Image by: MARHARYTA MARKO, ©2019 Getty Images
It was roughly a year ago when OpenText CEO Mark Barrenechea strode onto the main stage at their annual customer event in Toronto to declare the company’s rebirth in the cloud.
For one of the largest and most established players in enterprise information management, such a bold transformation had some wondering if OpenText could truly reinvent themselves in the cloud—moving on from almost three decades of history steeped in mostly on-premises technology to stake a claim on the modern information technology (IT) infrastructure of the future.
In early July, OpenText showed their resolve to advance their path to the cloud, and the market response was swift. At Enterprise World 2019, Mr. Barrenechea, joined on stage by Google Cloud Corporate Vice President Kevin Ichhpurani, announced further integrations in their strategic partnership with Google Cloud, an alliance that first launched in December of last year. The expanded collaboration will leverage Google Cloud’s new open platform Anthos, Alphabet’s stab at multi-cloud and hybrid-cloud offerings, to bring containerized versions of OpenText enterprise information management applications to the Google Cloud Platform. Some of these applications include Content Server, Extended ECM, Documentum, InfoArchive, and Archive Center. In return, G Suite’s productivity and collaboration apps (which directly compete against Microsoft Office 365) will soon be embedded into the OpenText information management suite of products as well as key artificial intelligence (AI) and machine learning services from Google.
Shortly after the announcement, the OpenText stock price skyrocketed to an unprecedented high (peaking at $56.11 per share), coupled with an annual gain of 26%. Google hasn’t been left out in the cold either, reporting just last month that they expect more than $8 billion of revenue in the next year for their cloud business. This number puts Google Cloud as the third largest driver of revenue for its parent company Alphabet. While Google Cloud still significantly lags behind competitors Amazon Web Services and Microsoft Azure, the installment of Thomas Kurian, armed with all the lessons from his former employer Oracle, is pushing Google Cloud, and its ever-expanding salesforce, closer to the front lines of the enterprise than expected. With this context, the symbiotic relationship between OpenText and Google Cloud means a little more than meets the eye, which is perhaps why this announcement was met with so much fervor and fanfare in Toronto this year.
According to Alan Pelz-Sharpe, Founder and Principal Analyst at Deep Analysis, “Both firms will offer customers a single service-level agreement (SLA) and a single point of contact. On the surface at least, this is the foundation for a deep partnership, rather than the paper partnerships we so often witness.”
Another marked announcement out of OpenText, which was surprisingly overshadowed by the news of tightened integrations with Google Cloud, was the imminent arrival of Release CE in April 2020. These Cloud Editions offer the full OpenText information management solutions portfolio. “OpenText Cloud Editions can be deployed into the OpenText Cloud, managed and hosted by OpenText directly, or into other public clouds, such as the preferred Google Cloud Platform or optional Microsoft Azure or Amazon Web Services,” explains Marci Maddox, Research Manager for Enterprise Content Strategies at IDC.
Mr. Barrenechea emphasized that the company’s recent July 2019 update will be the last “major release” of OpenText CE, as all future releases will be containerized in quarterly updates.
While Release CE will certainly see cloud editions of Content Suite and other products, it particularly targets a major strategic emphasis for Documentum, one of the most scrutinized acquisitions in the enterprise content management (ECM) market at the time. Purchased in 2017 for a reported $1.62 billion from Dell EMC's Enterprise Content Division, it joined together two of the biggest content rivals under one roof. Since that time, OpenText has consistently maintained that they are committed to investing in and improving Documentum.
With the introduction of Docker containers and Kubernetes scripts for Documentum, it’s becoming clear where that investment lies, as OpenText actively pursues a key area of their product strategy around ease of deployment and total cost of ownership through the cloud. According to Sean Baird, Director of Documentum Product Marketing at OpenText, “This is an important direction for OpenText in general around Documentum. Documentum will essentially become cloud-first.”
“OpenText has a significant investment to preserve with the Documentum portfolio, especially with its life sciences, government, and utility solutions. The move to a modern, containerized architecture for Documentum and its related solutions will offer its large customer base an onramp to the cloud,” said Ms. Maddox of IDC at the announcement.
Documentum has long been plagued by the complex and manual configuration process that comes with its implementation. OpenText believes that the cloud has some very strong advantages on that front by separating configuration from the actual code that's being patched or upgraded, thereby, eliminating duplicate efforts. In our talk with Mr. Baird, he was empathic on the future of Documentum, saying, “We’re putting a stake in the ground next April to say our products have been reborn for the cloud.”
Another core area of focus for Documentum in the July update centered around user experiences through Smart View for Documentum D2, adding capabilities for creating and submitting new documents in a structured format—beyond just content consumption.
This modern user experience borrows from work that OpenText has done on Content Suite and several other products to tie certain tasks in the business process with a personalized workspace for increased user efficiency within a particular business context. This enhanced user experience is available for customers who upgrade to the 16 EP6 release, with the option of switching back and forth from the Documentum D2 Classic user experience to Smart View, depending on the use case. Additionally, OpenText also announced in Toronto their first Extended ECM solution with Documentum as the backend system.
Currently, OpenText is still straddling various pricing models for their platforms, as they continue to move to the cloud. While their managed services for the OpenText Cloud and OT2, the OpenText software as a service (SaaS) cloud offering, provide subscription-based pricing structures, the company’s complete evolution to this pricing model is still in flux. This means that customers will need to balance traditional licensing costs in coordination with developing subscription models from OpenText.
Last month, OpenText reported their fourth quarter results of $747.2 million in revenue, with their fiscal year ending up at $2.87 billion, up 1.9%. Their cloud services revenue rose 11% at $241.9 million. Market analysts point to their continued cloud revenue growth as a driver for OpenText future value, estimating almost a top-line growth of $3 billion for 2020.
OpenText modernization efforts, including their recently announced cloud-first agenda, re-tooled user experiences, and development tools, landed them as the leader in the recent Forrester Wave for ECM Content Platforms. According to Forrester, “OpenText’s ongoing modernization, including investments in new user experiences and app development tools, reflects [their] commitment to a broader enterprise information management strategy, with content being an essential ingredient.”
When I sat down with Guy Hellier, Vice President of Product Management, Customer Experience Management (CEM) at OpenText, in Anaheim at our annual event, DSF ’19, we asked what’s next for OpenText. For a while now, the messaging out of OpenText has revolved around the “connected enterprise.” Mr. Hellier underlined what this really means for modern organizations, “For OpenText, it's about helping our customers get to that point of connecting their systems, their processes, their information, and their data, so they can turn that into a real business benefit for their organization and for their customers.”
Allison Lloyd serves as the Editor of DOCUMENT Strategy Media. She delivers thought leadership on strategic and plan-based solutions for managing the entire document, communication, and information process. Follow her on Twitter @AllisonYLloyd.