It’s becoming the latest trend in enterprise software company evolution. After years of merger and acquisition, in which dozens of products and thousands of customers were dumped helter-skelter into a single corporate bucket, yet another agglomeration of disparate products, services, and technologies is trying to rationalize its offerings.
This time the company is OpenText, and the rationalized product set is code-named Red Oxygen, a collection of five suites of functionality that span search, analytics, archiving, publishing and presentment, social collaboration, process management, integration, content management, and a development and deployment platform. Though the product set is vast, the goal is simple: rationalize a massive collection of products, strategies, and market acquired over its 30-plus years of existence.
In pulling a disparate set of over 100 products under a single umbrella, OpenText is showcasing the ambitions of its CEO, Mark Barrenechea, to avoid being road-kill in the too big to succeed club. In this regard, OpenText is following in the footsteps of companies like Microsoft and Infor, both of which have woken up from a binge of acquisitions and poorly integrated business and product strategies and realized that leveraging the sum of the parts requires more than just a single corporate logo.
From the looks of what OpenText presented at its recent Enterprise World conference, Red Oxygen is just what the company needs – a tangible strategy, and a new platform, for helping customers innovate around the increasingly important domain of content, big data, and business process. At face value this makes a lot of sense – content is at the heart of pretty much every major business transformation I’ve witnessed or worked on, and the interrelationship between content and business process is fundamentally what has to be improved in order for processes to improve.
While OpenText has a lot of ground to cover between its Red Oxygen strategy and execution, the foundation has clearly been laid for re-imagining a compelling reason for enterprises to work with a unified OpenText.
There are three reasons why this strategic rationalization is essential for a company, like OpenText, with dozens of acquisitions under its belt: existing customers need it, prospective customers need it, and an often overwhelmed and outgunned sales force needs it.
For existing customers, a unified product strategy – as opposed to the smorgasbord of products that in many companies results from an often investor-friendly and customer-hostile acquisition strategy – gives customers a strategic vision and roadmap for the products they’ve invested in. Many companies became customers of OpenText through acquisition, and they need to know that the single product they bought can lead them to a promised land of other products, and innovation and value, etc. etc.
Of course, the trick is to make sure that the inevitable bad news that some products will be orphaned or simply rationalized out of existence is countered with some really good news about the new strategy and products that will replace them. Problematic for some customers, but essential for the vendor going forward.
For prospects, the rationalized strategy is usually about sloughing off the lingering market-dinosaur status that often is the result of an investor-friendly acquisition strategy that’s more about creating a fat maintenance revenue stream than product innovation. This is clearly part of the rationale behind Red Oxygen, as it was the rationale behind Infor’s Infor 10x strategy and the Fusion software and middleware strategy that Oracle – the king of investor-driven acquirers – tried and failed to use to rationalize its software binge.
(Over in Redmond, Microsoft has been accused of looking like it is on the road to extinction, but not by running up a massive maintenance stream based on a hodge-podge of older products. Though you could argue that its desktop and office productivity monopolies were definitely making Microsoft as fat and happy as any maintenance-revenue rollup, what was really happening was that the company had let its different operating units function so autonomously that they were indifferent to the need to cross-sell Microsoft products. While the cause was different the effect was similar: existing and prospective customers may have bought the products, but they weren’t being sold a pan-Microsoft strategy, and a massive up-sell and cross-sell opportunity was squandered. In theory, this is what the company’s One Microsoft is intended to solve.)
Like Microsoft, Infor pre-Infor 10x, and like Oracle today despite Fusion, OpenText needed a shot in the arm that could leapfrog its reputation as an old guard market laggard doomed to obsolescence in the face of an aggressive new set of competitors. Reputations like these are often unfairly earned – there is a mountain of evidence that customers have continued to spectacularly innovate using OpenText’s existing portfolio, especially but not exclusively in the SAP market for which OpenText is SAP’s top OEM partner . But there’s nothing like having a loud-mouthed startup, such as Box, trying to steal your market and paint you into a strategic corner to force a little strategic change.
Finally, there’s the problem of sales execution – that great black hole where all good marketing ideas go to die. Companies that grow through rapid acquisition usually find themselves at a point where there are just too many wildly different and often over-lapping products in the portfolio to sell. In frustration the field sales team simply rolls up its sleeves and goes tactical, selling only the point solutions they’re most familiar with and foregoing any attempt to sell a strategic product set or vision. This works well-enough as long as the customers don’t want vision and the competition isn’t doing a halfway decent job of selling a vision of their own. But once the competitors start looking visionary, and the customers start thinking that a little vision might be good for them as well, then a field sales force that can only sell tactically is going to be drag its company down the road of mediocrity.
This triple threat is clearly what Barrenechea is trying to avoid with Red Oxygen, and judging from the reaction at Enterprise World there’s a decent chance he will succeed. While there were definitely customers I spoke with who voiced concerns about whether their favorite product or capability might be lost in the shuffle, there was clearly a sense of relief that OpenText was starting to show some moxie. How well moxie translates to market and mind share will take some time to discern.
There’s one important caveat for OpenText and it’s fellow acquirers-cum-strategic visionaries. The pan-enterprise story is a good one, and a necessary one for vendor and enterprise alike. But it’s hard to sell at a time when more and more influence is being divested to the line of business buyer who unfortunately doesn’t care as much as he or she should about how LOB buying decisions fit into a broader corporate strategy. This problem only gets worse when you add a platform to the mix, as Barrenechea has done with Red Oxygen. Take your vitamins and eat your vegetables … always easier said than done.
In the end, OpenText really doesn’t have a choice – no more than any other serial acquirer in today’s fast-moving technology market has a choice. And as for the ambitiousness of its plan – it’s definitely better to err on the side of too much vision than not enough. The vision is a good one, now we’ll have to see if the customers agree.