Sunday, July 30, 2006

ECM in a post Microsoft world

A recurring theme is the threat that Microsoft is posing to the Enterprise Content Management (ECM) industry with its upcoming release of Sharepoint 2007, packaged with Office 2007. This release is likely to bring Sharepoint to the desktops of more Windows users than ever before, enabling them to experience first hand the advantages of using ECM technologies in their day to day business.

The key things that most users will be exposed to are:

  • Metadata for the identification and classification of documents enabling them to be searched more easily within a business context
  • A portal for seamless access to a range of data sources
  • Saving documents to a records repository for lifecycle management
  • Collaborative working environments enabling multiple users to share and create documents and knowledge
And all of this will be performed seamlessly in a familiar user environment.

Threat to the ECM industry

Microsoft has a huge marketing budget (some say $500 million) to bring awareness to their ECM offerings. This will obviously be a cause for concern, since the majority of ECM companies are not in a position to compete at this level. This has been discussed by several industry observers including:
Much of their attention has been turned to Filenet as a prime example and how it will cope with this threat, or whether it will just become another acquisition target like Hummingbird.

The fear for many ECM vendors is that Microsoft will swallow up market share and will commoditize ECM offerings so that there is no value for anyone else to compete (except maybe the open-source players).

Its not all over yet

Microsoft will release Sharepoint 2007 early next year, meaning that many organizations will not be in a position to update most of their office suite to really benefit from it for another 18 months at least. As I suggested in Vista in 2007 v. improved New Account Opening now, some organizations probably have budgets in place and demonstrable ROIs from actually deploying much before then. But really that is just a stay of execution.

In Dear Mr CIO - don't hold off buying ECM I talked about how the players targeting different levels in the market could cope with the Microsoft invasion, suggesting that for the enterprise vendors there is still a light at the end of the tunnel. The four serious points I made here were that the enterprise vendors could:

  • Extend and enhance in-house technology with the MS capabilities
  • Build business solutions on top MS and in-house technology
  • Embrace the user facing components, like Office 2007 with strong integrations and value-adds
  • Identify and enhance enterprise technology requirements that MS can not easily deploy
One major thing that I have not seen discussed is this: Microsoft is not typically adopted by corporations to provide enterprise-wide capabilities.

In my experience, most MS deployments are targeted and implemented at the departmental level, a strategy that meets the architecture of the products. Very large deployments of MS technology require federation, deploying multiple servers and additional technology to tie them together into a whole. So it is far easier to just deploy departmental level systems and track them as independent instances, which is ideal when each department has different requirements for its systems.

E is for Enterprise

Let us focus on ECM and get back to basics: E is for Enterprise.

A major selling point for the true enterprise-level ECM vendors is the ability to deploy a single system, capable of managing the whole enterprise’s content. Especially when it comes to records management, defining records lifecycle policies centrally is essential for effective management of enterprise records through to destruction.

In the Microsoft model, having multiple instances of records management systems spread throughout the enterprise, to match the federated nature of the Microsoft Sharepoint architecture makes true enterprise content and records management complex to track and control. Microsoft is rarely truly enterprise level.

Everything has its place

Remember that $500 million that Microsoft is expected to spend on marketing its ECM vision?

Not only will that bring awareness to the MS products, but it will actually finally awaken the recognition that ECM has been struggling for years to achieve, despite the efforts of vendors, and organizations like AIIM. This should drive demand for ECM products at all levels.

For the ECM vendors, this is a golden opportunity to keep Microsoft in its place – confined to individual departments. To capitalize effectively though, there are some things that the vendors will have to do:

  • Partner with Microsoft to give the appearance of embracing its model
  • Integrate with the MS Office/Sharepoint 2007 suite fully and completely
  • Embrace the strengths of Sharepoint and its pervasiveness to the vendor's advantage
  • Identify gaps in the suite and fill them with value added features
  • Estimate, measure and demonstrate the value of true enterprise centralized ECM capabilities, including records management, web content management and business process management

Act now

In my opinion, all of these items are essential as long as vendors acknowledge that eventually Microsoft will copy many of the best capabilities, functionality and arguments that an independent vendor has. Acting now will help to ensure a firm footprint, and a model that the market can take as the de-facto architecture. Investing too much will be a waste long-term. But being adaptable and a vendor can provide a long-term profitable solution.

My view (and its not an expert opinion) is that vendors can more than survive, rather thrive, in the post MS ECM world. But they need to play to their strengths, and show flexibility that few Filenet, Vignette, EMC and other companies of their type have.

[UPDATE: correction to URL for Russ Stalter's post]

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Anonymous said...

Good stuff Phil..anyone competing with MSFT in the ECM space should read your post.


Phil Ayres said...

Thanks George. I'll let all those MSFT competitors know. Oh my boss will be so happy (I think not!)


Anonymous said...

Hi Phil,

Very good breakdown.

Microsoft is staying true to form and is extending their products as an underlying "platform". An often stated benefit is that they're making ECM easier for the masses (though they're late to the ECM moniker party) and for partners to build upon. For existing ECM ISV partners to Microsoft, they should evidently be happy since Microsoft is now taking care of so many things. That isn't neccessarily the case however. Instead, existing partners see their plans and efforts in expanding their market share in the horizontal now taken by Microsoft. This is typical and the inherent danger in dancing with Microsoft. Further, Microsoft now lowers the bar to entering the market for other partners. Now that is good for "new" partners... but not helpful to the old. It is important for existing partners to understand this cycle and how to turn it to their advantage.

Thanks for your post!

Phil Ayres said...

Don, great point on the new partners. I hadn't thought about it from this direction, that the MSFT entry into this space could help lower the bar for new partners. I'm assuming that you are thinking that new vendors could actually take the new MSFT capabilities and build novel new applications on top of them - do you have any more insight into this?

Nice thoughts.