Hindsight on Documentum's Content Management Leadership; Foresight on EMC's Direction

It’s becoming clear now: Documentum has outmaneuvered its competitors by acknowledging the long-term reality of the enterprise software market, aggressively leading the market first by acquiring and then by seeking to be acquired. Now, it’s new owner EMC that has a less clear strategy.

The Bottom Line: EMC’s acquisition of Documentum leaves other vendors between a rock (infrastructure) and a hard place (the desktop).

What It Means: The database vendors, most prominently IBM and Oracle, constitute the rock, encroaching gradually on the content management market through support for unstructured information--the storing, versioning, and tracking that are at the core of content management systems.

Having felt this pressure for some time, many of the document and content management providers have been groping into portals and collaboration--apparently with a view toward another analyst firm’s notion of the “Smart Enterprise Suite (SES).” In light of Microsoft’s direction with the Office System just released this week (no coincidence on the timing of the EMC­–Documentum acquisition), this direction was just plain stupid for the majority of vendors. At least they won’t have to change the acronym.

The brilliance of Documentum was that it led the market down this fruitless path, driving the category into a direction which most of the other vendors couldn’t follow. The purchase of eRoom was a head fake. Now it’s clear that Documentum was deliberate in shaping the market and then shopping itself around, acknowledging that in a few years the enterprise will only support a few vendors as it sells itself at the height of its momentum as a stand-alone vendor.

This is not to say that it’s at the height of its potential as part of EMC. If EMC manages this well, Documentum can outsell its traditional competitors on price and its new competitors--Microsoft, IBM, and Oracle--on functionality. While plenty of room remains for differentiation in content management technology, EMC–Documentum should be able to price it as a commodity and sell it at a very high volume.

Less clear is how EMC will now shape itself. So far, the marketing message is a hardware and software platform for “Information Lifecycle Management.” Presumably, “information” represents a combination of structured data and unstructured content. There’s lots of nuances here, but the point is that EMC manages storage for it all. But while EMC has been long on the storage and archiving back end of structured information, it has not acted as the database or at higher levels in the course of the information lifecycle. Meanwhile, the Documentum acquisition means that EMC operates not only at the database level as the organizer of content (considering Documentum’s core role as repository for unstructured information), but also in the create and capture portions of the information lifecycle. In order to thrive, EMC will have to embrace content management as more than an opportunity to sell its storage products.

Conclusion: There’s good news and bad news for companies using or planning to use content management and document management software:

• Good news--Price relief is on its way. Microsoft, IBM, and now EMC–Documentum will push content management pricing down considerably--not only by lowering license cost but by packaging or embedding the technology in an array of related products.
• Bad news--Your chosen content management provider may not be able to survive lower deal sizes.