ECM Report

Complementary product stacks and similar infrastructures should benefit customers in a relatively short period of time.

Relative to other recent deals, I believe the synergies of the Vignette and Tower product lines are especially intriguing. When two products merge and there is overlap in core functionality, customers on either side are frequently frightened at the prospect of their product decision disappearing into oblivion. There is little to no crossover in functionality in this deal so current customers on either side won’t necessarily feel the typical pinch. Both product lines sport J2EE infrastructures which, by definition, should make integration easier than normal. In addition, one of Vignette’s core differentiators and competencies is their infrastructure which is completely built around presentation and delivery of content. In other words, their product is already designed to allow easy integration with other products. Mix together Vignette’s existing, ready to integrate infrastructure, Tower’s strong and broad reaching core ECM capabilities, and a common technical backbone and what you get is a complete solution and a compelling story that can likely be brought to market in a relatively short period of time.

On the surface, the new product offering will look very much the same as the other players Vignette will now take on. They are targeting IBM and FileNet, but I would add EMC, Open Text, Interwoven and Stellent to the mix. They all have acquired or built similar stacks and are all positioned to move forward competitively. What I like about Vignette is that their platform is built, right now, today, around portals and presentation. None of others, except perhaps IBM, have the robustness of the Vignette’s portal driving the delivery of the content. I might have added Plumtree to this list… they certainly have the portal power. However, their native ECM functionality is fairly lightweight and not all encompassing. In any case, Vignette’s delivery capability could give them a significant leg up in bringing a complete vision to market in a timely fashion.

I will sound like a broken record now, but I think this is such a critical point it is worth saying again. As challenging as integration of two products can be, I maintain that the bigger challenge is an integration of two sales teams, methodologies, and marketing messages. The current convergence in the industry is, generally speaking, being defined by traditional Web Content Management and/or Portal vendors purchasing vendors with backgrounds in document management, imaging, collaboration and workflow. This deal is no exception. From the perspective of an organization looking to improve their processes, the WCM and ECM product sets are extremely synergetic. This is nothing new. After all, that’s why the convergence is taking place. But as much synergy as there might be in the product stacks, the sales processes and the value propositions couldn’t be more different.

Traditionally, WCM initiatives grow out of IT departments. The messaging in those deals is all tech… scalability, stability, integration, blah, blah and blah. ECM deals, on the other hand, tend to grow out of line of business managers who have a business problem to solve. The messaging in these deals is much more about value propositions, return on investment, efficiencies gained, cost savings, cultural and employee moral, and gaining a competitive advantage. Selling solutions with business related benefits is very different from selling a product specification. Talking FTEs (full time employee) versus XML (eXtensible Markup Language) is like apples and oranges, except at least apples and oranges are both fruit. Vignette, to their credit, has at least recognized this shift in paradigm. Whether or not they can execute on it is the proverbial million dollar question.

In summary, the same sets of question marks accompany this deal as all of the others. Given good product synergy, how quickly, if ever, can a fully integrated solution be offered? Can a new and improved marketing message identifying new differentiators be developed and effectively delivered? Can the existing sales teams adapt to a different sales process? Will any or all of this happen before the competition does the same? There is a lot to do for sure and nothing is certain, but the combination of Vignette and Tower has the potential of being a formidable force moving forward.

Highlights

• $125 million. $45 cash, $80 stock
• Little crossover in core functionality should lead to nearly immediate upsell opportunities across both organizations
• Vignette is extremely competent in delivery and presentation which should allow for relatively rapid integration
• Tower’s strength in core ECM functionality should complement Vignette’s delivery infrastructure
• Both products share a common backbone (J2EE) which should ease integration concerns and allow for a compelling enterprise solution story