IBM puts up US$1.6 billion for FileNet

IBM puts up US$1.6 billion for FileNet

IBM made a play for a bigger share of the information management market Thursday with its plans to acquire FileNet, a publicly held company based in California, for US$1.6 billion.

FileNet makes content management software that organizes unstructured data such as images, audio, video and other documents that are generally more troublesome to manage than structured content in databases. Products from vendors such as FileNet help manage and distribute unstructured content efficiently, so a company can reduce the likelihood of having multiple versions of the same presentation floating around an enterprise, for example.

A key part of FileNet's technology portfolio is its business process management (BPM) capabilities. FileNet's strength is in routing documents through processes that humans are essential to, says Barry Murphy, a senior analyst at Forrester Research. For example, a claims process at an insurance agency might require a document to go through 12 people who all need to do something different to it. "FileNet's system is very good at doing that from end to end, taking content-driven processes that require human intervention and building solutions for that," Murphy says.

IBM has BPM technologies of its own, but they are focused on making system-to-system links, Murphy says. "IBM's BPM capabilities are more around driving data between applications, putting systems together to talk to each other," he says.

The acquisition of FileNet fits into IBM's "information on demand" initiative, which it formally launched in February to help companies find new ways to use the content scattered throughout their enterprises to make better informed business decisions.

"The goal of information on demand is to provide clients with a seamless flow of all forms of information, regardless of format, platform or location, and deliver it exactly when and how we need it to improve the processes and quickly respond to market needs," said Ambuj Goyal, IBM's general manager of information management, in a conference call announcing the news. The FileNet acquisition marks IBM's 20th purchase related to the information-on-demand strategy, Goyal said.

Looking ahead, IBM plans to combine FileNet's operations with its own content management business. But doing so won't be easy, Forrester's Murphy says. "It's going to be hard to put these two companies together," he says. "They've got to decide where overlapping products get pushed together, or where they stay separate, and how they help customers through that transition period."

Research firm IDC says the market for enterprise content management software grew 9.6 percent to hit US$3.2 billion in 2005. Last year EMC with its Documentum division led the pack of content management software makers with an 11.3 percent share of the market, according to research released in July by IDC. FileNet ranked second with 9.2 percent, and IBM held third with 9.1 percent.

Other players in the content management market include Open Text, Microsoft, Hummingbird, Stellent, Interwoven and Vignette. Just last week, Open Text announced plans to acquire Hummingbird in a US$489 million deal.

More consolidation is expected as larger IT vendors look to bolster their information management capabilities, Murphy says. "I could envision a year from now looking at this market and only covering SAP, CA, EMC, IBM and Oracle -- and Microsoft, because they're in this game and could change it on a moment's notice," Murphy says.

The FileNet deal, which IBM expects to close in the fourth quarter, is the third acquisition announced by IBM so far in August. Last week Big Blue announced plans to acquire MRO Software, which makes products for managing physical assets, for US$740 million; and Webify Solutions, which makes industry-tailored software and services for service-oriented architecture (SOA) deployments, for an undisclosed amount.

At US$1.6 billion, the FileNet deal ranks among IBM's largest acquisitions and is the biggest since IBM acquired Rational Software for US$2.1 billion in 2003.

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.


Show Comments