David Brakoniecki has some good commentary on OpenText’s Q2 results on his blog.  Not about the financials of the call, but about implications in the BPM market:

In their core market of electronic content management (ECM), the Opentext world is neatly divided in two:  Microsoft/Sharepoint and SAP are allies and ECM Documentum and IBM Filenet are the enemies.

At least this simplifies their strategy.  They know who their friends are and who their “enemies” are.  Companies rally around relatively simple strategies and objectives.

Also interesting were the comments about BPM integration (two BPM suites integrating, not to mention integrating them with the rest of OpenText’s offering):

• 2012 will be a year of product development to bring the products together and create a coordinated roadmap
• The combine BPM product line will be integrated with the rest of the Opentext business in 2013

So far David’s blog has been the best way to keep up to date on OpenText’s BPM developments.

I liked Dave Brakoniecki’s analysis of OpenText’s December comments on their BPM strategy. Like Dave, I find it interesting that they think they’ll be most often running into Pega and IBM.  Dave’s thoughts:

OpenText probably need to acquire some rules technology to really compete with Pega and IBM. Shame that Progress snapped up Corticon a few days ago.

His analysis is spot-on in that without a rules engine, OpenText has a chink in the armor that the other vendors can exploit.  And they’re not exactly a pure play vendor that can appeal to the “best-of-breed” argument with their customers.  It just looks like a tough hill to climb.

Rules engines aren’t that complicated, per se.  It is thinking through the design of user interface and maintenance of these rule systems that is where the value is, and where the challenges are.  Incorporating them with a BPM suite is another interesting problem to solve, though one option is obviously to leave them loosely coupled.  I think OpenText has their work cut out for them to differentiate themselves in this market, but we’ll certainly have a chance to see how it develops.

Analysts were predicting more consolidation in 2011, and it looks like the late-year acquisitions are happening again.

First, doc capture specialist Kofax has acquired Singularity, a BPM and case management provider.  Kofax has been part of many a BPM project, whether they realize it or not, as the doc capture element.  Almost every BPM project needs that transition from “physical world” to “electronic bits” or “process world” – and document capture is a common entry point.

Neil Ward-Dutton, of MWD, comments:

In a call first thing today, Kofax CEO Reynolds Bish highlighted that he expected the acquisition to double the size of the company’s addressable market – in large part through the expansion of sales coverage and effort for Singularity’s products, which Singularity itself had largely confined to the UK.

In other words, Kofax expects to expand the reach of Singularity, as well as of their product set itself.  Interesting, to me, was that Singularity’s revenue mix was 50% services, and that Kofax intends to adjust that downward.  Good news for Singularity partners or services experts.

Meanwhile, in another corner of the BPM world, Progress has acquired Corticon, a pure-play rules management (BRM) vendor:

Progress is pitching Corticon as a crucial ingredient as it continues to develop its RPM story, and this makes sense. Progress’ Savvion BPM technology already had a fair business rules capability (BizRules) as an integrated component, but my view is that Corticon’s technology is more widely-applicable, as well as being widely acknowledged for a very strong ease-of-use story, enabled by its heavily model-driven and graphical approach to rule specification. Its open stance towards rule management repositories will also serve it well, as Progress seeks to blend Corticon’s tools into broader capability mixes.

In a previous life, we used Corticon for rules for a while.  We didn’t find it particularly compelling and ended up writing our own, similarly non-compelling rules solution.  More often than not, customers would use ILOG or Fair Isaac or Drools. But it has been several years now, and no doubt Corticon has made some progress in that time (pun intended!) on their rules capabilities.

The conclusions I’m drawing from these acquisitions:

1.  BPM and Rules are a natural combination.  BPM seems to be the value driver, as it is the rules vendors getting gobbled up.

2.  BPM and Content Management or Document Management combinations are also happening.  But the major BPM vendors have (largely) already purchased Doc Management or Content Management solutions… So the remaining players in these spaces are forced to go pick off the weaker BPM vendors instead (OpenText acquired two of them, Lexmark acquired Pallas Athena, and now Kofax is in on the act).

3.  There’s still a lot of shakeout to occur in the market – and execution at a detailed level for each vendor is really going to matter.  At this point it isn’t all marketing fluff – real differences in product are apparent.  But the target keeps moving.  A well-integrated solution that is coherent to the end-user is going to win the day.

Neil Ward-Dutton may be late to the party with his post on the OpenText / Global360 merger, but it is a good read:

So, having set out to purchase Metastorm in February, Open Text has followed up less than 6 months later with the acquisition of Global 360. It’s not much of a secret that Global 360 was looking to be acquired; the hiring of some key webMethods executives in 2008 signalled the start of a concerted effort to shape the company up for a sale. Still, it caught many industry observers (including me) by surprise to see the company follow so closely in the footsteps of another BPM technology vendor and be snapped up by Open Text.

The surprise factor may be one of the reasons this acquisition made so much more news than the Metastorm acquisition.

Appian is again taking shots at others’ acquisitions from the sidelines in “Another Monster is Born”:

Bigamy is one analogy for what’s happening in the stack vendor land-grab for the BPM market. Another is “Frankenstein’s Monster.” And we all know how that played out…for the Monster and the townsfolk.

That’s only the beginning.  Appian is not impressed with OpenText’s acquisition of Global 360.  Frankly, I’m surprised they reacted at all (were they really competing that often with Global 360 or OpenText?)  But here’s a statement I strongly agree with:

BPM is not yet commoditized for the simple reason that BPM is not yet done evolving. Perhaps more than any other enterprise IT market right now, BPM is in a process (no pun intended) of innovation. BPM software is just now learning how to reach more people, drive more value and truly transform a business. Cloud BPM is driving a growing percentage of the market. Mobility has entered the game, as has social technology. This market is not yet complete.

In fact, there are other areas in which BPM is learning to reach more people and incorporate more mature technologies, as well as emerging tech.  But cloud and mobile are certain two big trends to watch (and, to Appian’s credit, two trends they bet on early… compared to other BPM vendors at least).  BPM is not yet commoditized.  But the demand is growing faster than the independents could satisfy it – faster than they could build their sales channels and development teams.  So it looks to me like a lot of interesting innovation will happen in pure plays or niche plays, but that bigger vendors are likely to acquire and incorporate those innovations (hopefully, not destroying them in the process). The question is, can BPM reach its true potential without the deep pockets of public market money or big company R&D?

But leave it to Appian to misunderstand what some of its competition are up to:

It seems to me that all the mega-vendors think BPM is simply a commodity. The mentality is that the more BPM technology you can acquire, the better; loosely stitching them together to create a creature that will succeed through sheer mass. OpenText is the latest example, but look at IBM, Oracle, Progress, etc.

I can’t speak to whether OpenText views BPM as “simply a commodity”.  However, I have some personal knowledge about Oracle, Progress, and IBM.  Oracle: guilty as charged.  They have a BPM strategy but it doesn’t feel like they are putting the gravitas behind it.  Ditto for SAP.  Progress has made BPM (aka RPM) the center of a coherent go-to-market strategy.  When a company reshapes their value proposition with BPM at the heart of it, I hardly call that treating it as a commodity or trying to succeed through sheer mass.  There are legitimate criticisms of the Progress approach, but they have brought together sound technical solutions across a range of product areas that pure plays don’t play in, and they’ve found a way to get behind a process vision for that.

Finally, looking at IBM – Appian is sadly mistaken if they think IBM looks at BPM as a simple commodity that it need not worry about.  Anyone attending IBM Impact in May can see how seriously IBM is taking BPM.  IBM’s customers and partners are taking it equally seriously.  In the very last session of the day on the third day of the conference, our own session at Impact was full to overflowing – as were nearly all the BPM sessions at Impact all week long.  IBM is hearing the message, and the investment in rationalizing their products into a much improved BPM offering is quite obvious to see for those of us in the trenches.

Bruce has a nice write-up of the Global 360 acquisition, and hits on a couple points really well:

On the analyst call, Open Text admitted they are still working on the roadmap, but I came away with the impression that nothing would change very much.  Metastorm would keep on being Metastorm, G360 would keep on its track.  Only the company letterhead would change.

And if so, I think that would be too bad.  If you compare IBM’s acquisition of FileNet (leave it alone) versus Lombardi (revitalize the core offering), there is no question which path is better…

I agree, it would be too bad if they don’t really rationalize the offering and carve out a vision for the future.  And yet, it fits the pattern (so far) with OpenText.  Bruce’s recommendation:

Yes, merging case management and conventional BPM is a good thing – a no-brainer, really – but simply recycling 1990s technology is not the way to do it.  Better to take a page from IBM’s  Lombardi playbook and choose the best pieces from across the portfolio and then do the necessary engineering to create a world-class unified offering.

Exactly.  Perhaps the world needs a world-class BPM offering on Microsoft technology.  So far, Microsoft isn’t building it.  Maybe OpenText can fill that void.  But we haven’t heard the vision for that yet.

Lubor Ptacek comments on the Global 360 acquisition on his blog:

With the combination of Metastorm and Global 360, we are now the largest provider of BPM solutions for the Microsoft ecosystem. The BPM solutions complement our existing information governance and archiving solutions for SharePoint and Exchange. But what’s more important, Global 360 increases the critical mass of process management focus inside of OpenText.

(I didn’t know anyone was still blogging on blogger…)

Being the biggest Microsoft BPM partner is sort of like being the biggest Microsoft Cloud partner.  There are bigger players in both markets, with more traction, momentum, and ecosystems.  But being the biggest in the Microsoft ecosystem is probably better than not being the biggest.

Lubor continues:

The Global 360 acquisition is unique, though, as it allows OpenText to not only expand its offerings, but also reach a critical mass needed to establish itself as a serious contender in a new market. This is not a minor matter.

I think this is the key point.  The ECM vendors need the BPM market to revitalize their growth and increase their addressable markets.  It isn’t a bad thing to be strong in both content and process.  Of course, this isn’t just three companies, OpenText + MetaStorm + Global 360.  MetaStorm and Global 360 each had acquired several companies as well, so this is a roll-up of roll-ups and integration challenges are going to be many and diverse.  The interesting questions will be about a year from now-  what is the roadmap for BPM at OpenText, the roadmap for innovation, etc.

Forrester has a quick summary of the acquisition as well:

OpenText is at it again — and another independent BPM provider is gone. This time it’s Global 360. But Global 360 was more than BPM; it had done a good — no, great — job revitalizing what was at its core an ECM rollup of midrange and questionable solutions (remember Kodak, Keyfile — I actually met an original Keyfile developer there — and ViewStar?). But it nurtured this account base well and  built a fast-growing BPM and case management business. It’s now been purchased by the ultimate ECM rollup, OpenText.

Craig Le Clair’s article emphasizes even further what a monumental integration challenge this will be.

In a surprise (to me) move, OpenText has acquired Global360:

Waterloo, Ontario – 2011-07-13 – OpenText (NASDAQ: OTEX, TSX: OTC) announced today it has acquired Global 360 Holding Corporation, a leading provider of process and case management solutions. The acquisition continues OpenText s expansion into the fast growing business process management (BPM) market, adding to its technology, talent, services, partner and geographical strengths, as well as giving the company important new capabilities in dynamic case management.

Merger Agreement
The transaction purchase price is approximately $260 million (1), subject to customary purchase price and holdback adjustments. Global 360 has generated approximately $90 million in trailing twelve months revenue and is profitable. The transaction has closed in the first quarter of fiscal 2012 and is not part of the fiscal 2011 fourth quarter and year-end results of OpenText. The management team of OpenText will provide further information regarding the future plans of the combined company when it provides fiscal year-end results on August 10, 2011.

A press release in June 2011 claims 30% revenue growth YoY for Global360′s BPM unit for the quarter, but I can’t find any references to the baseline revenue # for either the company or the BPM unit.

So, given that OpenText just acquired MetaStorm, what will they do with Global360?  The press release points to leveraging their strengths in Dynamic Case Management and the Microsoft BPM ecosystem.

OpenText says they’ll continue on with roadmaps for MetaStorm and Global360.  But the questions flying on Twitter yesterday were references to indigestion, concern over merger issues, and doubt about how these products fit together.

The question I have is whether this is truly a software acquisition or a financial management acquisition.  In the latter, you simply acquire the company to capture their customer base and maintenance revenue stream – and then cross-license and work off the maintenance while slashing all costs. In the former, the new acquisition not only benefits from your bigger sales channel, but also helps you sell more of the product you already have into a new customer base.    Too early to tell what the real rationale is, or whether it is simply that they didn’t get what they were looking for in the MetaStorm acquisition.

Others commented that Global360 was one of the last of the original pioneers of the space (actually, it was the successor organization to eiStream, which was one of the original pioneers).  The number of viable commercial BPM suites seems to be declining even as the market is growing, which seems counter-intuitive.  I think that partly this is a function of lower ASP (average selling price) in enterprise software, and lower valuation multiples (these companies aren’t getting big multiples on revenue and growth as they might have in the 90′s).  That leaves them vulnerable to being acquired by someone big enough or determined enough. Not to mention, these firms have taken big VC or PE stakes, and those guys want their money out so they can put it back to work elsewhere.

We’ll keep an eye out for updates on this acquisition and report back.  But given how little coverage the OpenText-MetaStorm combination received, I’m not sure how much coverage to expect this time around.

I was surprised the OpenText acquisition of Metastorm didn’t garner a little more attention in the press.  It certainly got less airplay than the acquisitions of Lombardi and Savvion received last year.  Maybe it is just a sign of how busy things are for the people who cover the space.

MWD recently published their take on the acquisition:

OpenText is no stranger to acquisitions, of course – its 2009 acquisition of Vignette being the most high-profile to date. But with key competitors IBM and Oracle now very firmly in the BPM game and pushing forward with investments to combine ECM and BPM capabilities for case management applications, it’s no surprise that OpenText would be on the lookout for a suitable BPM tools vendor.

That’s about how it reads to me, too.

OpenText is buying Metastorm.  As soon as I saw this announcement, I could guess what transpired.  At first glance, Metastorm has some assets that don’t really fit with the OpenText direction as I’ve understood it (in the recent past, OpenText bought Vignette, formerly a content management powerhouse in Austin).

But if you follow the content management space, you might be aware that in general, the ECM vendors are targeting BPM as a way to stay relevant to their IT and Business buyers.  It is about wallet-share and mind-share.  But there’s more than just the general trend, there are specific data points to look at:

• IBM bought Filenet, along with a BPM software vendor (Lombardi, our coverage under the link).
• EMC owns Documentum. I‘m not aware of a BPM product in their portfolio, but now that all the content management companies seem to be paired up with bigger vendors, it creates some pressure on the remaining players in the space. Looks like they have their own BPMS as well.
• Alfresco has sponsored the Activiti project – an open source BPMS, started by the leaders of the jBPM effort, which has been getting traction and is already in GA.  Activiti is already a key to Alfresco’s value proposition.

I think OpenText was feeling a need to round out its portfolio and the options in the BPM world are a bit more limited than they were a few years ago.  Metastorm has some good product assets, however, and I expect OpenText will find new ways to leverage them, and it will help them stay relevant.

As a BPM services vendor – we see a lot of BPM projects that involve documents, and managing processes relating to key documentation assets.  There’s clearly an overlap at a project or solution level.  But I have to admit I liked the more old-school approach of having clean implementation and interfaces for document management systems, rather than baking the two products into a single offering with a more “UI-driven” integration.  Having said that, the UI-driven integration of ECM and BPM is clearly going to make it easier to build hybrid process solutions.

Side Note:  I can see BPM capabilities being rolled into other products in other horizontal and vertical niches, and improving the value proposition of those products.  That future is coming.

There are just a few software companies in Austin that, if you worked there, will ensure that you are well-networked with most of the current software companies in Austin.  Vignette is one of them.  Everyone knows someone who worked there, and the network among Vignette alumni is pretty good. I’ve worked with a number of Vignette alumni who were top notch, including our own Greg Harley.

I first saw the mention of the acquisition on the Austin Startup blog.