Some the most popular posts in the ECM/CPS space are typically when an analyst takes a strong stance on a vendor. Joe Shepley’s post for CMSWire back in November – OpenTextand Documentum – Still not buying it – was one of those posts. Joe took a pretty aggressive stand on his thoughts on the future of Documentum now part of OpenText. In a follow-up piece, Virginia Backaitis took the more pro-OpenText side with her article on Shedding Light on the FUD around Documentum and OpenText. This post will review both articles and points and present TSG’s thoughts.
Joe Shepley and Virginia Backaitis Background
To understand the context of the articles requires a brief background of the authors. Joe Shepley has been an analyst in the ECM/CPS space for Doculabs for years. Doculabs does some vendors reviews but most of his input comes from clients. Doculabs used to be very active in AIIM but now is one of the driving force behind the Document Strategy Forum. In our discussions with Joe, we would say he is fairly objective with the bulk of his input coming from clients. Joe has had some back and forth with OpenText in the past two years – See our write-up of the last time OpenText marketing went on the defensive in regards to his article.
Virginia Backaitis also has a long history in the ECM/CPS space as well but much more on the Documentum side. Part of a Documentum partner/recruiting firm, she is more active writing on many things but has maintained a close relationship with Documentum getting most of her information directly from OpenText/Documentum. Most times Virginia’s posts are biased toward the “Documentum can do no wrong” camp and we would recommend clients view her writings as an extension of Documentum marketing. As an example, see this post from 2014 when even Virginia acknowledges EMC was not investing much in Documentum – EMC Keeps the Faith in Documentum, LEAPs Ahead.
So why did OpenText buy Documentum?
Joe begins his article with a pretty aggressive statement that OpenText bought Documentum as “a land grab to get maintenance revenue and boost short-term earnings per share.” Joe reasons that due to the overlap between Documentum and OpenText products, OpenText would not invest in Documentum and begin moving Documentum customers to OpenText products.
To counter Joe, Virginia quotes Muhi Majzoub, an executive vice president at OpenText that “OpenText is committed to the Documentum portfolio and innovating on its products.” Virginia states that a quote from Muhi, an engineering resource, is more than just marketing talk as it is a commitment to roadmaps and how OpenText will be innovating on the Documentum platform. As an example of the innovation that OpenText has invested in Documentum, Virginia lists a number of investments OpenText has made including D2 Smart View UI, Documentum for Life Sciences, Office 365 integration and Content Analytics enhanced search as well as a future integration with SAP by Enterprise World 2019.
In regards to TSG thoughts on the both opinions above, we would say we fall somewhere in the middle. OpenText, like any other public company, is focused on shareholder return. One of the best sources of truth in regards to why OpenText bought Documentum was the investor call conducted by OpenText shortly after the announcement went public. Read our detailed review from 2016 that, during the investor call, OpenText proudly promoted the maintenance revenue (our guess was $300 million per year) as well as their ability to cross-sell/upsell the install base. Even in their recent investor presentation from July, OpenText stated that their Strategic Acquisition strategy values remain “recurring revenues, paths to higher margin and strong cash flows”.
In keeping the focus on the revenue stream, we would agree with Virginia (and our clients say the same) in that OpenText is not pushing their Documentum customers to abandon the platform and move to OpenText as it would risk both the install base and maintenance revenue as clients might choose a different platform. Joe seems to have different input from his customers but we have not heard it from our Documentum customers.
In regards to “investing in Documentum”, we would have to somewhat disagree with Muhi and Virginia in that the list of investments Virginia sites are really more integration into Documentum to upsell/cross sell and expand the margin per client rather than true investments to the core product. Back when the deal closed in 2016 we listed a number of Documentum investments that our clients would like to see their maintenance revenue applied to that would improve the platform without requiring the client to buy more products. These included integration with Amazon (S3 and Aurora) , xPlore removal of xDB and Solr updates as well as finally getting rid of the Java Method Server behind D2. We have seen little to no movement or investment from OpenText on items that do not cost additional money for the core Documentum clients.
What about Documentum and Life Sciences
One of the major disagreements between Joe and Virginia has to do with Life Sciences. Joe writes that “every firm in this vertical I’ve personally spoken with is not going to stick with Documentum as a strategic, go-forward platform” and counters with some rough numbers about half of the big Life Sciences firms leaving Documentum mostly for Veeva as a SaaS alternative. Virginia counters that OpenText has provided a statement “indicating that 24 of the top 30 life sciences customers are using Documentum for general or regulated content and have no plans to move from Documentum” something that OpenText insists it is presenting hard facts.
Our thoughts are that Virginia and Joe are both right in some respect. For background, TSG has been working in the pharmaceutical space with Documentum for all of our 23 years. Our first client was a major pharmaceutical company and we continue to do work there today. Consistent with Joe’s thoughts, in the last 5 years we have seen a move to Veeva for many clients as Veeva’s success on the CRM side with Salesforce integration has led to significant success on the document management side. We would say that Documentum customers that were leveraging Documentum for submissions are clearly moving to Veeva. Submissions is a very complicated area given multi-company regulations and Veeva is leading the industry both in terms of capabilities as well as the advantage of a SaaS model specifically for submissions. Additionally, early on Veeva had an electronic Trial Master File (eTMF) offering that was readily adopted by the industry. Many of these documents feed into a Submission filing,making the move to Veeva for Submissions an even easier decision. Documentum has struggled with this space in the past with a variety of different partners(CSC back in the day) as well as their own solutions and was late to the game with an eTMF offering. The decision to keep an old Documentum system with a variety of components from multiple vendors just can’t compete with leveraging Veeva’s SaaS model particularly at the start of a new submission process.
The above being said, when it comes to the management of regulated manufacturing documents (Manufacturing Instructions, SOP…) while related to submissions is typically a separate system. For the clients that have invested in Documentum for compliance, we would agree with Virginia that we haven’t see the clients moving as whole heartily to Veeva Vault. Documentum customers that have built out solutions on D2, Webtop or even our own Open Content Compliance made a pretty heavy investment in their solution and the justification for moving to Veeva is not quite as simple. Most clients we talk to are evaluating Veeva but not moving as quickly as they did for submissions and eTMF.
Documentum’s Future? Customers, not analysts, will decide
At the end of Virginia’s article, Virginia brings up the idea that legacy software means “software or hardware that has been superseded but is difficult to replace because of its wide use.” Virginia defends Documentum and OpenText as not legacy software due to research and evaluations from the “world’s foremost analysts” – Gartner and Forrester.
We have argued here often that analysts, particularly Gartner, tend to rate and evaluate based on size and market share when it comes to the older vendors and a suite of products like OpenText. See our thoughts on this year’s GartnerMagic Quadrant – What’s Missing as well as our thoughts on when a Suite is not so Sweet. Our key finding in regards to the Gartner’s review was the cloud and specifically the infrastructure as a Service providers like AWS and Microsoft Azure were missing from the evaluation, something that we mentioned in 2016 when IBM was the identified leader based on IBM Watson, a mistake that was corrected the next year when IBM left the leader quadrant. We were also pretty critical of OpenText due to the push and distraction of their own, proprietary cloud, versus Amazon or Microsoft.
At the end of the day, Customers, not analysts (Joe,Virginia or TSG), will have to decide on their own whether newer entrants or alternatives like AWS can displace Documentum or any of the other older ECM solutions. For most customers on older Documentum solution that has been superseded by the cloud and newer alternatives, some even from Documentum and OpenText themselves, it is difficult to not use the term legacy to describe their Documentum system.
Joe and Virginia present two opposing black and white viewpoints where we think the future for Documentum continues to be somewhat grey or unknown. As we pointed out in our blog post last year – Documentum,Should I stay or should I go, the majority of long-time Documentum customers, while far from thrilled with Documentum over the last 10+years, have stayed on Documentum due to the perceived trouble of leaving or just a simple “if it isn’t broke, why fix it”. Joe is right is stating that many pharmaceutical clients are leaving Documentum for Veeva, particularly for eTMF and Submissions and probably considering Veeva Vault for manufacturing.
Documentum customers that are staying are looking for ways to reduce the total cost of ownership of Documentum/OpenText, not increase it with additional products or services from OpenText. We would argue that cloud and specifically infrastructure as a service vendors like Amazon Web Services and Microsoft Azure have the potential to push long-time Documentum customers to consider moving given the cost savings with moving both ECM and the supporting infrastructure to the cloud.
We would expect Documentum clients to continue to take a“wait and see” approach and may move from Documentum when other alternatives and cloud initiatives present better value.
Let us know your thoughts below.