Dell, EMC, and Poor Documentum

Even with our fights, I never wanted it to come to thisI haven’t blogged in a while for various reasons that I won’t get into in this post but recent news demands that I share some thoughts. It seems that barring a better offer, Dell is going to buy EMC for a LOT of money.

Now the numbers don’t really matter to me as I don’t hold stock in any of the players except perhaps in some retirement mutual fund to which I never really pay attention. What I care about is the fate of the Enterprise Content Division (ECD), the home of Documentum.

This Matters Why?

I’ve been advising a lot of companies about how to implement various Enterprise Content Management (ECM) platforms of late. None of them have been Documentum. This is likely as much a bit of chance mixed in with the software many of my consulting partners tend to sell. I have been coming in post-sale to help companies make sure that they don’t go through this same process in 3-4 years.

If Documentum vanished it wouldn’t hurt my income but it would hurt me. I poured a lot of years into the ecosystem as a Documentum partner and rabble-rouser. When I saw the deal leaking into the news last week I paid attention. Now that something is definitely happening I can stay silent no longer.

Different World

When EMC bought Documentum it was the biggest ECM buy by an IT shop ever. IT bought all this ECM software and then couldn’t figure out why it wasn’t just taking off. EMC eventually understood that it was the nature of the technology and not Documentum specific so they didn’t keep buying more content management vendors.

In this environment Documentum languished. It was at times ignored, yelled at, and written off. There were times that they tried to bring Documentum into the bigger EMC picture but it never really worked.

This time EMC is being bought by Dell who wants to strengthen its storage and security offerings. EMC is perfect for Dell with a strong storage portfolio and RSA to secure it all. Virginia Backaitis offers an interesting take on the combined analytics assets that show a potential future for Pivotal. Documentum is nowhere to be seen on any analyst’s radar as a positive component of the deal.

As a result, this is either the best or worst thing that could ever happen to Documentum.

Scenario 1: Salvation

Dell doesn’t care about the ECD. Documentum is likely something that was mentioned in a laundry list of Wait, that’s not all!’ items that Dell doesn’t care about. As each item was listed they were probably asking themselves how they could turn those assets into cash as a chunk of this deal was financed with new debt. That debt will likely want to be dealt with quickly to provide more flexibility for Dell in the future.

An easy way to raise some money is to sell of parts of EMC that aren’t desired anymore. One of those parts is likely the ECD. Documentum could be sold to private investors who actually want to invest what is necessary to right the ship. The crew at Documentum have been trying to move to the cloud for years, ever since the Next Generations Information Server (NGIS) was announced years ago. While that effort has not seemed to bear fruit there are continuing efforts to move to the cloud.

New ownership with a priority to get this done would enable Documentum to at least complete the transition. Whether or not it is too late to successfully compete is up to the market. It isn’t dominated by a set of players yet but there are a lot of biases built into the market at this point that would work against Documentum. A strong engineering push coupled with a solid marketing effort could be enough but the margin of error is small and shrinking every day.

But if it worked…

Scenario 2: Death Spiral

The other scenario is where either Dell or someone to whom they sell the ECD decides it is time to milk the customer base for revenue. This would trim overhead and focus on keeping customers on the platform to maximize cash-flow. If Dell keeps the ECD, this is the most likely reason.

If you see Open Text or CA buy the ECD, start lighting the funeral pyres because Documentum would be officially brain dead and waiting for the machines to be turned off.

What Will It Be?

If Dell decides they need cash quickly, expect them to line-up a deal that they will execute as soon as the deal is finalized. It may even happen before the deal is finalized if there is high-confidence that the last hurdles to the deal have been cleared .

If sold then it will depend on the intent on the buyer. Private equity is the best bet and I’d keep an eye out for activity along those fronts.

Given that the deal may not be finalized for over 6 months I wouldn’t dismiss the cash cow option, especially if interest in buying doesn’t happen quickly. Converting into a more steady revenue stream is something that could be done quickly and would generate cash in the short-term and increase the value for any company that wanted to buy Documentum for the revenue.

This is a wait-and-see game but if I was a betting man I’d start looking for wood to use to build that pyre.

Reports from the Content Management Frontier

The following are excerpts from an explorer hiking the Gartner Hype Cycle for Enterprise Content Management (ECM) technologies.

Day 1, Reached the Peak

Today we finally reached the Peak of Inflated Expectations. The view is simply amazing. This technology is going to revolutionize everything. Everyone is excited and  teaming up with their friends. Documentum just got some great new equipment from EMC. I suspect that those two will be very happy together for a long time.

Life is good.

Day 2, Getting Crowded

Apparently everyone is excited and more and more people are joining us on the Peak. While the view is still lovely, they ground is starting to get muddy from all the people trampling everywhere.

Stellent showed up with their new pal Oracle. Everyone thinks they are a bunch of posers but they are mostly keeping quiet because Oracle has a bit of a temper.

There seems to be a new noise. I’m going to go check it out.

Day 4, Ooops

That noise from the other day? That was the beginning of an avalanche that carried the entire group off of the Peak. According to our maps we are in the Trough of Disillusionment. It is hard to validate because nobody can get a clear signal anymore. It is a bit gloomy but some people seem to think we can get out.

OMG! Open Text ate Hummingbird while we were sleeping! They must be panicking already.

Tensions are very high.

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Box and Dropbox Race for Long-Term Relevancy

The Spanish InquisitionIn case you missed it, Dropbox has followed the path blazed by Box and has integrated with Microsoft Office. While Box integrated on the desktop, Dropbox is integrating with the Office mobile apps and plans to extend it to the Online Office versions. This is a no-brainer move as anything that simplifies people’s ability to work with content within Dropbox helps keep people using both tools.

On top of all this, Microsoft announced that their Android and iOS versions of Office will now be free. Microsoft is clearly trying to maintain their edge on the office productivity world and Dropbox is aiming to stay in front of people’s eyeballs.

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EMC’s Faulty Perception of Content Management

How I Met Your Mother Spit TakeWhile at the Monktoberfest last week, I had the luck to run into some people from EMC.  Not just any folk from EMC, they were from “core”, the storage side of the business. After convincing them that I knew enough about EMC to have a real conversation, we discussed Documentum and the Information Intelligence Group (IIG) where Documentum sits.

The talk quickly turned to why Documentum did not live up to the potential they had when EMC acquired them. While I have many opinions, I thought I’d get their opinion. It was a little surprising.

They didn’t adopt Virtual fast enough.

There have been a lot of missteps over the years, but that wasn’t one of them. I was selling Documentum during the rise of VMWare and I can state this for a fact, I NEVER lost a deal because Documentum didn’t support virtual machines.

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Six Years of Pie

You may not know it looking at my last two months of activity, or lack of it, but I’ve been writing, tweeting, and generally being loudly opinionated for the past six years. What started as just a way to vent my opinion over the direction of EMC/Documentum has become a platform for trying to push for change in the industry.

Thing is, the change is here. This June I’m going to pull my best Howard Beale and I’m going lay out why things are changing and why we can’t act as if it isn’t or that we have control.

But before all that, let’s review what has come before.

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Looking at the Legacy Content Management Vendors

In my predictions for 2013, I made the following prediction on the future of the traditional “leaders” in the Content Management space.

First Major On-Premises Traditional ECM Vendor will become Obsolete: I know, obvious right? Statistically speaking, one of those vendors will likely still be a market leader in 10 years. In 2013, we’ll see our next elimination for that spot (though they will be in denial). To make this easier to measure, I’ll name the contenders: EMC, IBM, Open Text, and Oracle. Microsoft falls into this category but it won’t be them, at least not in 2013.

Aside from simple statistical probability, I saw a few things this fall that led to this prediction.

  1. Talked to people attending the IBM Information OnDemand while I was in Las Vegas.
  2. Attended the Open Text conference in Orlando.
  3. Watched the news out of Momentum Europe.
  4. Kept my eyes open.

What I’ve seen is a scary amount of consistency among the players.

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Box, Syncplicity, and EMC

imageThis post has been a long time coming but it really took me a while to come to grips with all the implications of the Synplicity acquisition, and there are many. (Plus there is this whole day-job thing with AIIM). There are really three angles to take when looking at the acquisition.

  1. What this does for EMC’s Content Management cloud strategy?
  2. What this means for EMC’s technology stack?
  3. The impact on the nascent cloud-based Content Management space?

Without further adieu, let’s dive in and see what we can figure out.

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