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Consolidtaion of the DRT-market
Dismissals
The market for DRT document related technologies is in a massive consolidation stage. With IBM, EMC, Open Text and FileNet four large companies have been built, which first of all will dominate the market with the mission ECM. At the consolidation a number of very different developments can be observed. On the one hand the list of the suppliers gets longer, on the other hand more and more suppliers disappear. Let us have a look at the different aspects of these market changes.
More products, more suppliers?
The list of suppliers gets longer because more and more originally separated product categories become part of DRT document related technologies or ECM enterprise content management or BPM business process management of DLM document life-cycle management or KM knowledge management or, or, or… the independent profile of the industrial sector becomes more and more blurred, document technologies increasingly become part of the IT-infrastructure and common knowledge. If you consider the classic suppliers and products from the original DMS-market of the nineties, it becomes clear that more and more products and companies have disappeared from the market. In the classic workflow there is only a handful of suppliers like Staffware or Transflow, which still offer an independent workflow engine. The situation is similar at the classic document management, here only companies like EMC/Documentum or Hummingbird can be found. The majority of classic suppliers has cleared out with suits or new products in arenas like BPM, collaboration or ECM for a long time. Only the market for electronic archiving in Germany has a surplus of too many independent products - however, is also growing thin at the moment. At the records management the consolidation has almost been completed - the classic suppliers like Tarian, TrueArc or others were taken over by larger suppliers. A similar situation can be found on the capture market. If you take the traditional market segments as a basis, the "list" has become much shorter. However, also at the companies on the "list" you can observe a striking change: a separation a) in component and sub-system suppliers, b) in suppliers with own products and corresponding services and c) suppliers with specialised or industrial sector solutions has taken place. For this reason, the companies on such lists cannot directly be compared any more.
Mergers & acquisitions are pushing the consolidation
After the period of slackness during the last years the whole market for DRT has set into motion again. The news that EMC first of all has purchased Legato and then the leading collaboration and document management company Documentum and that Open Text purchases IXOS and SER eGovernment are only two examples of the massive changes on the market. They show clearly that none of the medium-sized companies has a sufficient size to survive on its own - particularly if the large standard software suppliers decide to enter this market in a concentrated way and, for example, simply to supply the necessary components in an integrated form. As we can see presently, also the larger suppliers like FileNet, Banctec, IXOS or Documentum have these problems.
Therefore one will be able to observe two trends. The larger companies of the classic suppliers, which have already completed their portfolio through mergers & acquisitions, will continue to purchase as much as possible to achieve more importance and influence. In the past the purchase of companies predominantly served as completion of the product portfolio. In the future the winning of market shares and market segments will be more and more important. This becomes clear at OpenText which has purchased overlapping products on a massive scale with the IXOS-portfolio, the solutions of SER eGovernment and the Gauss Interprise product range. At this strategy the technology of the purchased companies will fail to make it. The large IT- and software houses, however, will keep an eye out for DRT-suppliers in order to complete their portfolios or to sell additional functionality to their already existing customers. By this, the smaller suppliers are increasingly pushed into niches. At present almost all smaller suppliers search for capital and partnerships.
The real opponents
Meanwhile the competitors of the classic DRT-suppliers are outside the original DMS-market. In the sphere of operating system near software Microsoft advances more and more with the SPS sharepoint portal server and other corresponding servers into the area of intranets of the companies in order to cover portal, content, document and process management there. SAP as classic ERP-supplier extends from data-oriented to document-oriented solutions. The currently integrated products like Records Management, Workflow and Portale are only the introduction. Oracle continuously completes its portfolio and in the meantime also attacks the classic DMS-market. From the database partner, the database of which one likes to use for the administration of the indices in a classic DMS or archives, a significant competitor is developing. With the probably most extensive ECM-portfolio IBM attacks new markets. Especially WebSphere as portal platform is extended more and more. By means of starting packages at low prices IBM wants to open up new markets. Storage-system suppliers complete their storage solutions by the corresponding administration systems like document management, see for example, EMC. Even network infrastructure firms like Cisco move slowly over the storage area attacking the field of content and document management. If these huge firms of the industrial sector have no products themselves, they will purchase. Even in case of the ECM- huge firm OpenText it is still doubtful if the critical size with 2100 employees and an expected combined sales volume of approximately 370 million US$ has been achieved, but maybe after the purchases of IXOS and SER eGovernment there is still some money left.
Price war
And what does the rest of the industrial sector do, the number of suppliers in Germany? The trend of vertical extension with industrial sector solutions still continues - from the supplier of the product to the supplier of the solution or system company. However, some seek their salvation in increasing their market share through the price. The price war, which can be currently observed, however, causes damage for everybody. With the returns the dumping suppliers cannot secure the long-term further development, not to mention, professionally deal with the great number of the "purchased" projects. Therefore the strategy does not have to be considered as sustained for the company development. The advancing measures of the large suppliers put small suppliers under pressure, especially at the "question of confidence" - Obviously the price war is the last revolt of the original DMS-industrial sector against the reform of the market for DRT- and ECM-solutions. 03/2004, Dr. Ulrich Kampffmeyer
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