Is it growth or consolidation?

Open Text's Kirk Roberts adds, ""For us, we see nothing but silver linings in IBM's plans. If IBM's deal gets done, we are firmly established as the only large-scale, global ECM company with complete independence from hardware platforms. This, combined with partnerships we've been building with SAP, Microsoft and Oracle, puts us in a very strong and unique competitive position to assist customers in managing key content and processes across their enterprises."

Surely IBM will have the typical problems that major acquisitions bring, such as those that FileNet experienced when it acquired Watermark, Saros and Greenbar in rapid succession over a decade ago: competition between rival development teams, coordination of geographically dispersed support teams, retaining customer loyalty, keeping customers and resellers through the transition, and consolidating product lines.

Having FileNet on the front end capturing and managing document images and content with IBM operating a Content Manager DB2 database on the backend will bring about not only technological challenges but also bring in to question the efficiency of such an architecture. Integrated, streamlined architectures developed holistically like those from smaller ECM providers--particularly those on Microsoft server platforms—will be more efficient, faster and less costly to manage.

And that brings into question another element of the deal that IBM is surely counting on: those lucrative maintenance revenues that FileNet collects from its aging installed base. Increasingly, those customers are going to make the calculation that to continue paying the high costs is more painful than making a conversion to a more advanced and nimble architecture from a competitive offering. Especially if they are Microsoft shops. So, just as FileNet did not fully capitalize on what it thought it was acquiring with the Watermark, Saros and Greenbar acquisitions by the time the dust cleared, IBM may find dissatisfied FileNet customers peeling off and choosing other options--with the current lower-cost or even open source alternatives in the ECM marketplace.

IBM and FileNet competitors will be well advised to attack the FileNet installed based to harvest alienated customers in the uncertain period of the transition. Ultimately, FileNet customers will be the winners as the planned IBM acquisition of FileNet will bring about new negotiating leverage and make a conversion to other, lower-cost alternatives more attractive.