TORONTO (10/21/2003) - Canadian enterprise content management (ECM) solution builder Open Text Corp. on Tuesday announced a merger with German ECM provider IXOS Software AG, whereby IXOS will become a wholly owned subsidiary of Open Text and will act as the European division of the company.
According to Waterloo, Ont.-based Open Text, the business combination brings two separate ends of the ECM market together to form the world's largest pure-play ECM provider.
Open Text has historically operated in the people management, collaboration and content management side of the equation, explained David Glazer, vice-president of product management for Open Text in San Mateo, Calif. The company initially began life as a mechanism to connect people to information by providing the tools to manage content created through collaboration.
IXOS' heritage has been focused on the archiving and the long-term resting-place aspect of content as the information becomes storage.
"You put these together and you have the entire information life cycle covered," Glazer said. "Any piece of unstructured data that anyone in the organization touches from womb to tomb...all of that can be unified into one enterprise content management system. You couldn't have designed a better global leader in ECM than by taking these two pieces and putting them together."
Under the business combination agreement, Open Text's North American division will focus primarily on the collaboration and knowledge management offerings, while the European division, based in Munich, will concentrate on content management and archiving capabilities.
Vendor consolidation has become a strong trend as of late across the ECM spectrum -- most recently EMC Corp.'s acquisition of ECM provider Documentum Inc.
In essence, Open Text's merger with IXOS puts the company in direct competition with the likes of EMC and IBM Corp. However, despite the economies of scale, Glazer is confident Open Text will not go the way of the Dodo.
"We are seeing a customer push and pull. The...push is as people recognize how critical ECM is to their IT and operational plans, they know that cannot purchase (solutions) from a hodgepodge of vendors or from small vendors," he said. "The pull that we see is as customer realize that ECM...really is an enterprise capability, they recognize the value in one-stop shopping."
This recognition may indeed be the key to survival for the "worlds largest ECM vendor," according to Nick Wilkoff, senior analyst with Cambridge, Mass.-based Forrester Research Inc. He explained that the combined entity is definitely designed to go after the large vendors and will help Open Text compete as more of an enterprise-scale content management vendor.
"I think for a while, companies will be continuing to look for the best-of-breed, pure-play vendors in this market," Wilkoff said. "In a three- to four-year period, I think it's pretty safe to say that the very large vendors, the software giants, will take a leadership role in this market. Still, I think there will be a little bit of room for these pure-plays and Open Text, with this additional functionality may indeed be one of those."
The Open Text-IXOS deal is expected to be completed within the next 90 to 120 days.