Open Text cuts 130 jobs

Waterloo, Ont.-based enterprise content management (ECM) vendor Open Text on Tuesday said it is improving operational efficiency by cutting 130 jobs from IXOS Software AG, the German ECM software maker it recently acquired.

According to Open Text, the total number of cuts amount to 14 per cent of IXOS’s work force, and half of the jobs affected are in Germany.

At press time Open Text spokesperson Rich Maganini did not have any further information as to whether any Canadian IXOS jobs will be affected, but told IT World Canada that “if they are, it involves very few people …. Because of the extent of IXOS being a big player in Europe, obviously it’s going to impact German workers (more).”

The cuts, according to an Open Text statement, are part of a focus to “improve IXOS profitability and position the combined companies for future growth.”

The total restructuring charge for the subsidiary will amount to 14 million euro, or $23 million, in the third quarter of fiscal 2004.

“This is just part of keeping and running an efficient, streamlined business, eliminating redundancies, maintaining a tradition of financial stability and so forth,” Maganini said. “Stability is part of our history and this is just in keeping with our track record.”

Warren Shiau, research manager, software research for IDC Canada Ltd. in Toronto, agreed. “I don’t think there’s anything special to read into that — it was about the rationalization of administrative…and operational overhead. I would imagine that it’s something that people would have expected.”

Shiau said that Framingham, Mass.-based IDC Corp.’s 2002 worldwide market share numbers for ECM put the combined Open Text/IXOS entity “right near the top of the market” at 5.8 per cent — separately, Open Text had 1.8 per cent and IXOS had four per cent. Taken together, “That would have put them slightly behind Documentum…which got taken out by EMC” in October 2003.

Shiau said IDC analysts expect to release the 2003 market share numbers next month.

As for consolidation in the ECM space, he said “it certainly looks like it’s going that way.”

He said Open Text has made many other acquisitions over the past couple of years, including ECM vendor Gauss in August last year, collaboration software maker Centrinity in November 2002, portal software firm Corexchange in February 2003 and rich media collaboration software provider Eloquent in March 2003.

Add to that EMC’s acquisition of Documentum and content management software firm Interwoven’s purchase of collaboration software maker iManage (August 2003), and a pattern emerges, he said.

“I think that…the larger players are seeing that because content management software is tied to the server — it manages all the information or files that are residing on server — offering document management is a way of adding value to a server software offering or to server product line.”

He added, “With the price pressure on the hardware side, it becomes natural for them to start looking at adding to the software side of value. This might be one of the forces that creates pressure for more consolidation, or creates rationale for really large players to continue buying up content management functionality.”

Previously issued guidance from Open Text remains unchanged as a result of this announcement by IXOS. Open Text added that the charge IXOS will take related to its restructuring actions will not impact the operating results of the business combination of IXOS and Open Text.

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