In Focus: What's Hot and What's Not in ECM, Part 2 - InformationWeek

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8/12/2005
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In Focus: What's Hot and What's Not in ECM, Part 2

A few weeks ago, I shared my insights on what's selling in the world of content management as reflected in the financial results of leading enterprise content management vendors. Numbers have since trickled in on Hummingbird, Mobius and Stellent for the quarter ended June 30, so here's another look at what's hot and what's not.

A few weeks ago, I shared my insights on what's selling in the world of content management as reflected in the financial results of leading enterprise content management vendors. Numbers have since trickled in on Hummingbird, Mobius and Stellent for the quarter ended June 30, so here's another look at what's hot and what's not.

Sales to government were significant for both Hummingbird and Stellent, where results were good and great, respectively. At Hummingbird, revenue increased 10 percent over the same quarter last year to $61.7 million. Among the 73 deals during the quarter was a major sale to the State of Queensland, Australia, where Hummingbird Enterprise ECM software was selected as the enterprisewide standard. Governments account for the largest share of Hummingbird's sales, at 35 percent, followed by law firms at 27 percent and financial services at 9 percent.

Stellent's stellar revenue increase of 26 percent over past year can be attributed in part to last year's acquisition of Optika. Yet the company also reported a 15-percent increase over the prior quarter, which points to healthy organic growth. Government sales are the largest vertical market for Stellent too, accounting for some 40 percent of its sales and 40 out of the 55 deals in the last quarter. Wins included sales to national governments in the United Kingdom, Japan, Brazil and Spain, to state governments in Alaska, Washington and Minnesota, and to cities governments in Ottawa, Philadelphia, Seattle and Palm Beach, Fla.

In a conference call with financial analysts on August 8, Stellent CEO Robert Olson said the combination of multisite deployments and compliance technologies figured in half of all deals. Stellent specializes in supporting multiple Web sites, intranets and extranets from the same ECM infrastructure, and it also offers Sarbanes-Oxley (SOX) and records management modules aimed at meeting compliance needs. When asked how long demand for compliance-related technologies might continue, Olson said projections extend into 2009, explaining that organizations start with tactical problems such as SOX Section 404 compliance and then add general records management and risk management capabilities.

Table: Quarterly ECM Revenue and Trends

Company

Revenues ($ millions)

 

April 1 to June 30

Prior-Year Quarter

EMC Software Group

$408

+16%

FileNet

$105

+11%

Hummingbird

$62

+10%

Interwoven

$41

+4%

Mobius

$23

-2%

Open Text

$108 to $112*

+2 to +6%*

Stellent

$28.6

+26%

Vignette

$47

+3%

*preliminary

At Mobius, which butts heads with the likes of IBM, FileNet and EMC, particularly in the financial services sector, revenues were down two percent overall to $23.1 million and 10 percent on software license revenues to $11.1 million. Notably, the company won a huge $5.7 million deal with "a major international financial institution" during the quarter. Mobius is coming out of rebuilding mode, having named new senior vice presidents of sales and marketing in the last six months. CEO Mitch Gross told analysts he expects the company to gain momentum with new products including an update of the ViewDirect Total Content Integrator, which answers corporate demand to link disparate legacy repositories while avoiding costly and time-consuming content conversion or migration projects.

Among the handful of notable private companies serving the ECM market, Hyland Software is arguably the largest. The company had sales of $52 million in fiscal 2004 and has reported revenue increases of 20 to 30 percent over the last several years. Bill Priemer, the company's chief operating officer, recently told me the company is on track for sales of $65 million in 2005, and he credited the company's focus on targeted solutions that "get the job done at the lowest cost available" rather than selling technology as infrastructure.

Hyland's OnBase software is aimed at the needs of midsize enterprises, which the trade group AIIM International has identified as the biggest growth opportunity for ECM. Priemer said the company also gets much of its business from departmental deployments within large companies such as Countrywide, Quicken Loans and Key Bank. In the healthcare industry — one of the company's fastest growing segments — large networks including Allina Health System (Minneapolis), Sharp HealthCare (San Diego) and MetroHealth System (Cleveland) use OnBase. Solutions typically involve accounts payable, human resources, hospital administration, revenue cycle management and/or medical records management.

One footnote on my last report on vendor financials: I missed a comment from EMC executives that sales of Documentum software were up just one percent in the most recent quarter. The company's EMC Software Group encompasses both content and storage software sales tied to the company's Documentum, Legato and Dantz acquisitions.

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