FileNet and Hummingbird lose independence

By Graeme Burton

Enterprise content management (ECM) software suppliers FileNet and Hummingbird have both been acquired by rivals within the space of a few days.

Continuing consolidation in the ECM software industry saw FileNet acquired by IT industry giant IBM in a surprise $1.5bn deal on 10 August. In the summer tug-of-war over Hummingbird, meanwhile, Open Text emerged as the victor, beating Symphony Technology’s bid for the company with an improved offer that was accepted by Hummingbird’s board.

Open Text’s purchase of Hummingbird is widely viewed as an acquisition of customers and market share – rather than technological capability – and is likely to usher in a period of uncertainty for many users. An avid acquirer of rival ECM companies over the last three years, analysts say Open Text will likely seek to cut costs by minimising the number of software platforms it supports. “RedDot customers will probably not be affected too much, but other Hummingbird customers should buckle up for a potentially bumpy ride,” wrote CMS Watch analyst Tony Byrne in a recent weblog.

However, Open Text CEO John Shackleton was keen to provide reassurance in a letter to customers, particularly of Hummingbird’s flagship Enterprise product. “We believe Hummingbird Enterprise will be a valuable addition to the Open Text product portfolio and we intend to continue to innovate and further develop the combined portfolio,” he wrote.

IBM’s acquisition of FileNet came as a shock to many in the software industry, given that IBM already owns technology that competes against FileNet in both its core areas – ECM and business process management (BPM).

Despite the overlap, IBM insists that this is a technology-led acquisition and that FileNet’s software will slot into IBM’s wider strategy for helping customers develop the service-oriented architecture (SOA), a means of delivering software as a network of modular services.

That view is supported by Forrester Research senior analyst Barry Murphy.

In particular, he believes that FileNet’s BPM software will sit comfortably alongside IBM’s. He says that whereas IBM’s BPM software focuses on moving data around between applications, FileNet’s is more document-oriented, which reflects its heritage in imaging and workflow software. This makes it more appealing for business users who want to configure and re-configure organisational processes.

Jon Pyke, the former CEO of workflow software vendor Staffware and now head of The Process Factory and chair of the Workflow Management Coalition, agrees. “I think this move confirms that BPM is not just about system-to-system SOA,” says Pyke. Content and the movement of that content between applications will become more and more important, he believes, to the business applications of the future.

Upon completion of the deal, IBM plans to integrate FileNet with its content management business, which falls under the auspices of Information Management general manager Ambuj Goyal. The company has also promised to continue developing FileNet’s ECM platform alongside its own.

Although analysts had always suggested that an acquisition of FileNet by one of its larger rivals – such as Oracle – was a likelihood, the deal still came as a surprise, especially after its long-running CEO Lee Roberts had spelt out the organisation’s long-term strategy at its user conference only a month before.