IBM last week entered into a agreement to acquire FileNet, in an all-cash transaction at a price of approximately $1.6 billion. According to analysts, the deal is among IBM's largest acquisitions, and the biggest since Rational acquisition in 2003, for $2.1 billion.
If confirmed, the acquisition would make IBM the market share leader in this fast-growing sector, leaving EMC recently estimated by IDC as number one in the ECM segment, to be downgraded.
Hours after the announcement, market observers were already speculating the potential of an outbid for the deal from other major content management market leaders and competitors, such as EMC, or Oracle, following the recent coup by Open Text that snatched Hummingbird with a hostile bit from first time takeover offer from Symphony Technologies just weeks earlier.
Others say that it could be aimed to interfere with Microsoft close alliance with Filenet, and even that it could spur a a frenzy of other deals in the market
Content Management Software applications have matured rapidly over the years, and have become the center of advanced enterprise deployments that extend to support business process functionality, and to satisfy more advanced and complex requirements up to data analysis.
Part of the market consolidation occurring today is the result of content management vendors trying to upgrade their technology offer to become more integrated and offer broader support for other enterprise software, and partly a strategy to gain market share with the idea of becoming the dominating vendor.
While the resulting range of offering in the top end market may benefit from expansion and upgrading, the organisational complexities arising from such large mergers are unlikely to be easily absorbed by customers.
Integrating an expanded technological offering with increased business agility is a must for the top players - and surely a challenge for companies that are becoming larger by the day
Agility is one quality that the software giants find hard to sustain.
Revenues, company size and market position are not in themselves a meaningful measure of success, - but customer retention and satisfaction, speed of response and ability to fulfil ever changing requirements are.
And large content management vendors have yet to demonstrate their ability to deliver that.