Open Text , ECM, and Sharepoint

Rumours of the Death of Open Text Have Been Greatly Exaggerated
Open Text, the makers of Livelink and the new owners of the ECM application formerly known as Hummingbird (now Livelink ECM - eDOCS) released their fiscal 2007 results today. To the surprise of many, profit was up, license revenue was up and debt was down. The result of all of this is an uptick of 10%+ on their share price in after hours trading.
I say ‘to the surprise of many’ because there has been a lot of speculation about the impact that SharePoint would have on incumbent ECM vendors. This very blog predicted a couple of challenging quarters for incumbent ECM vendors through the middle part of 2007 as organizations considering ECM figured out whether SharePoint was up to the task. Based on my observations here in Calgary I stand by my earlier comments about organizations delaying their purchasing decisions about ECM tools. If this is true elsewhere, as I suspect it is, how is it that Open Text has managed to post such impressive results?
My take on this is that Gartner’s predictions about the growth in the ECM market are accurate and that there is enough to go around for everyone. Microsoft reports that SharePoint revenues topped $800 million in 2007 which exceeds Open Text’s revenues by more than $200 million. My math tells me that this gives Microsoft about 28% market share in the ECM space and Open Text 20% (that’s $800 million and $595 million of the $2.9 billion that Gartner predicted). I may be wrong about how long organizations are delaying their purchasing decisions or it may be that they’re approaching their ECM solution as an “and” when it comes to SharePoint instead of an “or”. I’d appreciate any comments you, my loyal readers (both of you), might have about this one.
In terms of the overall ECM market, for companies that have already deployed a non-SharePoint ECM solution the question is how and where does SharePoint fit in (if at all in some cases). For those that have not yet deployed an ECM tool, the question is, firstly, why the heck not and second, does SharePoint give me everything I need? To me, the more important issue is to identify what problems your organization is trying to solve. It is very easy (and very common) to start talking technology before figuring out the business problem you are expecting an ECM tool to help address.
While it is difficult to distil a complex discussion about the ECM market into a single blog post, my view on this hasn’t changed. Incumbent ECM vendors will very likely continue to have success meeting the needs of organizations with a heavy regulatory requirement to manage their content and also in areas where they own mature vertical markets. SharePoint will gain ground in these areas over time as third party applications providing strong compliance management, engineering drawing management, legal matter management etc. are developed and bolted on to SharePoint. Maturing integrations between traditional ECM apps and SharePoint will also help. SharePoint clearly owns the collaborative space and will continue to dominate the desktop. It’s easy to use and viral in nature and is hard to stop once it gets a toehold in an organization. Whether this is a good thing or not is a topic for another day, but again the bottom line is to identify your business need and find the tool (or tools) that fit the bill.
I’ll give another plug to my friends at AIIM who have recognized that many organizations both inside and outside the world of ECM are asking these very questions. Their SharePoint Meets ECM sessions are scheduled for this fall and I suggest you attend if you can. For those of you in and around Calgary, I’ll be speaking more on this topic this fall as well.