From predator to prey

Sunday, 01 June 2008 00:00

It`s often surprising how a dominant player in the IT space can go from being the predator to being the prey. Open Text has the potential to be one such example.
Open Text was incorporated in 1991 as a spin-off from the University of Waterloo, Ontario, Canada. However, over the intervening years, the company has grown organically and through multiple acquisitions to become the market leader, according to , in the enterprise content management (ECM) space. It last reported annual revenues in excess of $700 million and a user base that includes over 46 000 customers and millions of users across 114 countries worldwide.

Open Text`s spate of acquisitions include Bluebird in 2000, Centrinity in 2002, Corechange, Eloquent and Gauss in 2003, Artesia Technologies and Ixos Software in 2004, and Hummingbird in 2006.

Open Text`s ECM solutions help customers manage critical business content, as well as assist companies with the management of their content revisions, approvals to archiving, and compliance with regulatory requirements. Its principal product, Livelink, enables corporations to manage traditional forms of content, such as images, office documents, graphics and drawings, as well as to manage electronic content, including web pages, e-mail and video.

The company`s solutions allow users to access, view and manage information related to a transaction or business process without switching from one application to another. It offers solutions for compliance and governance, e-mail management, corporate services, information systems and technology, and manufacturing and operations.

Open Text Corporation provides its solutions to various industries, including energy, financial services, government, legal, manufacturing and production, media, and pharmaceutical and life sciences. The company also offers customer support, consulting, and training and integration services. It also has strategic alliances with the likes of , Oracle and AG.

Open Text is profitable, has a full-time staff complement of approximately 2 700, a market capitalisation of nearly $1.8 billion, and has regularly featured as a leader in a number of Gartner`s s.

With such a visible profile in the global market, and as a result of its strategic alliances with many of the larger IT corporates, it has now become a potential acquisition target for at least five of these players, namely, HP, , Microsoft, Oracle and SAP AG.

The shake-up in the information lifecycle market (ILM) started in 2003 with EMC`s acquisition of Documentum. However, IBM quickly followed suite with its purchase of FileNet, and Oracle with its buy-out of Stellent. More recently, HP acquired Tower Software.

None of these consolidations provide those companies with the capability and breadth that Open Text provides, and thus a take-over of Open Text provides an opportunity for one of them to position themselves way out in front as the ECM and/or ILM market leader.

According to research undertaken by some of the global players, the ECM market is worth almost $4 billion and growing at a very fast rate, as this type of software becomes critical for businesses trying to manage the deluge of data from, for example, blogs, e-mails, instant messaging, videos, web pages and wikis.

Open Text believes that it can remain independent and still continue to prosper. However, the dynamics of this market niche and the appetite for acquisitions shown by many of the major IT market players, suggest that the inevitable will happen.

From the outside, it appears as though SAP is the front runner, but as we know from experience, conventional logic doesn`t always prevail. Watch this space.

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