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Oracle Prepares For ECM Move

When Ovum Research analyst Alan Pelz-Sharpe revealed that Oracle would be entering the market for managing content, he didn't surprise many folks so much as confirm a rumor.

Tsunami, the software maker's code-name for the offering, had been circulating for about a year. And rivals such as Interwoven and EMC's Documentum expressed concern that the marketing clout of Oracle would muddy the industry.

But analysts disagreed about Oracle's impact potential in a space where content is stored in repositories, shuttled across networks and managed over the course of its existence.

Enterprise content management (ECM), in conjunction with storage, has taken center stage in a sector racked by record retention regulations. Thanks to accounting improprieties and shady document shredding, enterprises now must retrieve unstructured data, such as e-mails, spreadsheets and photos, quickly in the event they are sued and called before a court.

This heightened concern about corralling documents has made ECM -- once a quiet market taken for granted by businesses -- a popular industry niche. Analysts estimate that as much as 80 percent or more of data categorized as unstructured resides on the Web and in e-mail files.

The potential for new business has driven several acquisitions in the space in the past year, with Open Text buying Ixos Software and EMC grabbing Documentum.

Oracle, which declined to comment for this story beyond the acknowledgement that it is planning a "significant upgrade to our content management capabilities" took a different route after deciding not to purchase Documentum.

It's building its own from scratch, according to Pelz-Sharpe, who said Oracle envisions Tsunami as a major upgrade to its Collaboration Suite, delivering functionality that scales to tens of thousands of seats.

Pelz-Sharpe and other analysts find this encouraging. They see Oracle following a familiar path that Microsoft has embarked on with its collaboration software suite SharePoint Services. Analysts believe Tsunami will deliver data management as infrastructure in contrast with market leader IBM's document management approach.

Forrester Research analyst Robert Markham said Oracle will go after Microsoft's market and that it could find success there, focusing on fixed content management.

"What they're going to do is go for the broad market like they have with their Internet File System," Markham said. "I don't think they're too late. We've been predicting that Oracle will get in as one of the infrastructure vendors and that's a different type of play from the infrastructure perspective than it is from an ECM play."

Looking for Room

But is the burgeoning ECM market suitable for vendors whose offerings are considered "incomplete"? Some analysts aren't convinced Oracle, and Microsoft for that matter, will satisfy organizations that need "full-blown" ECM functionality.

According to Sue Clark, an analyst with Butler Group, organizations need records management to help them comply with the growing raft of regulations, and one of the vendors with complete offerings, such as EMC or IBM, will provide the functionality they require.

"If Oracle is serious about entering the ECM market space, it would have been better to acquire the functionality rather than try and build it in-house, as that would have given it an immediate market share," Clark said. "It is extremely difficult to establish market share with a new product in a market that is consolidating. Oracle would have been better to abandon its attempts to acquire PeopleSoft and instead buy its way into the ECM market through an acquisition."

Dave DeWalt, former Documentum CEO who now co-manages EMC's Software division, agrees that Oracle's path with Tsunami will likely be akin to SharePoint.

The executive, who admitted that Oracle's marketing clout is fearsome, said Oracle isn't bringing anything new to the table that it hasn't tried before. He sees Oracle and Microsoft as vendors who choose to add a file system to a database in order to cook up ECM.

"We felt our best choice was to go with vendors that already managed structured information and storage," DeWalt said in describing Documentum's coupling with EMC. "The database wasn't architected very well for managing large, binary objects. While we're worried a big vendor is entering this space, Oracle has no less than five times tried to enter Documentum's market place," he added, noting such Oracle products as Oracle Documents and Internet File System.

"What ends up happening is the database vendors need to mount a file system as part of the database in order to access the file system for unstructured information," he continued. "Not a very elegant solution for versioning, work-flowing and collaborating on unstructured information. Rows and columns and SQL access are not suited for managing objects like frames of a video or pages of a document of an unstructured file."

Kevin Cochrane, vice president of product management for Interwoven, agreed, noting that while Oracle's database has been a strong platform on which Interwoven ran its software, Oracle has an uphill battle.

"We see no validation that Oracle has the knowledge and capabilities for bringing business solutions to market for managing content," Cochrane said. "If you look at the ECM market, it's not just about putting more infrastructure out there; not just about selling the latest whiz-bang features in a workflow engine, or the latest whiz-bang features from a version-control perspective. It's really about understanding unique business problems and how they're looking to solve those problems with content management."

Edging Out the Big Guns?

While Ovum's Pelz-Sharpe and Forrester's Markham see a lot of SharePoint in Tsunami, Microsoft isn't so quick to agree. Microsoft officials refused to comment specifically on Tsunami until it hits the market, but the company views its SharePoint as unique in an industry that consistently labels the software as content management.

Mike Fitzmaurice, a technical product manager for SharePoint products and technologies, said SharePoint provides collaboration and file-sharing, not full-blown ECM like Documentum or FileNet.

"I would not directly compare environments that serve up collaborative workspaces that have some document management functionality to specific, formal document management products," Fitzmaurice said.

He also said the large number of people who say they want document management actually just want version control, check-in/check-out functionality and rich metadata.

"The idea is to provide meat and potatoes -- critical functionality that has been lacking in operating systems for some time -- and make it available everywhere."

Nevertheless, Oracle and Microsoft are dipping into a market that already has established vendors satisfying the ECM needs of its customers. But it's clear they have clout, and, for this reason, the market will make way.

"Can the relational database manage object-oriented unstructured info?" DeWalt asked. "I think the last 10 years have proven they cannot. Appending file systems to the database has been tried and hasn't worked. Oracle has lapped its file system along with Microsoft's approach and called it ECM. Is it any more ingenious or innovative than before? I would argue not. But they want a piece of the ECM market, so from a marketing point of view, they're good, so that worries me."

More Contraction Looms for ECM Market

Disagreements aside, analysts expect there to be more contraction in the ECM space as the market continues to grow.

Gartner analyst Tom Eid said he expects content and document management, combined with enterprise content management, will grow at a compound annual growth rate of 10.7 percent through 2008, with worldwide new license revenue of $1.7 billion in 2008.

"We see the enterprise content management market as strong and vibrant, experiencing more technology convergence and undergoing additional vendor consolidation in the coming years," Eid said.

Forrester's Markham said ECM will constitute a $3.6 billion market by 2006, noting that records management is being folded into that space because of compliance rules.

"We see the e-mail archiving market as being subsumed into the ECM market," he said. "One of the big driving factors of the growth of the market is having a big chunk of that e-mail archiving market."

Whatever Oracle's position in the market, its task remains clear. "There is a spectrum of choices and Oracle's sweet spot is to go for the mass market. The ECM market as it stands with all of the specialist vendors is too small for them to really care about."

Vendor Share in the Content and Document Management Market
Company 2003 Market Share (%) 2002 Market Share (%) Growth (%)
IBM 17.9 18 8.3
FileNet 11.6 11.3 12.6
Documentum/EMC 10.8 9.5 25.2
OpenText 7.8 7.3 17.2
Interwoven/iManage 6.1 8.3 -19.3
Hummingbird 5.7 5.1 21
Others 40.1 40.6 7.9
Source: Gartner Dataquest (June 2004)



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