Comments on the IBM-FileNet acquisition

Questions and comments about the IBM-FileNet acquisition have been coming at me since last Thursday when it was announced, asking for my perspective — many people know that I was FileNet’s Director of eBusiness Evangelism in 2000-01, and that FileNet is still an occasional client of mine, and I also have a number of friends and colleagues who are current or past employees of FileNet. As a shareholder, I’m also monitoring the stories and stock price online to see if it looks like another suitor might jump in — with the current price running higher than the offer price, the market seems to be indicating that that’s a possibility, or at least a pipe dream.

To clarify my “speechless” state of last week when this news was announced, I wasn’t surprised that FileNet is being acquired, since rumours of acquisition were rampant even when I was at FileNet and before; I’m just surprised that it’s IBM, since I always figured that it would be Oracle. Phil Ayres has a thoughtful post on how all the IBM and FileNet pieces might fit together, but I’m not convinced that FileNet’s content management has much of a future within IBM. I found Connie Moore’s (Forrester) comment interesting (in this article, among others) that BPM is FileNet’s “crown jewel” — I agree with her sentiment, but think that’s it’s a bit of a hidden gem, unfortunately.

I listened to two of the conference calls on Thursday: a very brief one for investors (it was over before I got on it live, but listened to the replay later; for a conference call about the acquisition of a content management vendor, it was pretty content-free), and a longer press call. Ambuj Goyal, the GM of the Information Management unit that will be eating FileNet whole, delivered the usual blah-blah about how the whole is greater than the sum of the parts, how FileNet partners will benefit from an “enhanced ecosystem” and how IBM will preserve and enhance customer investments in both companies’ platforms. Yeah, right. He also referred to FileNet’s BPM as “content-centric”, which means that there’s some pretty fundamental misunderstandings by people how matter about the current state of the product.

Then Lee Roberts, CEO of FileNet, started with “we’re all very excited about this announcement”, and I swear that I could hear the rigging on his platinum parachute twanging in the background. During the Q&A, Roberts said that both he and Ron Ercanbrack (FileNet’s president, to whom I reported when I worked there) would be moving over to IBM — it’s worth noting that they’re both former IBM employees — and that “a vast majority [of FileNet’s workforce] will migrate over to IBM”. He also said that the cultures of the two companies are very similar, words that could only come from a former IBMer, I think. FileNet employees: resistance is futile! Prepare to be assimilated!

Bruce Silver also caught the conference call and had a few comments, and Cote from Redmonk did a mindmap of the calls.

Tons of interesting commentary all over the web:

  • IBM Acquisition Aimed at Microsoft?: “The purchase could be seen as an expensive play by IBM to compete head-to-head with Microsoft, which plans to integrate its own content management capabilities into Office SharePoint Server 2007.”
  • Why IBM bought FileNet (hint: it wasn’t for the technology): “Indeed the only feasible reason I can see – other than the fact that IBM just wanted to have to compete with one fewer vendor – is that FileNet deployments usually need a fair element of services, so FileNet brings in services partners including Unisys, EDS, Accenture, Capgemini, BearingPoint, Fujitsu and many more. Now that IBM owns FileNet, it will try to mop up most of that services business itself.”
  • IBM acquires FileNet – who really stands to gain?: “If IBM believes that the ECM/BPM market is set for a period of significant ongoing growth, it is highly plausible that buying FileNET is the most cost-effective way of making sure it takes a leading share in that market.”
  • BPM Market Changes: “This is a very interesting acquisition that addresses a gaping hole in IBM’s BPM strategy while signifying the importance of the BPM market to even the biggest players in the software industry.”
  • IBM Snaps up FileNet for $1.6B: “Despite FileNet’s worthy product developments over the past few years, the acquisition is hardly about technology. With the exception of some industry-specific applications built on the FileNet platform, IBM already has all the technology pieces. The motivation for the move is more likely acquiring customers and gaining a better competitive position relative to the ECM market and the enterprise IT market as a whole.”
  • IBM’s FileNet bid proof of ECM consolidation: “IBM Corp.’s intention to acquire FileNet Corp. points to a major shift underway in the ECM software market as systems infrastructure companies encroach on pure-play ECM vendors’ turf.”
  • Mr. Palmisano, this is American Express. We’ve noticed some unusual activity on your account …: “The acquisition will strengthen IBM’s position in a very lucrative market.”
  • FileNet to be acquired – first thoughts: “Lee Roberts CEO (and ex IBM’er) will also do very well – but I am not sure I would be too happy if I were a FileNet customer, or for that matter a member of FileNet’s staff.”
  • IBM acquires nice customer list: “This is what analysts call a “customer acquisition”.”
  • Morning news: Block, drop, gobble, charge, crunch: “IBM buys software company FileNet for $1.6 billion, and papers everywhere remark on the “recent trend” of big companies gobbling up small companies — which is like remarking on the recent trend of panthers gobbling up gazelle.”
  • IBM Embraces BPM 2.0 Model: “IBM moved on a fast track to adopt the BPM 2.0 model with its proposed acquisition of FileNet.”
  • And lastly, advice for other ECM vendors from A World without FileNet: “Those who used FileNet as their model and who are working in the thin air of the enterprise market had better find some breathing apparatus because being sandwiched in the top of the market pyramid between Oracle, IBM and EMC will suck the air right out of your lungs.”

I also received a hilarious comment from someone I know at FileNet: “Back in the liberal ‘70s of my youth, working for Big Blue was your worst nightmare! What a long, strange trip it’s been and now I am one of them — wake me up!!”

IBM buys FileNet

I did not see this coming (thanks to Elizabeth at ebizQ for tipping me off). [Disclosure: FileNet is a customer, and I’m a shareholder. I still didn’t see it coming.]

Back in 2000-01, when I worked for FileNet as their BPM evangelist, there were always rumours swirling around about someone bigger buying them out. Usually Oracle was named as the potential suitor, but never IBM as they were too directly competitive, particularly on the content management side. From FileNet’s press release (IBM doesn’t have one out yet as of 9am Eastern), the plan is to:

  • Combine FileNet’s operations with IBM’s Content Management business in the Information Management unit. Since this is the area where they compete most directly, I suspect that this means that FileNet’s content management could eventually be subsumed into IBM’s Content Manager product.
  • Integrate IBM’s BPM and Service Oriented Architecture technologies with the FileNet platform. This is an area where FileNet provides a quite different and possibly complementary product to IBM, so I think that FileNet’s BPM product could actually survive, get properly integrated with the IBM integration substructure, and become the product that it should have been years ago.

These are only my speculations as an outsider; I have no inside information and knew nothing of the transaction before it hit the wires this morning.

All in all, I’m still totally speechless.

Stats that never seem to go away

I’ve been watching statistics like this ever since I started in the BPM/document management field over 15 years ago, and they never seem to really go away. These ones were published by AIIM earlier this year:

400 Hours — Number of hours per year the average employee spends searching for paper documents. (Source: Datapro/Gartner Group)

$6 – $12 Million — The amount the typical enterprise with 1,000 knowledge workers wastes per year per year searching for nonexistent information, failing to find existing information, or recreating information that cannot be found. (Source: IDG)

25 Percent — Percentage of enterprise paper documents that are misplaced and will never be located. (Source: Datapro/Gartner Group)

The last one puts me in mind of a contract that I did a few years back for a manufacturing organization. A very old company, they were converting their engineering drawings (some dating back 100 years) and aperature cards [a pre-historic storage medium that consisted of a piece of microfiche embedded in a computer-readable punched card containing the indexing information] to scanned images, eventually to be redrawn as CAD files, and implementing some basic change request and approval workflow. I had an internal company email address, as I often do when working with customers, and one day was copied on the following mass internal email:

Found: an aperture card, reference #xxxxxx, on the road between building A and building B.

You can be pretty sure that this is one of the misplaced ones.

WCM resurgence

This article in Intelligent Enterprise last week questions why ECM vendors — including Hummingbird, FileNet and Open Text — have been highlighting their WCM products lately, but they miss the mark on the answer:

Is it the fact that online advertising and e-commerce initiatives are back? Is it the prospect of capturing fast growth in the mid-market–the rationale Hummingbird cited for its Red Dot deal? Is it a defensive move in response to Microsoft’s recent signal that it will consolidate the SharePoint Portal and Microsoft Content Manger products? I suspect it’s all of the above, plus a healthy slice of pressure from Wall Street to fuel growth through new license revenue as well as services income.

A big part of the answer should be “compliance”, that is, for companies where their compliance requirements include control of the creation and delivery of content via the web, such as securities. WCM as a part of ECM is key for web compliance requirements, because it allows tight control over the processes of how something is published, and also provides a record of what content was available on what dates.

Why is it that everything that I see these days becomes compliance? 🙂

Global 360 Active Compliance Framework

I watched a webinar earlier this week about BPM and compliance, a topic that I’ve been working on for a while, in which Global 360 announced their Active Compliance Framework (today’s Computer Business Review also reviewed their announcement). The speakers were from Doculabs and BWise, the latter of which has just partnered with Global 360 (and a bunch of other ECM/BPM vendors) for a compliance offering. Global 360 states the advantages of their compliance framework as follows:

Improved Compliance & Risk Management (i.e., do a better job of being compliant)

  • Standardized, structured approach
  • Focused on highest risk controls & processes
  • Centralized visibility and control

Reduced Compliance Costs (i.e., be compliant in a more cost-effective way)

  • Reduced project costs via control reduction based on risk
  • Reduced testing costs for remaining controls via automation
  • Eliminated testing costs for continuously compliant processes

Process Optimization & Control (i.e., provide an opportunity to optimize your business processes)

  • Optimize process performance while increasing control
  • Proactive compliance issue visibility, notification
  • Evolution from obligation to optimization

I liked the focus on the last of these sections, or what they called “from obligation to optimization”: changing the organization’s attitude from compliance being a chore that they’re forced to implement, to compliance being an opportunity to improve business processes through standardization and measurement.

If, like 1/3 of Doculabs’ current customers, compliance is one of your highest priorities for 2005, it’s worth your time to check out compliance solutions like this from ECM/BPM vendors. The whole compliance field is still chaotic; a Gartner report on compliance management software lists 26 vendors and clearly states that the compliance market is not mature:

A key finding of our research is that there is no comprehensive compliance management application. Whether buying from one or many vendors to get a solution, you will need significant services for implementation and integration.

Partnerships like the one between Global 360 and BWise start to address this problem, but there’s still a long way to go before we can even agree on what “compliance management software” is.

Hallucinating about ECM

The thoughts of my previous post on BPM and agility came on the heels of a conversation with a collegue in Australia who was looking for anyone who had implemented a comprehensive “ECM vision”, including BPM, web content management, records management and document management. It appears that most companies are implementing one large ECM-related project and some bits and pieces of the other parts; I have to admit that most of what I see is still at the hallucinatory stage rather than a full-on vision, and is neither cohesive nor comprehensive.

How many cusomter organizations really have an ECM vision, and more importantly, how many have the ability to implement it?

Gartner’s BPM trends and forecasts

Another webinar going on right now, Gartner BPM Roundtable: Business Process Management Trends and Forecasts, hosted by Global 360 and featuring Jim Sinur of Gartner (yes, this turned out to be “webinar day”, I have a third one after this if I’m not burned out).

The usual webinar format is the “expert” talks to his slides for 30-40 minutes, then some marketing geek from the vendor talks about their product for 10 minutes. Not this one: it’s a very dynamic conversation between Mr. Sinur and Michael Crosno, President of Global 360, and both of these guys are really smart about BPM. Yes, Mr. Crosno talks about Global 360 product features, but it’s used as a springboard for Mr. Sinur to talk about the importance of specific functionality in the current and future BPM suites marketplace.

A few really great insights. The first one is was that legacy BPM deployments are more likely to have been for the purpose of reducing paper, whereas the new deployments are all about streamlining processes and improving productivity, with a new and increasingly important focus on extending the enterprise. Although this is something that we all know by gut feel, it’s good to see some real numbers behind it:

The second insight is that customer requirements are evolving from enterprise content management (ECM) to enterprise process management: a shift from information lifecycles to process lifecycles. As a “column 2” advocate, I’m really glad to see Gartner recognizing the shift in focus from content to process. Mr. Sinur showed a scale that started with image management and went all the way through to business optimization, with the crossover from ECM to EPM happening between portals and process execution. He puts “workflow” in the ECM space, that is, the subset of BPM that is used for content lifecycle management.

Another point was the trend for CRM vendors to integrate BPM with their products, usually by buying or OEM’ing in a third-party product, because they see it as an essential part of managing the customer relationship. I’ve been seeing this trend lately as well, such as with Onyx‘s acquisition of a BPM product and their current push to integrate it into their mainstream CRM product.

By far the best webinar that I’ve listened to in months. The slides and the audio playback will be available tomorrow on Global 360’s site.

A “Column 2” sort of girl

Although process, not content, is my main focus, I dropped by the e-Content Institute’s 16th annual Information Highways conference in Toronto today to sit in on a workshop called “Bridging Obstacles in E-mail, Workflow and Compliance Management: Best Practices”. Although it was a vendor presentation by Tower Software, I figured that I’d see something interesting along the way.

As an aside, I have to say something about the conference title: the term “information highway” is a bit of a blast from the past. It might have been on the cutting edge 15 years ago when the conference started, but when’s the last time that you heard it without a snicker involved?

Meanwhile, back at the presentation, the speaker from Tower’s Toronto office couldn’t make it, and the replacement had flown in from DC this morning. She spent half of her intro expressing surprise that none of us had met the original speaker (from what she called “our Canada office”), as if Toronto were a small town where we all have dinner at the local Legion hall together on Saturday night. Sigh.

Tower’s view of workflow is interesting: they consider that it’s either ad hoc, transaction-based or knowledge-based, where the latter can be email-based, process-based or document-based… huh? Okay, I’ll cut the speaker some slack for having to work from someone else’s slide deck, but what was the original speaker thinking? Maybe he was trying to categorize everyone else’s stuff as ad hoc or transaction-based, then show why their “knowledge-based” workflow was better, but it wasn’t clear to me and I’ve spent enough years around workflow such that anyone’s explanation of where they fit in the space should be pretty obvious to me within a couple of minutes.

In spite of all that, some interesting tidbits, particularly about how email messages are now considered evidentiary in many cases, with their legal admissibility being based on authenticity, which in turn relies on content, context and structure being preserved and auditable. Unfortunately, although IT is usually responsible for email, they know nothing about records management (RM); furthermore, individuals manage/delete/archive (or don’t manage/delete/archive) their corporate email as if it belonged to them personally, not the corporation. The answer, even admitted by Tower, is not in a software package, but in the creation and enforcement of email RM policies.

Although their system can capture everything without user intervention, that’s not really recommended because you just end up with a mass of undiscriminated data, not unlike what is on many corporate email servers now. They state that every user needs to take some responsibility for RM (presumably because there are insufficient business rules built into the system to allow it to automatically categorize messages, or even recognize duplicates catalogued by multiple recipients), but I think that the chances of that happening on a suitably complete basis are pretty small when you consider that most people don’t even put the items in their InBox and Sent Items into properly categorized folders.

All good stuff, but a bit of a yawn: now I remember why I kept my focus on process and became less and less interested in content except as an adjunct to process. I recall working on a client project several months ago where I was designing a BPM implementation to integrate with a line-of-business database, hence I had a lot of discussions with the data architect who was designing the database side of things. I dropped by his desk one afternoon and we had a rather passionate discussion about the relative roles of data and process in the system.

After some amount of discussion, I said “Do you know the Zachman framework? Well, I’m a column 2 kind of girl.”

“That explains it,” he said, “I’m a column 1 kind of guy”.

Clearly incompatible.