Why Metastorm is good for OpenText

Canadian firm OpenText Corp., known for organizing and storing large business’ content and company documents, has acquired Metastorm Inc., a business process management (BPM) leader, giving businesses content and process management all-in-one, according to a report by OpenText released Feb. 18.

“It simply gives them one-stop shopping for (enterprise content management) ECM and BPM,” said Dennis Callaghan, an analyst at The 451 Group.

It is important for the Waterloo-based company, OpenText to have BPM as a part of its services, to eliminate middleware by Microsoft Corp. and SAP AG because its enterprise customers may not have that middleware or want to spend money on it, according to Melissa Webster, the vice-president of content & digital media technologies at IDC Canada Ltd.

The acquisition will benefit OpenText because business process management is in growing demand, according to Lubor Ptacek, the vice-president of product marketing at OpenText. The business process management market increased 15 per cent in 2009 to $1.9 billion.

“There’s an increased importance of business process,” said George Goodall, an analyst at Info-Tech Research Group Inc., who thought the acquisition was not surprising.

“It is consistent with OpenText’s strategy,” Goodall said. “OpenText is growing through acquisition. It is a key component of enterprise software.”

Metastorm was the leader in the Gartner Magic Quadrant for Business Analysis Tools and the Gartner Magic Quadrant for Enterprise Architecture Tools for business process management and enterprise architecture.  

“The demands for these solutions are in major industries such as financial services and insurance, energy, government, life sciences and health care, and that’s where we see the opportunity,” said John Shackleton, the CEO of OpenText, in a report. 

With OpenText’s acquisition of Metastorm, it can combine an offering of both process and content management because many processes have content businesses’ must manage. OpenText now has solutions for claims processing and customer on-boarding, where content management is critical to business processes. 

“With Metastorm, OpenText moves into the BPM market allowing customers to purchase leading solutions in Enterprise Content Management (ECM) and BPM from a single vendor which ultimately helps them improve their business in the most comprehensive way,” Shackleton said. “We see a lot of customer demand for solutions involving content and process improvement and Metastorm is the perfect fit, presenting a tremendous opportunity for OpenText.”  

This is not the only merger of its kind. IBM took over FileNet, Oracle controls Stellent and EMC acquired Documentum. FileNet was one of Metastorms biggest competitors when it was independent, according to Callaghan. Open text is used for organizing and storing company documents, using Microsoft Office and SharePoint to help enterprises manage SharePoint sites centrally. Similarly, Metastorm’s business process management also integrates with Microsoft applications like SharePoint.

According to Callaghan, Metastorm was going to work with an initial public offering, but it did not have the growing business to make it a worthwhile pursuit. “It’s fair to say they were stagnating,” Callaghan said. “So they took the deal they could get to deliver value to their investors.”

Metastorm will benefit from the acquisition because OpenText has more resources being a larger global company, according to Laura Mooney, vice-president of corporate communications at Metastorm.

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