Hummingbird to acquire RedDot

Enterprise-content-management (ECM) software vendor Hummingbird has acquired RedDot, a supplier of web-content-management (WCM) software, for b30.1m, with a further b4.5m to be paid at the end of the year, based on performance targets.

The two companies have been in partnership for three years, with RedDot providing WCM capability to Hummingbird Enterprise customers. An acquisition was “the next logical step” in formalising that relationship, according to Tony Heywood, Hummingbird’s senior vice president for Europe, the Middle East and Africa.

“This move is very much in line with how we see the ECM market developing. The market is consolidating because customers increasingly don’t want to buy technology for managing different kinds of content from multiple different suppliers,” he said.“That leaves all ECM software companies with a decision to make: where will they partner and acquire in order to offer customers the range of content management capabilities they require? We decided that WCM is a technology that, while widely over-hyped five years ago, is now in large demand. Owning that technology is a great step for us.”

It is a good step, too, for RedDot, which had previously attempted to dodge consolidation by building out its wider ECM capabilities. The company had added document and records management capabilities to its core WCM technologies to create RedDot xCMS (Extended Content Management System). The product, however, never gained much sales momentum and RedDot has “struggled to gain traction beyond its core WCM base”, according to James Lundy, an analyst at Gartner Group. That has left RedDot executives facing questions over the company’s long-term viability, which have now been answered.

However, the deal will present Hummingbird with some challenges. The companies have only 20 joint customers and the two systems can be integrated only at the application programming interface (API) level. Customers will expect – and should demand – closer integration of the RedDot WCM engine into Hummingbird Enterprise at the code base level, the repository level and, most importantly, at the user interface. “Hummingbird has made a mistake in execution by not aggressively moving to more tightly integrate the two companies and products up front,” says Lundy of Gartner.

However, the acquisition of RedDot does solidify Hummingbird’s ECM offering and strengthens the company’s European foothold. In the meantime, customers will need to push Hummingbird’s management for further information on how the company plans to integrate RedDot’s technology into Hummingbird Enterprise in the mid to long-term and how it plans to rationalise and complement the RedDot xCMS packages with the capabilities included in Hummingbird Enterprise – if it intends to at all.