|
|
|
|
|
Instant Insight |
|
|
|
|
EMC Buys Documentum and Moves beyond Data to Information EMC has announced that it intends to acquire content
management software vendor Documentum, in a stock-swap transaction estimated
to be worth approximately $1.7 billion, a 29% premium on Documentum’s closing
stock price Monday. Documentum specializes in managing “unstructured”
content, such as images, PDFs, and other content
that cannot be stored in relational databases. EMC officials project that 80%
of all data is unstructured. EMC indicated that it believes that Documentum,
with more than 2,700 customers worldwide, shares the same customer focus as
EMC enterprise services and the Global 2000 companies. As second major
acquisition for EMC this year (having acquired Legato Systems in July for
$1.2 billion), the two acquisitions were promoted as very complementary to EMC’s overall strategy of software focusing on storage
resource management and software infrastructure, with Legato’s software
infrastructure products managing data and Documentum software anchoring
content management software. Company officials were enthusiastic as to the
complementary nature of the customer bases, sales forces, and merged product
line potential. Net/Net Last year, EMC announced that it was initiating a
major strategic shift to begin offering a host of storage management software
and tools that would make its storage products and SANs
easier to deploy, manage, repair, and consolidate. The company’s logic at the
time was, in our mind, sound, as it sought to promote value-add in its
products, making them more enticing to customers, and staying ahead of the
creeping commoditization of hardware storage products. In short, the company
sought to differentiate itself from competitors by offering a stronger
portfolio of software products that improved the efficiency of storage deployments
but also gave support to EMC’s stated direction
toward virtualized data storage environments. We believe this acquisition of
Documentum takes this effort to the next level. Building on the on-going
product rationalization of the EMC and Legato assets, this acquisition points
the way to the virtualization of information assets Virtualization of storage networks allows enterprise
IT to more efficiently manage their SANs by
enabling enterprises to logically deploy data on the most appropriate piece
of hardware within the network. For example, EMC’s
storage software offerings are giving enterprise IT the ability to place
heavily accessed data on the fastest storage hardware in a network,
maximizing the return on that hardware while prioritizing that data based on
its heavy usage. Virtualization also offers greater flexibility and control
in managing data failovers, recovery, and mirroring. However, given that much
of the data stored on these enterprise networks is unstructured, the
acquisition of Documentum and its content-management schemata have the
potential to take EMC’s strategic vision that one step
further. What EMC is now pursuing, in our opinion, is well beyond the
virtualization of the widgets and whatnots, the nuts and bolts of the data
center storage management needs. It is taking a meaningful step toward the
virtualization of content, potentially providing greater value add through
the data context that the proper integration of Documentum’s technology
provides. With Documentum’s technology in hand, EMC can now put forward to its customers significant means by which they can craft more granular filters to all forms of content, beyond and complementary to what is stored in relational databases. When one considers the sheer volume of contracts, basic records, medical files, and other such unstructured data in the enterprise, the logic of providing the ability to manage the authenticated access, utilization, replication, and recovery of this information in a storage network seems obvious. As such, we believe this acquisition, along with the Legato transaction, offers concrete proof that EMC’s strategic software charge, to deliver significant software value add to its storage offerings, is real and made of stuff much sturdier than most strategic marketing communication campaigns. This acquisition tells us that EMC is pursuing a cogent, well-considered strategic vision that could significantly differentiate the company from most of its current competitors. |