IBM will acquire FileNet Corp. for $1.6 billion under a proposed transaction schedule to close by the end of this year. FileNet's niche, enterprise content management (ECM), is a relatively mature market: Its 2005 revenue was marginally above its 2000 peak, and analysts forecast a 7 percent annual top-line expansion. In addition to coining the word "workflo" in the early 1990s, FileNet offered one of the first document management systems.
Ventana Research sees the transaction as serving two strategic purposes. First, it is a belated response to EMC's acquisition of Documentum in early 2004, which left IBM at a disadvantage in selling its storage solution. Since documents, scanned invoices and other forms of unstructured information consume a lot of storage space for intensive users in financial services, government and regulated industries such as pharmaceuticals and chemicals, EMC and IBM have been touting the value of a complete, vertically integrated solution.
While Lotus (acquired by IBM in 1996) does play in the ECM market, it is not up to the range and scale of tasks that Documentum and FileNet can handle. Second, having FileNet's installed base will give IBM access to a potentially large middleware market that increasingly will be looking to stitch together unstructured and structured information for use in managing and executing transactions and other business activities.
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2006 Ventana Research
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