EMC treads acquisition tightrope

Summary:Buying Documentum gives EMC an opportunity to redefine content and storage

On 14 October, EMC announced an agreement to acquire Documentum in a stock transaction valued at $1.7bn (£1.01bn). The acquisition is expected to be completed in the first quarter of 2004, and upon completion, EMC will operate Documentum as a software division of EMC run by Documentum’s current management.

Although acquisitions among competitive vendors in the enterprise content management (ECM) market are not unusual (for example, Open Text and Gauss, Interwoven and iManage/MediaBin, Documentum and Bulldog/TrueArc previously), it is noteworthy that EMC’s planned acquisition of Documentum represents an infrastructure-level strategy that could be the beginning of a much larger trend, with potential impact on how enterprises seek to address content, archiving, and storage as a completely synergistic, single-vendor solution.

To be sure, storage hardware companies have been trying to increase revenue and have been commoditising margins through product differentiation via partnerships and integrated offerings on their products. It has also become apparent that storage companies are responding to customer demand for holistic approaches for managing exponentially increasing content through the enterprise and across multiple (often heterogeneous) storage systems, consolidation being the norm.

Furthermore, increasing fervour over technologies behind Sarbanes-Oxley and other regulatory compliance and organisational risks has been driving storage vendors and ECM vendors closer together, if only (thus far) through partnership. Documentum, viewed as one of a very few leaders in the ECM market (e.g., IBM, FileNet, Open Text), exemplifies the central theory behind EMC’s acquisition -- that enterprise content has emerged as an infrastructure concern for most Global 2000 and regulated organisations, on par with other mission-critical business data, such as databases, ERP, or financials.

By definition, enterprise content management is application software that provides a means to create/capture, manage/secure, store/retain/destroy, publish/distribute, search, personalise, and present/view/print any digital content (that is, pictures/images, text, reports, video, audio, transactional data, catalogue, code). These systems primarily focus on the capture, storage, retrieval, and dissemination of digital files for enterprise use and their life-cycle management.

ECM systems are generally tactical and non-discretionary, but are increasingly being viewed as more infrastructure-like than application-like, as organisations are dealing with accelerating business velocities, consolidation of redundant content management systems, regulatory and compliance issues (mandated or perceived), and business continuity. Indeed, it is the cost avoidance issues that have significantly accelerated the emergence of the ECM market. Fast processing and leveraging of information are key, but hefty fines, criminal prosecution, and litigation costs are recognised at a much higher level in most organisations.

Topics: Storage

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