Making sense of the ECM market
By Alan Pelz-Sharpe at 2006-01-05 23:25:00 |
Analysts and consultants like to point out trends of industry consolidation and a growing profile among infrastructure vendors in the enterprise content management (ECM) marketplace. These commentators don't exactly have it wrong, but they don't have it completely right, either, so content management buyers should take their advice with a grain of salt and continue to scan the full breadth of the market for the best-fitting solution.Conventional Wisdom: Victory to the Big Boys
Talk of industry consolidation is rife. In particular, there is a great deal of speculation about the future of FileNet and Open Text, especially regarding whether they will soon be acquired. From a market-watcher's perspective this kind of consolidation is generally considered a good thing, particularly as key database vendors Microsoft and Oracle enter the market and start to shake things up.
In fact, if you were to speak to most of the industry or financial analysts in this space you would find almost unanimity around where the ECM market is moving. Their story goes like this:
The Mega Infrastructure Vendors (IBM, Microsoft, and Oracle) will continue to push ever more heavily into the space with the eventual aim of managing unstructured data just the same as they currently manage structured data.
Few truly believe that they will fail in this endeavor, although there is disagreement is in how long it might take. Very large enterprises are already considering this content infrastructure route, and many small and mid-sized enterprises (SMEs) are already far down the road thanks to a viral growth in Microsoft SharePoint deployments.
For market-watchers and advisors this makes for an interesting time, but for buyers of ECM technology such analysis can be not only unsettling but also potentially misleading. For in real terms of buying and deploying ECM related technology, there is in fact far less change and turbulence than first appears.
ECM Product Suites are not Dead
For example, although there are certainly some vendors whom one would always be reluctant to recommend to any buyer, all of the lead players (read top right of a Gartner Magic Quadrant) will still be with us in five years time. This is no longer dot.com bubble time, and all of those who currently remain standing are either well funded and/or represent excellent acquisition targets for other larger technology vendors who want to absorb their customer base and technology.
If for example either FileNet or Open Text were acquired it may not be a bad thing at all for a customer, since they may well find even better support and improved technology due to better funding. This has to date been the case with Documentum at EMC and iManage as part of the Interwoven stable.
Therefore, though it may appear to be a lively and potentially volatile market, the current crop of standalone ECM vendors are in fact in a good place. They will gradually all reposition into areas of core strengths and their offerings will represent a specific business application approach. Time will tell how the pieces fall, but we can already see that:
- FileNet has deep strength in Insurance and Government
- Documentum has deep strength in Regulated Process Sectors and Banking
- Open Text is continuing to lead the way in integration with ERP vendors (particularly SAP)
- Vignette in Portal-driven customer and Intranet environments
- Interwoven for collaboration in Professional Services
- Hummingbird for correspondence and contracts management
In addition, there is a good chance that these will be the particular strengths they will continue to build upon.
Moreover, one must remember two things:
- Technology markets always move far slower than either technology vendors
or industry analysts forecast or expect.
So even though Oracle, IBM, and Microsoft are making solid and exciting moves, it will take a long time before they genuinely own the unstructured data infrastructure (my guess: 7-8 years). Until they do, and until they use this time to fully refine their offerings and educate their ample partner channels, the standalone ECM vendors will still represent the best purchasing option in many circumstances -- at least for large enterprises. Which brings us to…
- Remember that virtually all analysts and market-watchers (myself included) focus almost exclusively on large enterprises.
BOBs for SMEs
Truth is, most analysts do not really do that much research (if any) into SMEs. The only market that is studied in depth is those of the current market leaders. In other words ECM vendors who are well established, veterans by Silicon Valley standards, whose technology is complex and extensive -- and designed specifically for larger enterprises.
Therefore, if you too represent a large enterprise then all of the ECM suite vendors should be considered when looking at purchasing new software -- for in one guise or another all of these players and their technology will be around in the near future.
If on the other hand you represent a smaller enterprise, then the reverse may also often be true. The ECM vendors discussed above are not focused at all on SMEs, and in any future consolidation, SME client bases will not be high on the list of priorities of a potential acquirer. However, there is another, SME-focused market that is hardly tracked at all, and it is one that you need to be aware of. It is populated mainly by best-of-breed (BOB) vendors -- and there are lots of them.
Surely ECM technology is not rip and replace technology. Porting from one environment to another is a complex process, fraught with difficulty and high switching costs. When you invest in ECM technology you need to be looking at the long term. All the ECM vendors, and the larger database vendors should be on the long list -- if you are a large organization. As the current market volatility is very unlikely to have much impact on you or your buying decisions in the foreseeable future.
However, if you are an SME, you need to consider much more carefully what your needs are, and how committed to a particular proprietary approach to ECM you want to have. Managing and organizing the information management needs of a large enterprise represent large deal sizes for vendors and systems integrators alike. In smaller enterprises it can simply appear to be complex and poorly rewarded to bother with, and left to the domain of SME specialists. In this regard, there are a lot small BOB players (including many open-source options) that can solve pressing problems in a simpler fashion, and therefore likely represent better options.
Final Advice
In summary, watching the evolving ECM market is very interesting to people like myself -- but is not as important in buying decisions as one might think. To be blunt about it, if you are a large enterprise the market is moving slowly enough for you to keep pace, and nobody who is offering genuinely enterprise-level ECM solutions is likely to have their technology offering disappear from view in the near future.
If you are an SME then know that the reported market activity that you read about from the major analysts is focused largely on ECM suite vendors who are not planning on providing you with affordable offerings in the first place. Therefore, SMEs would often be best served to consciously look away from the "top right" quadrant vendors and focus instead at those best-of-breed vendors who are dedicated to serving your market -- you -- properly.
