IBM acquires FileNET - who really stands to gain?
So - IBM has just announced the
impending acquisition of content management/business process management vendor
FileNET. There was an analyst call about it yesterday, and from the nature of the questions being asked by other analysts, I got the impression it was generally seen as a positive step. Given that I feel wholly nonplussed by the whole thing, I'm forced to ask myself why this may be. Perhaps it’s because I’m not exactly sure who is gaining what.
Let’s have a think, firstly, about the clients of both companies. As FileNET was already an IBM partner, and what with the interoperability standards that have been emerging for information sharing, it is difficult to see how clients can gain technologically. There are things in FileNET’s portfolio that are stronger than the IBM equivalents, notably (we are told) on the content and records management side, and in imaging and workflow – which just happens to be where
EMC has been making some recent investments (such as Captiva and ProActivity). Given IBM’s investments in Lotus and WebSphere however, and its strong integration capabilities aided by its
Venetica acquisition, I do wonder whether any gaps were particularly significant from the customer perspective, or whether they merited buying what just happened to be one of IBM’s biggest rivals in this space.
What about for business partners? Again based on the existing, though co-opetive relationship between IBM and FileNET, any opportunities for “synergies” would have existed for FileNET partners already. The sales opportunity is unlikely to be any different, nor are new customers suddenly going to buy into these areas. Enterprise content management (ECM) and business process management (BPM) are notoriously hard to articulate and sell, and rightly so as they are enabling technologies which offer little value out of the box, without services. Automate a poor process, or manage duff information and you succeed only in speeding up failure.
Concerning the pitch we were given about the merger, I just didn’t buy the idea that there were two kinds of business process – process oriented and content-oriented. The idea of a process that isn’t process-oriented is, frankly, laughable; a process operating without content is only slightly less of an oxymoron. Meanwhile, the idea of offering a stronger, more tightly integrated portfolio just left me thinking I’d heard it all before – around the time of the Venetica acquisition, for example (it is perhaps no coincidence that Venetica’s integration capabilities were OEM’ed by FileNET). Assuming the goal is to end up with a single product set for ECM and BPM, lets not underestimate the integration challenges – it's taken EMC several years to align its software products following the acquisitions of Documentum and Legato, for example. Once IBM achieves that what choices do its customers have other than an expensive migration, if they are to be expected to make use of the integrated platform? At this stage this is a
rhetorical question, but valid nonetheless.
On the upside, I hope, is that the business pressures around compliance, better reporting, integrated views on information and so on are actually leading to a growing market for ECM and BPM. Here, IBM has plenty to gain, in terms of expanding its services offering (consultancy is a must). plugging a few technological gaps as highlighted above, and also (like last week's
Webify acquisition) giving the company more of a business-led sales strategy, particularly for BPM as FileNet has tended to have a stronger vertical proposition in this space. But all of this brings things back to the financial benefits to IBM, which may or may not be simultaneous with an increase of value to IBM and FileNET’s customers.
If the main beneficiary of this acquisition is IBM, and it is my belief that it is, this has to be seen as a consolidation move. If IBM believes that the ECM/BPM market is set for a period of significant ongoing growth, it is highly plausible that buying FileNET is the most cost-effective way of making sure it takes a leading share in that market. Good luck to IBM and its shareholders, we only hope they don’t make their customers pay more than they have to.
