Entries from January 2009 ↓

It might be overshadowed by the ramp-up to LegalTech, but a big project of the Sedona working group on e-discovery will be kicking off later in February, the 2009 Text Retrieval Conference (TREC) Legal Track.  For going on 18 years, TREC has been a workshop for encouraging research in information retrieval.  The three-year-old legal track is organized through the National Institute of Standards and Technology and co-coordinated by Jason Baron, director of litigation at the National Archives.

Participating teams work with a test case to evaluate the most effective search protocols for finding relevant documents in e-discovery, i.e. what finds the responsive documents best?  Concept search, expert human reviewers, Boolean keyword search using “x and y or z” or other methods?  I spoke with Jason Baron briefly about this year’s TREC, which will switch test collections from the tobacco litigation “Master Settlement Agreement” repository to the Enron collection of email and attachments.  He believes it will increase participation by reducing the need to search OCR’d documents.

Most of the participants in past years have not been vendors, but a few we know of are H5 and Clearwell Systems.  It’s certainly a worthy goal to find the most effective methods and work towards improving standards in how we approach sifting through legal documents for relevancy.  You’d think more vendors would be willing to put their tools to the test for the greater good, “walking the walk” if you will.  Instead their absence is a reminder that e-discovery is still a wild west scenario with no “standards sheriff” in town.

How likely is it that vendors will put their products to the test in an attempt to back up claims and find better methods in review and analysis of Electronically Stored Information for trial?  We hope that more of them will answer the call.  It’s a good time to prove your chops if you’re in e-discovery – anyone going to LegalTech next week will be able to attest to the dizzying number of vendors making the market ripe for consolidation, which we have already partly seen through the high volume of acquisitions in the last few years.  It remains to be seen how many of the smaller fish will still be left swimming at year end given the economic climate and fierce competition.  Proving their mettle and working toward the common good wouldn’t hurt any.

I will be at LegalTech from February 2-4 talking to vendors about their products and their own methods for finding responsive documents.  If you would like to get in touch or schedule a meeting, I can be reached here.

There seem to be two schools of thoughts at the moment on how ECM vendors will fare the tightening of IT budgets.

On the one hand, few doubt there is increased legislation and regulation headed our way on a global basis, particularly in financial services and government, and this could be a boon for ECM vendors that sell document and records management systems for compliance purposes — IBM, Open Text, EMC, HP to name a few.  Litigation related to events of the past four or five months is also likely, making the need for eDiscovery tools that can help organizations more cost effectively deal with discovery requests for electronic information more dire.  The vendors listed above, along with a host of others, certainly see growth opportunities in eDiscovery (this was a big part of Autonomy’s rationale in picking up Interwoven last week).

But on the other hand, IT spending is taking some big cuts and ECM vendors aren’t going to be immune to this.  In October, we noted data from our survey partner ChangeWave that forecast declines in ECM spending in Q4 and we’re watching some of those results come in now.

EMC’s Q4 revenue for its content management and archiving (CMA) division declined 12% year-over-year, with license revenue down 30% in the quarter.  For 2008 as a whole, EMC’s CMA division did grow 2%.  Interwoven’s Q4 revenue held up ok, with 11% revenue growth and 6% license growth; about half of this is typically Web content management revenue though, a different market from the traditional ECM and compliance-related stuff discussed above.  (There’s no way to break out IBM and Oracle’s ECM-related revenue, unfortunately).

Open Text announced its fiscal ’09 Q2 earnings yesterday, with revenue up 14% year over year to $207.7m and license revenue up 18%.  Open Text has been beating the compliance drum for awhile now (it was perhaps pushed here earlier as its initial strength was more in the realm of collaborative document management, SharePoint’s target market), and may be benefiting from that most now.  (With ongoing success in this range and high interest in compliance-related markets, we continue to ask if/when Open Text will be open to a deal itself).

Compliance/records management/eDiscovery hasn’t necessarily been the number one sales driver for most ECM vendors (except for Open Text which has tied 70% of license to “compliance” in recent quarters).  Growth in these areas will have to make up for potential shortfalls in other tried-and-trued areas of ECM — the transactional content apps for things like loan originations, account enrollment, claims processing, drug approvals and myriad other types of business-specific apps for which organizations use ECM.

These vendors are also still figuring out how to deal with SharePoint in the market.  While most have a more realistic view of what SharePoint is and isn’t in the market at this point (it is increasingly a standard layer for basic content services but it’s not full ECM for compliance or transactional apps, at least not yet) and have developed some nuanced strategies for co-opetition with Microsoft, there’s still little doubt Microsoft has taken some ECM business that previously went to bigger, more sophisticated document management products simply because there weren’t other alternatives.  A new version of SharePoint expected as part of Office 14 late this year / early next could also see a lot of customers pushing off decisions in this difficult 2009 to “wait and see” what SharePoint.next has to offer.

If you missed it, there was an article from CNNMoney earlier this week on Open Text and spending in this sector.

I have been somewhat remiss in promoting this, but I’m presenting a webinar tomorrow, Wednesday about our recently published report on eDiscovery and eDisclosure.

We’ll be going over some of the key findings of the report including our mapping of vendors to stages in the EDRM process.

Registration is here.

Date: January 28, 2009

Time: 9am PT / 12pm ET / 5pm UK

More information on the report itself is here and you can buy it as a one-off report here.

So it appears that John Markus Lervik has left Microsoft – he’s now a (Former) Corporate Vice President there, despite the fact that Microsoft claimed to be concentrating its search efforts in his native Norway.

When I saw the news over the weekend I took one look at the date and recalled that the deal to buy FAST was in early January 2008 and thus a year had just past and such 12 month lock-ups are customary, and that FASTForward09 is coming up, starting February 9 and so Microsoft wanted a clean break before that, I’m sure. Nobody’s talking right now, so it’s hard to know all the ins and outs, but that’s why I suspect it’s happened now, rather than earlier or later.

Anyway, I agree with Dave Kellog’s assessment of why what happened, happened.

John Markus never seemed comfortable to me being a Microsoft executive. Bjorn Olstad probably isn’t that comfortable with it either, but he is undoubtedly a very smart engineering leader and product developer, and in a role where he doesn’t need to sing the company song three times before breakfast and I suspect he’d like to stay that way, rather than get involved in being a figurehead for FAST within Microsoft.

We look forward to hearing just what Microsoft is doing with FAST in early February, because over the last year or so, we haven’t heard anything more than we heard at FASTForward last year.

Release is here. Autonomy is paying $775m cash, including a new loan.

Main drivers as we see it right now having just listened to the call:

• eDiscovery and increasingly regulated environment.
• Access to Interwoven’s rich customer base in the legal sector.
• Adding automation to the content management process – think auto-tagging rather than manual tagging.
• FRCP changes in 2006 forced companies to consider all their data and you can’ manage all your data manually.
• Autonomy has changed its mind about content management for the reasons above.
• Reward for Interwoven’s turnaround and refocusing efforts including in eDiscovery via the Discovery Mining acquisition.
• Leaves other standalone content management players in an even worse position (e.g. Vignette).
• Autonomy acquisition engine gets some more fuel; it’s looking more & more like a mini-Oracle every day, in all senses of that phrase.

More considered and deep analysis coming to 451 customers later today.

In a surprisingly chilly Orlando, a surprisingly lively Lotusphere is going on this week.  IBM claims attendance is up 2% over a well attended event last year and in an environment when travel to events like this one is down.  That’s a good thing for IBM and the Lotus group, though Lotus loyalists are a fervent bunch and Lotusphere is an annual ritual for many (buttons like the one below, many with numbers much higher than this one, are worn proudly).

A perennial question for IBM is how to grow the market for the Lotus brand outside of this loyal group.  I agree with Mike Gotta from the Burton Group when he says in his pre-Lotusphere post this year:

“IBM needs a message that resonates beyond the “Notes faithful” that attend Lotusphere each year.”

Did I hear that message at Lotusphere?  I think it’s most accurate to say I heard some good attempts, some of which may well pan out but it’s too early to tell.

The most notable of these were IBM’s announcements around LotusLive (formerly known as Project Bluehouse).  LotusLive is a SaaS offering combining the web conferencing capabilities IBM got when it acquired WebDialogs in 2007 with file sharing and some of the social networking capabilities in Lotus Connections.  There’s also the inlusion of “hosted Notes” but the email components of LotusLive are likely to change and expand (especially given IBM’s acquisition of email provider Outblaze last week).

The main problem with LotusLive is that IBM is attempting to position it for two markets simultaneously, a tricky proposition.  On the one hand, it wants LotusLive to appeal to the SMB market, a sector that is definitely “beyond the Notes faithful” and a new market for Lotus.  But it is also positioning LotusLive as an extended collaboration environment for existing enterprise customers that want to collaborate with partners and clients in a secure, private, external environment.  Now these are both real and valid market opportunities, but they are different markets with different requirements and different competitors.  We’ve commented before on the difficulty of selling social software for both internal and external use cases and this will be compounded by the fact that Lotus is not a well established brand in the SMB market.

IBM has also continued to claim traction in the social software market and Lotus Connections is a strong product. The announced 2.5 release will add more capabilities, most notably the wiki that has been lacking to date, and Lotus clearly leads Microsoft in this area.   So far though, Connections seems to be having the biggest impact in the Notes installed base — that’s a good thing, as it’s one more reason for that Notes base to stay on Notes, but it doesn’t necessarily do much to attract new customers to Lotus.  We consistently hear that Lotus Connections is a strong competitor in Notes shops, but seen little elsewhere.

There could be some opportunity to sell Connections coupled with WebSphere Portal for use cases other than classic internal collaboration.  IBM claims adoption outside of the Notes installed base when Connections is tied to Portal but as noted earlier, external “social media” or community software is a fairly different market and one that IBM doesn’t seem to be after all that aggressively at the moment.

Also of note were demos of the latest enhancements to Lotus SameTime, showing that IBM continues to do a good job innovating in the area of on-premise software for real-time communications, another way that it can capture new customers.

The other major announcements at Lotusphere — Alloy, the jointly-developed SAP-Notes integration and extended integration with RIM’s BlackBerry devices — are mostly targeted at that loyal installed base of large customers.  Again, good in terms of keeping that installed base on board and happy, not to mention upselling them additional software but not exactly targeted at bringing new customers to the Lotus brand.

After my post earlier this week on whether or not “ECM” will continue as a useful and valid market category, it was interesting to attend an analyst day held yesterday by Open Text here in Boston.  Open Text is a poster child for ECM with nearly all of its business coming from content-related products — document management, records management, archiving, WCM, capture/delivery & collab.

As the largest independent in ECM, it’s certainly in Open Text’s best interest to pursue and preserve ECM as a market category and it is doing so.  “ECM” is featured prominently in the company’s basic About text, it tags itself “The Content Experts” and last year renamed its long-standing user conference from LiveLinkUp (a reference to its flagship Livelink product) to ContentWorld.  Execs also claimed at the event that they see more customers coming around to the idea of enterprise content management — not in a way that is driven by a single repository or even suite, but as a set of practices and processes that must be in place for compliance and to mitigate risk and cost.

I think what remains to be seen is whether these compliance and risk-related content management practices eventually fall under an ECM bucket from a market perspective.  Certainly not all vendors that sell pieces of technology in support of these practices (like archiving or records management) sell themselves as ECM, since ECM carries with it the connotation of transactional document management apps.

As a clear-cut ECM vendor, Open Text wants to compete in a clear-cut ECM market, even if competition is becoming broader and more varied.  Is it big enough to define the category if other, larger vendors meld archiving, records management, eDiscovery and so forth into ‘information governance’ or some other, governance-related, non-transactional sector?  Other independents like Interwoven and Hyland Software are a good deal smaller than Open Text and don’t talk as much about ECM as they used to.  They’re choosing instead in most case to focus on their areas of strength (e.g., WCM or document management) and staying out of the line of fire of larger ECM competitors like IBM, EMC, Oracle and Microsoft.  And I think these larger vendors are somewhat conflicted as to whether or not they want to hang an ECM banner on a broader collection of products.

One other note about Open Text’s analyst day.  In contrast to events like this one held by other vendors, where, as we’ve noted before, it’s often difficult to miss the executive turnover from the prior year’s event, Open Text is refreshingly consistent.  It’s the same folks year after year, the titles shift around sometimes but the exec team appears to see little change.  One exception to that this year was the appearance of Lubor Ptacek, long of EMC Documentum, who turned up as a VP of product marketing.

We wouldn’t want to be left out of the new year preview craze and we do publish fairly lengthy end-of-year reviews and year-ahead previews, along with an M&A Outlook, for 451 clients — the full text of the information management reports are here and here and the M&A Outlook for Software starts here (451 Group client log in required for these).

One of my thoughts in our 2009 preview on information management is the title of this post.

I don’t think ECM (enterprise content management) has ever been a particularly well defined market.  It started out earlier in this decade as an idea, a way to talk about the need to rationalize repositories and content apps.  Then it became a market category, a way to talk about content management vendors (mostly those focused on document management really) whether there was really an “enterprise” component to deployments or not.

I think the “ECM” moniker may be nearing the end of its usefulness now (if it was ever apt or useful in the first place).  WCM (web content management) has already splintered off as it became clear that web content is really not just another type of content to be managed by a central repository.  Today WCM is more about online marketing and often ties at least as much to marketing automation and CRM products as it does to other document management apps in an enterprise.

Other “ECM” vendors are focused on TCM (transactional content management), the business process apps (claims processing, loan origination and so forth) that have been the bread and butter for ECM vendors like EMC Documentum and IBM FileNet for years.  We’re seeing more sophistication here, more ties to enterprise business apps (e.g., HR, financial) and more attempts at end-to-end offerings that include capture and document output/presentment.

The other, perhaps bigger, trend for the year ahead is the focus on ‘information governance’ (the IG in the title above) the term many vendors are applying to efforts and product lines aimed at proactive information  management for compliance and eDiscovery purposes.  Information governance from a product perspective generally includes archiving (mostly email), records/retention management and eDiscovery tools.  Here we find ECM vendors like EMC, IBM and Open Text, as well as CA, Symantec, Autonomy and others that have no stake in “ECM” of the TCM variety at all.

What do we mean when we say “ECM” these days?  Vendors like Autonomy and Symantec don’t generally claim to be in the ECM business, but yet they will be increasingly competing with the likes of IBM FileNet, EMC and Open Text for ‘information governance’ business.  It will be interesting to watch how the competitive dynamics (and nomenclature) shakes out in the year ahead.