Information management has become big business and at its heart lies the enterprise content management (ECM) system – a platform that manages the ever growing amount of data that now lies outside the traditional storekeeper of information, the relational database.
The two main drivers for the sustained interest in ECM remain the same as in previous years: the exponential increase of information requires a system that can manage unstructured content; and the ability to store, access, search and dispose of content in a controlled fashion helps organisations to meet the plethora of increasingly rigorous regulatory requirements.
This has been particularly so for records management – an important component of the ECM system – where identifying, classifying and disposing of records from a range of content types such as emails, instant messaging, PDFs, video conferencing and voice calls has proven to be a difficult task.
But this has merely added to the appeal of ECM especially for organisations struggling to manage content at an enterprise-wide level. According to Gartner analysts, the market is expected to increase by more than 10% per year over the next four years, making it one of the key areas of growth in application software over the coming years.
As ECM moves into the strategic realm of boardroom planning, integration has become a key consideration. Many large organisations struggle to integrate all their systems and it is no different for content management.
A quick checklist highlights some of the many technologies that may go into an ECM suite: document management (DM), web content management (WCM), document imaging, records management (RM), digital asset management (DAM), media asset management (MAM), collaboration and COLD (Computer Output to Laser Disk) technologies.
Consolidating technologies provided by numerous ‘pure-play’ vendors into a unified platform is difficult, especially as many have been swept into the fold of larger ECM vendors amidst a frenzied wave of industry consolidation.
Indeed, the wave of consolidation has reshaped the competitive landscape to such an extent that a vendor’s longevity is now considered an essential criterion in the selection process of an ECM system. The reason? Over the last four years there have been in excess of 40 mergers and acquisitions of ECM vendors, with over half of the entire ECM market now controlled by four companies.
Gauging who will survive in this turbulent market is no easy task, especially as the vendors most likely to be acquired are now at the top of the ECM hierarchy. The precedent was started in August 2006 when IBM embarked on its third largest software acquisition ever, purchasing FileNet, a 26-year-old veteran of the content management software market, for $1.6 billion.
What set this deal apart from previous ones is that now the broad players of the IT industry see ECM as a mainstream technology appropriate for the majority of mid-sized and large, global organisations. And it is a trend that has found favour with other infrastructural players: in November 2006 application and database vendor Oracle agreed to buy content management vendor Stellent for $440 million to further flesh out its own Oracle Content Database and Oracle Records Database.
However, for existing ECM vendors to compete they have to pursue ever larger acquisitions, as the $489 million acquisition of Hummingbird by its larger rival Open Text, also in August 2006, highlights. Thwarting an earlier private equity buyout of Hummingbird, Open Text offered $489 million for the company – the price it felt was necessary for it to compete alongside EMC, IBM and (at the time) FileNet. And while it gives Open Text a larger market footprint, Hummingbird customers are left with a stark choice, say Gartner analysts: either migrate to Open Text’s LiveLink platform by 2009 or select another provider.
Ironically, while the infrastructural players are busy integrating their rivals’ suites into their own portfolio, a gap has emerged in the market for a product that offers basic levels of personal content management. The basic content service (BCS) is a new breed of content management that gives entry-level functions such as version control, check-in, check-out, document security and auditing, but at a fraction of the price of their larger ECM counterparts.
The emergence of BCS presents a challenge to the established ECM players, says Gartner. Smaller vendors such as Xythos and Xerox already have an established BCS presence, while the likes of IBM, Microsoft and Oracle are developing their own BCS products. And although there is no enterprise-scalable BCS available yet, Gartner predicts that by the end of 2007 at least three-quarters of all large companies will have deployed a BCS product in some part of the organisation.
This leaves the market open for a fresh round of acquisitions – and uncertainty – as vendors continue picking up some of their rivals to establish ever-higher levels of critical mass and ensure their longevity.