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THE BUZZ Flash!!
IBM Buys FileNet
August 2006 - IBM has announced its acquisition of the FileNet Corporation in an all cash $1.6 billion deal.

THE BUZZ Analysis
This deal, while not surprising, is simply more proof that the ECM sector is in a consolidation phase and is maturing rapidly. The value of this transaction, while seemingly high, was not as high as it seems at first blush. FileNet has almost $500 million in Cash and Investments on hand, and a reasonable Payables number. Therefore, the net would appear to be closer to a $1B deal. Stock prices of FileNet have risen since the announcement. Could the shareholders be hoping for a new suitor to bid up the price of the acquisition?

From an organizational point of view, this acquisition makes perfect sense. FileNet is led by Lee Roberts and Ron Ercanbrack, both former IBMer's who built the company like a smaller IBM and operated the company like IBM. They know how to speak and deal with IBM Management, and will make the integration far easier. The question that THE BUZZ cannot answer is how well will the IBM and FileNet Product suites integrate? In many ECM acquisitions over the past 10 years, much of the IP from one company was never utilized. In some cases, this lack of integration caused the combined enterprise to fail. While we certainly don't expect this combination to fail, it will be a challenge to maximize the considerable assets of both organizations.

This deal also shows a trend that is becoming increasingly evident in the ECM sector. The operations of content management software is migrating from a standalone application to one that will be more and more included in the data platform. Those "platform" companies will begin to imbed key applications, applets and features into their core platforms to make ECM far more available, accessible and easy to use. These companies include IBM, Microsoft, Oracle, SAP and perhaps Sun. Given this trend, THE BUZZ wonders what actions we will see from Oracle and SAP in the near future to garner a robust ECM offering and presence. Once the Open Text / Hummingbird combination is finalized will SAP or Oracle show renewed interest?

The net results of the IBM acquisition are very positive for all ECM companies. It will bring more attention and more exposure to the sector. For IBM to acquire a company of the magnitude of FileNet, validates the importance of the technology and its future.

Along with the Open Text acquisition of Hummingbird, this latest acquisition by IBM clearly consolidates the field of ECM vendors who are after the largest companies in the world. If we add Stellent and a few others to this list, the competition is clear. However, this leaves a huge void in the companies going after the SME market sector. There is NO leader in this area.
Email THE BUZZ@documentboss.com and let us know your thoughts..