Open Text sees opportunity in compliance issues

Open Text sees opportunity in compliance issues hen it comes to IT, corporate concern about compliance and records retention is as high as it’s ever been. According to IT research firm Meta Group Inc., enterprise content management (ECM) software is now the number-one priority for IT managers at large organizations, outpacing middleware, application servers and portals. For Open Text Corp. this presents both opportunities and challenges. In an organizational shuffle, the Waterloo, Ont.-based ECM vendor announced that long-time chief executive officer Tom Jenkins will step down this July and be replaced by current president John Shackleton. Jenkins will continue in his role as Open Text’s chairman; he will remain as a full-time employee and will continue to lead the firm’s strategic activities. ComputerWorld Canada’s Ryan B. Patrick spoke with Shackleton on Open Text’s ECM strategy for 2005 and beyond.

What is the reason behind the CEO change and how will the transition impact customers?

I’ve been with Open Text now for six-and-a-half years. Most of the organization has reported in to me and…Tom has been focused more on the external and (has been) heavily working on acquisitions. We’ve actually streamlined the management team under me — before I had [about] 10 direct reports (but) we’re now moving to five. As companies grow and get close to a billion dollars (in revenue), the experience I’ve seen is not that they’re having problems with products or problems with sales; they have problems with infrastructure. So I want to make sure that we’re getting the infrastructure ready for the organization that we’re becoming. Tom (who recently penned a book on ECM) is becoming much more of a spokesperson for the company from a technology standpoint. So (with) these books that we’re doing on ECM, he’s charting this whole new space on enterprise content management and he’s becoming the spokesperson for that.

How does Open Text connect the dots between ECM software and corporate compliance?

Within our space there are really two market drivers. The first one is productivity, where people are trying to save money and maximize their investments and existing systems. ECM has (provided) the ability to grab and repurpose, more efficiently, the content of an organization. The second part is around best practices, where people have been trying to streamline their processes and do processes better than anybody else. That’s been a major driver for our customers. For the last couple of years with compliance, Sarbanes-Oxley (SOX) has been on top of everybody’s mind. But it’s been pretty much compliance across the board — every industry has had things that [it has] been working on. The issue with SOX is that it’s put more pressure (on enterprises) and everybody needs to get their act together in this space. So what we’re seeing is that 60 per cent of our revenues have had something to do with compliance. If you think of supply chain management, ERP systems and relational database systems, those have given organizations information they never had before on the structured data side. Now if you look at Web site content, the e-mail content, word document content and other unstructured data, the ability to manage, integrate and use effectively all data is really the key to success for companies, [not only] to comply but also to do best practices using effectively the information that they’ve got.

Currently, sales of ECM software is outpacing the larger software market as a whole. Does Open Text expect this to continue?

It will continue, as it’s not like Y2K where you comply and get approval that you are compliant and then you get on with business. I see in three to five years at least, that (compliance) will continue to be refined. (ECM) is where you can get a quick ROI as you build this platform from one department to another — these are the things that you should be looking at to get the quick hit. One of the interesting things that we’ve seen that have been of value to Open Text is compliance is, by nature, enterprise wide. You can’t do Sarbanes compliance just in your financial group — it impacts every function of an organization. And so the ability to scale across an organization is very important and that’s where we’ve had a lot of success in recent years.

As the larger vendors such as Oracle Corp. and IBM Corp. begin to offer ECM solutions, how does Open Text intend to compete?

There are two key criteria that we use when customers come to us. One is speed to deploy. If you look at the larger vendors, they really have a toolkit, and with their professional service organizations (they) can build robust custom solutions. But they typically take a long time to deploy. And in this kind of environment, if a customer can’t see an ROI within the fiscal year, they’re not going to do it. Time to deploy has been a major strength for us. The second is scalability. Many of (the other) solutions…might be okay at a departmental level but when you’re looking at 200,000 to 300,000 users, we have proven that we can scale quickly and efficiently to those kind of levels.

Open Text has made a few notable acquisitions and consolidation seems to be the order of the day in the ECM space. Will this continue?

I think the point-solution vendors in the ECM space, like the Web content management vendors and the BPM (business process management) vendors, are not going to make it. You’ve got to have an integrated suite. Vendors that realize they can’t make it alone are trying to make alliances with people like ourselves to really become part of the total suite. While [many IT departments are] managing well their relational databases, structured data and ERP and CRM systems, they’re concerned about their e-mail. People are generating millions of e-mails a day and enterprises have no idea what’s in there or if it’s complying with government regulations. The sheer volume of e-mail is a tremendous opportunity for the storage vendors but at the end of the day they’re storage and not software vendors… we don’t see them coming into our space.

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