Kneel before Zod! OpenText claims mighty Documentum from Dell

Dell-EMC unloads ECM heavyweight for $1.62bn

Dell has finally sold Documentum, one of the oldest and best-known names in storing and retrieving corporate information.

Documentum is going to the relatively small OpenText for $1.62bn, as part of Dell’s Enterprise Content Management (ECM) division.

That price compares to $1.7bn EMC paid for Documentum in 2003. Dell inherited the ECM player through its $67bn purchase of EMC, which closed last week.

Heavy lifting for OpenText came courtesy of Barclays Capital who bankrolled the deal to the tune of £1bn credit.

Compared to Dell and EMC, OpenText is a minnow – 8,600 employees versus 140,000 - but it’s developed a reputation for swallowing names in enterprise middleware market that once, briefly, glittered. Among them, Vignette big in content, portal and document management before falling sales and growing losses saw OpenText pluck it for $310m in 2009.

Documentum, however, is OpenText’s biggest prize – busting that relatively modest Vignette record.

Speculation over ECM and Documentum’s future has been hanging in the balance since April, when sources said Dell was looking to unload the business. Documentum’s revenue was falling under EMC – $599m in 2015, down from $640m the year before.

Once the main name in enterprise content management, Documentum became expensive to buy and difficult to customize. It was assailed first by open source, losing growth to competitively priced startups such as Alfresco, then to cloud because of its server-based (and expensive) on-prem licensing model.

EMC announced Project Horizon in May 2015 – ECM on Cloud Foundry, the open-source PaaS cloud that was supposed to – eventually – replace Documentum.

But that was too little, too late and with the numbers falling, and against the current competitive landscape, Documentum was never part of the mega Dell-EMC marriage to take humanity forward into its manifest desinty.

But it did represent an opportunity big enough for somebody with smaller ambitions.

OpenText makes no bones of its business. “The acquisition of Dell’s EMC ECD is consistent with OpenText’s strategy to drive growth through acquisitions, complement with organic initiatives,” the company told Wall Street on Monday.

OpenText is therefore buying Documentum for 2.7 times its 2015 revenue of $599m.

For OpenText, Documentum is the motherlode: a customer base of marquee names in government and the private sector. Importantly, it’s a “stable, loyal and diverse” customer base” – so not ready to escape en masse any time soon.

OpenText hopes to sell its existing products into those customers, putting it in new markets. ®

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