It’s been about a year and a half since I offered my take on the (then) recent OpenText acquisition of Documentum. At the time, I was pretty skeptical that the buy was anything more than a land grab for OpenText to add Documentum maintenance revenue and boost short-term earnings per share. My reasoning was that the OpenText and Documentum product sets overlapped in nearly every way across all enterprise content management (ECM) capabilities. I said that there was no way to sustain two duplicate platforms, and no benefit for doing so.
Overlapping product sets were predicted to be problematic.
Based on the challenges and disincentive is maintaining duplicate platforms, I argued the acquisition would be followed by:
1. Underinvestment in terms of dollars and innovation in the Documentum product set, and
2. A push to move as many Documentum customers as possible to OpenText.
My perspective admittedly represents a limited subset of the market, based on conversations with Doculabs clients and people I speak with at industry events. You should take my analysis, nearly a year and half on, with a grain or two of salt. Yet, I would still argue that developments in the last year or so have proved me right.
Documentum users have moved from wait-and-see to get out.
In terms of what I’m seeing across many sectors (we’ll get to specific industries in a minute), the majority of current Documentum customers I have heard about or have spoken with either are 1) planning to move to a new platform or 2) in the process of doing so. And I have only heard of one Documentum customer contemplating a move to OpenText.
The exodus from Documentum won’t fully gut that customer base for some time. But in my opinion, there’s no stopping that train. That’s primarily because of the daunting complexity and cost of changing any ECM platform. Any migration process is going to be long and painful from the perspective of people, process, and technology.
Core OpenText users are staying put.
OpenText’s bread and butter traditionally has been heavy industry, such as utilities, oil and gas, manufacturing, and construction. I’m not seeing these organizations going anywhere. I believe there are three reasons why many organizations are sticking with OpenText:
- The cost and complexity of moving,
- The lack of any true apples-to-apples options to consider as a replacement platform, and
- OpenText is continuing to support and innovate its own legacy products.
To be fair, these businesses shouldn’t think about moving. OpenText provides good value and isn’t going anywhere, so leave well enough alone. Given the fact that most of these same firms also are migrating parts of their workloads to Microsoft Office 365 or are in the early days of adopting it (and dealing with all that means), they likely have bigger fish to fry in terms of their ECM programs anyway.
The bad news for OpenText is that Documentum life sciences users are leaving the platform.
Unfortunately for OpenText, the picture in the life sciences industry isn’t nearly as rosy. In my travels over the last year, every firm in this vertical with whom I’ve personally spoken is not going to stick with Documentum as their strategic, go-forward platform. (Again, see above for the biases of my perspective.) And in terms of organizations moving from Documentum to OpenText, I’ve only heard (secondhand) of one such life sciences firm doing so.
Even if you adjust for the fact my perspective is based on conversations with ECM folks at 15 of the top 30 life sciences firms in the last year—and if you assume the other 15 either are doubling down on Documentum as a go-forward platform or moving to OpenText—it still implies that OpenText has lost at least half the global life sciences companies that once were Documentum clients.
Given that firms in other industries (outside of OpenText’s core user base in heavy industry) are slowly exiting Documentum, why is life sciences moving so much more quickly?
Veeva is becoming the life sciences ECM alternative.
Here’s my take. Although the cost and complexity of moving ECM platforms in the life sciences are no lower (and are arguably higher) than in other industries, life sciences firms have a viable alternative to Documentum. That’s Veeva.
Make no mistake, Veeva actively is pursuing these customers by making its platform as attractive as possible. Veeva is accelerating its pace of product innovation and fields an impressive full-court sales effort to double down on client satisfaction after implementation.
Veeva appears to be more costly than Documentum, but total cost of ownership may tell a different story.
The one complaint I hear from life sciences folks is cost. Nearly everyone gripes about how expensive Veeva is, which makes it harder for them to replace Documentum because funding at these higher levels is a big hurdle. What I say when someone complains about Veeva’s cost is, “When you’re the only person selling water in the desert, it’s not on sale.”
But more seriously, I think if firms did a better job calculating the total cost of ownership of their Documentum platform (both sunk costs and the costs of support), they would find Veeva’s price tag more in line with what they’re going to spend anyway. I’ll leave that arithmetic for a future blog post.
More than a year later, the OpenText Documentum union isn't looking any better.
So that's my take more than a year after OpenText's Documentum acquisition. Again, remember that my perspective is biased. However, I’ve tried to be honest about my biases and adjust for them in my assessment. Even so, I think the writing’s on the wall for Documentum.
That’s a shame, because moving ECM platforms is painful, expensive, and risky no matter how you look at it. Hundreds of firms will be faced with this over the next five to seven years.
A version of this post originally appeared in CMSWire.