ScottishPower is, in some ways, the classic enterprise content management (ECM) software user: global, complex, with millions of customers and a seemingly never-ending set of rules and regulations with which to comply.
In February, the international energy company extended its content management system to cover the creation, management and archiving of technical manuals and drawings at its UK power stations. Using Documentum’s ECM platform, ScottishPower is providing online access to enterprise content, enabling its field and operational engineers to better maintain plant operations. It will also support ScottishPower’s health and safety regulations. Commenting on the deal, Dave DeWalt, president of the Documentum software division of storage giant EMC, says: “Regulatory compliance is a major driver for companies across all industries.”
Indeed it is. Just when growth in the (still relatively young) ECM market threatened to stall, a new set of corporate regulations has come along to drive new business. The Sarbanes Oxley Act (SOX) and the Health Insurance Portability and Accountability Act (HIPPA) in the US require public companies to store certain documents for many years. These laws affect UK companies with share listings in the US, as well as public US companies that have UK operations. In the UK, meanwhile, the Freedom of Information Act, Basel II, the Companies Act, and a swathe of other new rules and regulations also stipulate long-term document storage requirements.
For the ECM market, these regulations have come along in the nick of time. ECM consists of the technologies used to capture, manage, preserve and deliver information to support business processes. ECM pulls together multiple content types and the technologies that manage them, including email, instant messaging (IM), web forms, paper and phone/audio conversations. The core functionality of an ECM system encompasses document management (DM), web content management (WCM), document imaging and records management (RM) technologies. On top of this, many ECM ‘suites’ provide Electronic Records Management (ERM), digital asset management (DAM), media asset management (MAM), team collaboration and COLD (Computer Output to Laser Disk) (see box, ‘ECM explained’).
The problem was that, back in 2002, ECM looked like a solution in need of a problem. True, there were deals still being signed by suppliers. But there were only so many ScottishPowers to go round: for every global energy or insurance company with large IT budgets and even bigger compliance needs, there were many more businesses that simply did not need an enterprise-wide content system. Suddenly, a market that had enjoyed heady growth during the dot-com bubble – particularly the segment dealing with the management of web content – stalled badly, as demand in newer segments fell and older sectors matured: total licence revenue actually fell slightly, by around 3%, in 2002 to $1.48 billion, according to Ovum.
One survey of CIOs by Rethink Research in 2003 found that, while content management systems were generally seen as important and complex, they were not mission critical. “When asked to rate the level of importance of a content management strategy, no respondent said that his or her company ‘could not function without it’,” say the report’s authors.
Despite this – or perhaps because of it – the industry has been through a particularly savage bout of consolidation. Many smaller ‘point’ providers have either been acquired by larger suppliers or have disappeared altogether. As the shakeout appears to reach something of a climax, five significant vendors have been left standing: IBM/Lotus, following its acquisition of Aptrix: Documentum (now owned by storage giant EMC); OpenText, after buying Gauss, Ixos and Obtree; FileNet; and Microsoft.
Another impetus, especially at the low end, has been the entry of Microsoft. True, there have always been many niche suppliers targeting smaller businesses. But for years, most content management systems (and, by extension, newer ECM platforms) were simply too complex and expensive for all but the world’s biggest companies to deploy.
“Microsoft’s entry signals the predominance of portals over content management in the low-functionality collaborative document management and web content management areas,” says Ovum analyst Sarah Kittmer. “Here, portals are becoming the solution of choice, since they offer both content delivery and simple content management functions.”
At the same time, the end of a period of IT budget cuts as well as the increase in regulatory pressures has spurred an upturn in sales. Revenue is expected to grow by 4% in 2004 (bringing the market back to pre-crash levels) and by a further 4% in 2005. But the improvement in fortunes is about more than spending cycles and the need for compliance. There are other factors, too, such as a fresh desire to integrate and consolidate existing content repositories, streamline business processes and improve transparency.
Phil Goodwin, a Meta Group analyst, has seen a shift in buying patterns. “Decisions regarding purchasing and deploying ECM systems have been tactical ones until recently, but increasingly, ECM is becoming a core component of conducting business,” he says. Connie Moore of Forrester agrees. “The ECM market… has become a reality,” she says.
Broad portfolio, or no portfolio
Suppliers may have rushed to acquire the building blocks of an ECM platform, but many are selling them in a pragmatic fashion. For example, many ECM suppliers are aligning certain functions as ‘quick fixes’ to current business problems, such as e-government targets or Sarbanes Oxley deadlines.
This trend towards selling modules rather than complete, integrated suites of applications is being driven partly by demand, and partly by necessity. As Forrester’s Moore argues, the ECM market is still embryonic, and integration within most vendors’ product lines remains rather basic. “The vendors are currently focusing on integrating repositories, but this must eventually give way to minimising repositories in order to create a universal repository,” she says.
Eventually, early adopters at the high end will roll out what analysts at Gartner call ‘smart enterprise suites’, which integrate content with everything from line-of-business applications to databases. But by then, the shakeout in the market will doubtless have run its course.