Consolidation in the ECM market

A May 2006 report by Gartner shows that OpenText, IBM, FileNet and EMC were market leaders in the Enterprise Content Management (ECM) marketplace.  The report said that the “ECM market is dynamic” and “marked by technology consolidation”.  That consolidation is happening at a rapid pace.

In 2003, EMC made its entry into the Enterprise Content Management (ECM) marketplace by buying Documentum.  Then this past year EMC acquired Captiva, buying its way to become the largest vendor in the ECM space.  But it looks like their lead has been short-lived.  They are about to be eclipsed by IBM.

Last week IBM announced plans to purchase FileNet for integration into their “Information on Demand” product offering.  This follows shortly after other recent IBM acquisition announcements that include Webify (specialized SOA technology) and MRO (Asset Management Software). 

And this follows up yet other announcements.  Stellant is to acquire SealedMedia and BitForm.  Brocade is to acquire McDATA.  OpenText is to acquire HummingBird.  OpenText had lost in a 1999 bidding war to Hummingbird over the purchase of PCDocs.  OpenText and Oracle also have had a close relationship.  And there have been many more announcements over the past few years.

The obvious question is what does all this consolidation in the ECM market mean? 

Of course there isn’t a single explanation to that question.  For example, in the case of the IBM purchase of FileNet, it is more likely that they’ve initiated the FileNet purchase because of the customers and dominant marketshare that IBM would gain.  But because of the significant overlap of IBM and FileNet products in the BPM and ECM space, IBM may not really be gaining much in the way of technology with this move.

There can be dangers associated with these huge acquisitions too.  Sometimes the bumps associated with dual or multi-product integrations last only a few months, but othertimes problems can linger for years. 

Frequently the behemoth companies created from a merger or acquisition will have difficulty in integrating multiple competing solutions and in presenting a consistent product strategy.  Sales people may not be sure of or have difficulty in articulating and recommending the preferred company solution, and the overall product direction can become disjointed.

But one clear over-reaching reason why consolidation is happening now is that document management, content management and knowledge management are capabilities that are being seen more and more as key components in any enterprise-wide software solution. Rather than departmental solutions, it makes sense to provide access to both structured and unstructured data across the entire enterprise.

Also as mentioned here in previous blogs, compliance has been a big driver in the upping of the importance of document and content management to enterprise-wide IT solutions, especially Sarbanes-Oxley and HIPPA.

How is Formtek managing in this space?  As a smaller and more nimble player in the world of ECM, Formtek competes by providing very focused attention to our customers, something that is often lost by the bigger players.  Formtek has a very consistent track record for creating high-value high-ROI mission-critical enterprise-wide applications.