium.
“Compliance has really been a trend [driving ECM] since Enron,” says Hyland’s director of international sales Nicole Buehler. “A major threat to any ECM implementation is being ignored by users. If they don’t like it they’ll find a way around it. SharePoint offers familiar end user interfaces, [into which] other companies can plug specific functionality.”
But while this approach works well today, it counts on the good graces of the ‘gorilla’ company to refrain from delving into the partner’s area of expertise. For example, Hyland’s position in the healthcare vertical could be challenged by Microsoft’s apparent interest in working more closely with the sector.
Another tactic, available to those with deep pockets, is to diversify outside of the crowded mainstream content management sector. Independent ECM vendor Open Text widened its horizons into collaboration through technology it acquired from Red Dot, while web content management vendor Interwoven’s acquisition of web optimisation firm Optimost takes it into web analytics and online marketing territory. Interwoven’s CEO Max Carnecchia is keen to distance it from the chaos of the ECM market: “ECM is an analyst term. We built our value on understanding the business side, and business wouldn’t call it ECM,” he says.
However, some vendors are taking on SharePoint directly, using the cost and community-development benefits of the open source model to do so. Alfresco Software, for example, in the words of the company’s outspoken co-founder and CTO John Newton “provides an alternative to the consolidating market”.
“Just like the airline industry, the older vendors plateau and consolidate, opening up opportunities for value players. SharePoint and Alfresco are value plays in the collaborative content market, and open source is the only thing that can compete with SharePoint,” he says. At a tenth of the price of many alternatives, Alfresco is doing particularly well in developing economies.
“Open source also allows us to innovate faster. As an example, he points to an open source developer from Denmark who added the important functionality of metadata extraction to Alfresco.”
Vendor lock-in has long been a competitive weapon in the ECM space, and previous attempts at standardising the industry have been met with guarded co-operation from major vendors but little adoption.
But the resistance is finally breaking down under user pressure.
At EMC Documentum’s Momentum conference in October, the company announced with some fanfare that was collaborating on a new ‘Content Management Interoperability Standard’ (CMIS) with Microsoft, IBM, Open Text, Oracle and Alfresco.
Aside from user frustration with incompatibility, calls for greater standardisation are also coming from independent application developers who are faced with the difficult decision of choosing a platform on which to base their products and services.
A successful ECM standard will also benefit businesses with a heterogeneous ECM environment.
The new standard will be “not unlike the (now ubiquitous) SQL standard for the database industry”, promised EMC’s vice president of marketing for content management, Whitney Tidmarsh.
If CMIS takes off and becomes widely adopted (the failure of several previous attempts at standardisation make this far from certain), then the impact on the ECM industry could be profound.
The advent of an SQL standard in the database industry accelerated consolidation around a handful of players. “That was great for interoperability,” says David Nüscheler, CTO of web content management firm Day Software. But it was not necessarily great for competition.
CMIS is a specific standard that omits any mention of web content, he says, which means it is unlikely to gain much support from web content management vendors.
Ultimately it may prompt smaller vendors to frantically innovate, form alliances or escape the market altogether.
Why the sudden enthusiasm for interoperability among the large vendors? “That is a very good question,” says Nüscheler, and one that remains to be answered.
However, it underscores the evolving dynamism of the ECM.