Why Co-Founder Thinks Documentum Is Doomed Under OpenText

ANALYSIS: John Newton fears the new owner will promise customers investment in their products but that the product lines eventually will wither away

Like any good parent, John Newton simply wants the best future for his corporate offspring, Documentum, but he’s quite worried about it right about now.

When someone starts a company, especially a first venture, it occupies a special place in the entrepreneur’s heart for life. Documentum is that first-born child Newton and Howard Shao started up way back in 1990, when the first George Bush was in the White House and the internet was a mere gleam in the eye of some key scientists.

Newton believes that his pioneering enterprise content management platform company is headed for extinction under the realm of its new owner, Canada-based OpenText.

Opentext future

Digital Catapult Centre (2)“There’s a pattern with which OpenText operates,” Newton told eWEEK. “It’s very much the Computer Associates (CA) model: They bring it [new IP] in, they do minimum maintenance on the product, and then they kind of milk the installed base. Then you provide your other products as an upsell, or move them on to the new products.

“There’s no reason to think that this will be any different. What they’re really doing is buying market share, which I assume is the most important thing for them,” he said.

So because OpenText isn’t invested in the long-term development of Documentum products, Newton contends, it’s highly likely the Canadian company will not invest in the company’s products and simply let all that IP stagnate. Documentum’s loyal customers from over the years will be the poorer as a result, he believes.

There’s Quite a Bit of History Here

Let’s set the table here for a minute. EMC acquired Documentum for $1.7 billion in December 2003, three years after Newton himself had left the company. The Documentum platform became part of EMC’s Enterprise Content Division (ECD) business unit, one of EMC’s four operating divisions.

Thirteen years later, Dell bought EMC—the deal officially closed Sept. 7. Five days later, on Sept. 12, Documentum was sold to Opentext, which specializes in enterprise content management—it also sells a number of other IT products and services—for $1.6 billion.

The deal is the latest in a string of acquisitions OpenText has made in recent months as it aims to become the world’s No. 1 enterprise information management (EIM) provider, led by ECM and information lifecycle management.

OpenText is a $1.9 billion company with 8,600 employees and more than 100,000 customers. The company has become a collector of new IP, no question about it. In April, the company spent about $170 million to buy certain customer experience software and services assets from HP Inc., including a digital experience management platform for web content management, a digital asset management offering and an intelligent workforce optimization product.

In June, OpenText bought customer communications management technologies from HP Enterprise, including Exstream, Output Management, TeleForm and LiquidOffice, for everything from process automation to document delivery offerings.

The deal for Dell EMC’s ECD will enable OpenText to help its customers accelerate their adoption of a full digital business environment, CEO Mark Barrenechea said. OpenText, whose software helps businesses manage huge volumes of data, will grow its range of industry offerings for particular verticals, expand its customer base and extend its reach into new regions.

OpenText will integrate the software, services and employees of Dell EMC’s ECD unit (mainly Documentum) into the company, and the two companies announced plans to negotiate a strategic business partnership to expand offerings to their customers.

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Originally published on eWeek