Open Text Social Framework
November 21, 2011
The dips and glides of the enterprise and content processing sectors fascinate me. I noticed that Open Text, based in Waterloo, Ontario, is on track to remain a $1.0 billion company. As I write this, the company’s stock is nosing toward $60 a share. With Hewlett Packard’s acquisition of Autonomy, Open Text inherits the title of a “billion dollar search and content processing company.”
In the 1990s, I tracked Open Text. As the company evolved into a collection of properties, I shifted to companies which were sticking closer to the “findability” sector. As you probably know, the core of Open Text today sits upon technology which I associate with Dr. Tim Bray. Dr. Bray work at Digital Equipment and worked at the University of Waterloo on the New Oxford English Dictionary project. He founded Open Text Corporation, which commercialized an XML search system which I believe was used in the dictionary. Open Text created a Web index which available as the Open Text Index and then morphed into “Tuxedo,” a Web index no longer available at the link I had on the Open Text Web site. Web search is an expensive proposition, and I understand why a company like Open Text would exit the free Web search service business.
Today’s Open Text owns the SGML search technology, and the company has acquired a number of other search and content processing systems. My view is that Open Text perceived search as a good business in which to compete. With the ready availability of open source search solutions and low cost “good enough” systems, I wonder if the company’s enthusiasm for search and retrieval has dwindled.
Open Text has a number of search technologies. For example, Open Text acquired Information Dimension in 1998. Information Dimensions’ BASIS search system was database management system. My colleague Howard Flank and I used BASIS to build the original Bellcore MARS billing system on the platform shortly after the AT&T breakup was announced. Open Text also acquired Fulcrum, a Microsoft centric search and retrieval system based in Ottawa, Ontario. I remember that one could use Fulcrum to search Siebel Systems content. Hummingbird was acquired by Open Text in 2006. Open Text used the Fulcrum technology in its Hummingbird Search Server product, now a connectivity solution. Open Text also acquired BRS Search (Bibliographic Retrieval Services) in 2001. As you know, BRS was a competitor to Dialog Information Services. BRS was a variant of IBM STAIRS technology, ran on IBM mainframe systems, and could handle sophisticated queries. I recall hearing that BRS technology was used in the Open Text LiveLink product. I think of LiveLink as an early version of SharePoint, blending content, collaboration, and search in a single system.
In 2010, Open Text purchased the Nstein content processing firm, which was based in Montréal, Québec. I think one of my team contacted Nstein to profile them for one of my reports. The firm was too busy. Then in 2009, an Nstein executive scheduled an appointment with me in London, UK, and “forgot” the meeting. Nifty.
Open Text has a basket of technologies to use to solve prospect and client problems. Is the company a model for other search and content processing firms trying to generate top line growth in a tough economic setting?
Since Dr. Bray’s departure, Open Text has been rolling up search and content processing firms. Much of the company’s growth has been fueled by acquisitions and cross selling, not raw innovation. In fact, Open Text has a bewildering array of content management technologies, including PS Software (records management), Gauss (Web content management systems), RedDot (Web content management systems with an embedded Autonomy search functionality), IXOS AG (SAP-centric archiving systems), Captaris (document capture systems which gave Open Text Brainware and ZyLAB functionality), Spicer (file viewing technology), Vizible (an interface company), StreamServe (an enterprise publishing system vendor of direct mail and other collateral), Metastorm (business process software), weComm (mobile device software developer), and Global 360 Holding Corp. (case management solutions).
I probably skipped some, but the point is this: Open Text has lots of diverse technology. I can envision some interesting discussions among the firm’s technologists about what to use, when to use a technology, and how much funding to provide to a “chosen” component.
Is the company integrating these different solutions into one homogeneous system? In my opinion, probably a little investment at a time as big jobs are sold and implemented. The reason is that it has now morphed into a “framework vendor.” In my lingo, a “framework vendor” is an organization that goes to a prospect, finds out what’s wrong in the prospect’s information world, and proposes a solution to make the pain go away. As a result, Open Text is becoming more like an experienced solutions provider who relies on tools owned by Open Text. The approach is similar to the vision Léo Apotheker, formerly at SAP, had for Hewlett Packard. Open Text, unlike Hewlett Packard, has an appetite for moving up the value chain in terms of enterprise software and solutions.
How do these search and content processing systems related to the Open Text Social Communities announcement last month?
What did Open Text announce? According to “Open Text Delivers New Offering to Power Social Business”, the new framework “helps companies promote and drive the shift to a social business model. It accomplishes this by combining a comprehensive social framework with a set of ready-to-deploy applications for quickly building and engaging communities.”
Social Communities, according to the company:
Social Communities 8.1 provides a set of ready-to-deploy social applications for social intranet, social marketing and social workplace workloads. These are complemented by reusable and adaptable site templates with the flexibility to combine features as needed to meet specific goals, such as launching a brand, product or campaign.
The framework is, as I understand the explanation, is the Open Text ECM Suite with pre-built apps, mobile device support, analytics, and “hooks” to allow a licensee to post content from Facebook and other social systems.
The question we discussed at lunch this week was, “So what?” Three observations are in play, just keep in mind that I may change my mind without warning. I know that the About section is viewed as baloney, but it is the editorial policy for this blog.
First, Open Text, even with $1 billion in revenue and $100 million in operating income, is going to be hard pressed to invest in each of these acquisition’s proprietary technologies. I can see maintenance investment, but the type of research and development dollars that many search and content processing systems require is probably not possible. As a result, Open Text is going to have to run hard to make hay before winter comes. I can see that certain products can be orphaned or just “parked”. This may give competitors a chance to attack Open Text’s acquired customers with more up-to-date alternatives.
Second, Open Text management is going to find itself competing against some very interesting firms also focused on the enterprise. Among the companies which come to mind are the smaller, more fleet-of-foot Brainware and ZyLAB. But there are incumbents who will not want to lose significant revenue to a “partner” or a firm starting to move up the value chain. These established enterprise solution vendors include IBM, Oracle, and SAP. Finally, my understanding is that Google covets the enterprise market as well. As a result of its feistiness, Microsoft is stepping up its enterprise assault. Open Text may not be on the radar of Google, but it could step into a Google marketing assault and face the need to boost its sales and marketing spend in certain markets.
Third, Open Text seems to be faced with what I call “small fish, big pond” problem. Open Text has been an enterprise vendor for decades. The company has been able to identify niches and serve them; for example, records management for regulated business sectors. With its new social positioning, Open Text may be able to generate some increased interest from prospects who see “social” as the “next big thing.” Open Text, therefore, will have to scale and quickly. Open Text will need cash, the ability to hire social-savvy professionals, and a development program that can keep pace with the changes rippling through the “social information” sector. Open Text’s management team will have an opportunity to demonstrate that it can manage a “mini boom” in the midst of an economic downturn without eroding its margins.
As I thought about the trajectory of Open Text, I wondered, “What happened to the XML database?” Dieselpoint, a company with an XML ecommerce system, has gone what I describe as “quiet”. MarkLogic seems to be the XML vendor focused on making markup a “platform.” Has Open Text dropped the XML ball? A related question is, “Has Open Text missed the big data revolution even though the company has a number of sophisticated database technologies?”
I am curious to see if Open Text’s “social” positioning will keep the firm on the growth track. Stakeholders, the Canadian government, and fans of roll up plays are cheering for the company.
Stephen E Arnold, November 21, 2011
Sponsored by Pandia.com
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One Response to “Open Text Social Framework”
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Nice post, Stephen, but given the detailed acquisition history on display here it does seem a bit of an omission not to mention Vignette. OpenText Social Communities is a significant new release and a rebranding of what used to be called Vignette Community Applications, a unified collection of social web applications built atop OpenText (formerly Vignette, formerly Epicentric) Portal. This portal product could prove to be an interesting part of OpenText’s overall acquisition strategy, serving as a web/mobile front-end “glue” used to integrate other disparate offerings. There are some indications that OpenText sees the product in just such a strategic light, but only time will tell. Thanks for educating me on other aspects of OpenText’s history.
PS: Also, “Open Text” has renamed itself to “OpenText.” 🙂