OpenText: Search to Teaching Is Not the Deal about Selling Services?
September 8, 2011
Another data management, search, collaboration vendor does the “we are in a new business” quick step. Searching with the Stars could be a TV sensation because there are more twists, dips, and slides in the search and content ballroom than in an Arthur Murray Advanced Beginners’ class.
Navigate to “Open Text acquires Peterborough’s Operitel”. The news is that one Canadian firm snapped up another Canadian outfit. What makes this interesting is that I was able to see some weak-force synergy between Nstein (sort of indexing and sort of data management) and OpenText, owner of lots of search, content processing, and collaboration stuff plus an SGML database and the BASIS system. But the Operitel buy has me doing some speculative thinking.
Here’s the passage which caught my attention:
Operitel’s flagship LearnFlex product is built on Microsoft Corp.’s .NET platform and is a top tier e-learning reseller for the Windows maker. Open Text also has a long standing partnership with Redmond, Wash.-based Microsoft.
I see more Microsoft credibility and a different way to sell services. OpenText strikes me as a company with a loosely or mostly non integrated line up of products. The future looks to be charging into the SharePoint sector, riding a horse called “eLearning.”
In today’s business climate, organic growth seems to be tough to achieve even with RedDot and a fruit basket filled with other technologies. (What happened to OpenText’s collaboration product? What happened to the legal workflow business? I just don’t know.) So how does a company which some Canadians at Industry Canada see as one of the country’s most important software companies grow? Here’s the answer:
Open Text’s growth-by-acquisition strategy has recently won accolades among the analyst community. The company purchased Maryland-based Metastorm Inc. for US$182-million, Texas-based Global 360 Holding Corp. for US$260-million and U.K.-based WeComm Ltd. for an undisclosed amount all in the past six months.
My hunch is that OpenText may want to find a buyer. Acquisitions seem to be a heck of a lot easier to complete than landing a major new account. I am not the only person thinking that the business of OpenText is cashing out. Point your browser at “Amid Takeover Fever, Open Text Looks Like a Bargain.” Here’s a key point in my opinion:
Open Text shares have climbed about 20 per cent this year, an increase that would pale in comparison to what would happen if a potential buyer emerged offering a premium similar to what HP has given Autonomy.
So we see a big payday for Autonomy has triggered a sympathetic response at the Globe & Mail, among “analysts”, and I am pretty sure among some OpenText stakeholders.
Several observations:
First, bankers think mostly about their commissions and fees. Bankers don’t think so much about other aspects of a deal. If there is a buck to be made from a company with a burlap sack of individual, solutions, and services, the bankers will go for it. Owning a new Porsche takes the edge off the winter.
Second, competitors have learned that other companies are a far greater threat than OpenText. A services firm can snag some revenue, but other vendors have been winning the big deals. The OpenText strategy has not generated the top line revenue growth and profit that a handful of other companies in search and content processing have achieved. So the roll up and services play looks like a way to add some zip to the burlap bag’s contents.
Third, customers have learned that OpenText does not move with the agility of some other firms. I would not use the word “glacial,” but “stately” seems appropriate. If you know someone with the RedDot system, you may be able to relate to the notion of rapid bug fixes and point releases. By the way, RedDot used to install an Autonomy stub as the default search engine. I find this interesting because OpenText owns BRS search, Fulcrum (yikes!), and the original Tim Bray SGML data management and search system. (Has SGML and XML come and gone?)
I am not willing to go out on a limb about a potential sale of OpenText, but I think that the notion of eLearning is interesting. Will OpenText shift its focus back to collaboration and document management much as Coveo flipped from search to mobile search to customer support and then back to search again. Canadian search and content processing vendors are interesting. Strike up the music. Another fast dance is beginning. Grab your partner. Search to services up next.
Stephen E Arnold, September 9, 2011
Sponsored by Pandia.com, publishers of The New Landscape of Enterprise Search
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