There is a heavyweight boxing match in Las Vegas this week between Tyson Fury and Deontay Wilder. But there is another equally heavyweight match lining up between Hyland and OpenText.
This past week, we attended an executive briefing with Hyland CEO Bill Priemer, CCO Ed McQuiston, and CPO John Phelan. It was a remarkably open and frank discussion that made clear Hyland’s future ambitions and current state. There was plenty of discussion regarding the acquisitions of Nuxeo, Alfresco, Learning Machine & Another Monday with the team making clear that there was zero chance of the company pushing any of its legacy clients to the two newly ECM platforms. This is something that should come as a relief to many of Hyland’s long-term and loyal customers.
But what caught our attention was the open discussion regarding their drive to double in size over the next five years, and how this will come through 50% organic and 50% inorganic growth. What that means in practice is that we can expect to see many more acquisitions over the next couple of years. Our analysis tells us they should have a two-pronged approach to M&A. Lower price deals that will quickly add good functionality – AI, ML, Automation & maybe more Blockchain. Higher priced market share deals where the technology is secondary to an industry sector customer base that Hylands wants to expand within. These higher-priced deals will likely focus on verticals with a strong footprint, healthcare, education, etc., and take them into new verticals like supply chain and life sciences.
At this time, though things could change, that puts them in stark contrast to nearest rivals OpenText, who has gone very quiet this past year and not closed a single new acquisition. Though OpenText is a close rival, and both have plenty of money to buy up smaller firms, it’s important to note that there is a significant difference between the two. Over the past decade, OpenText has expanded its remit far beyond content and process management and into security and business networking. Hence it is more accurate to say that Hyland competes with half of OpenText rather than the whole. And by that measure, they are pretty much level in terms of scale, with Box closely behind.
This all means that Hyland’s stated ambition to take a leadership position in the content and process management market looks pretty achievable. But that masks the fact that just a few years ago, such a claim would have seemed like hyperbole as Hyland had long been a major but oft-overlooked player in the market. Today they are starting to take center stage at a pace. Even so, there is still much to be done, innovation was never Hyland’s strong point, and M&A is a route to fast track that side of things forward. Innovation has gone from the need to announce something new at an annual conference only for it to be forgotten a year or two later to today it being essential to growth.
For in reality though content and process management vendors like Hyland have continued to grow through the pandemic, their customer base has been shaken by the unexpected changes to their workplace. Systems designed, installed, and running on-premises or even in the cloud to support on-premises working now have an expiry date on them. Moving to the cloud to support an increasingly remote workplace is only one step to addressing that challenge. Over the next few years, many business processes and tasks will be redesigned to meet new needs, which will mean significant change and churn. Organizations don’t simply want what they had before on-premises to be accessible remotely; they want to reinvent and reconfigure. In a Counselling Session this morning, I heard about the loss of significant critical workers across the world of higher ed tech who are being ordered to return to the office but instead have decided it’s time to call it quits. Workers, particularly tech and knowledge workers, are now calling the shots, wanting to change. Hyland and other content and process vendors need to innovate wisely and move beyond the shiny to innovation that truly embraces those impending changes or risk seeing their businesses decline in revenues and relevance over the next decade.
All the being said, Hyland appears to understand the challenges and the new opportunities ahead; only time will tell if they can execute. Still, with 16,000 customers, 4,000 employees, and close to $1B in revenue, they have the resources and customer base to do so. If you are an enterprise buyer of technology and would like to learn more and get some guidance about Hyland and the broader content and process market then feel free to set up your own (free) counseling call and we can chat! These are particularly interesting times to navigate for both users, buyers, and producers of information management and enterprise process technologies. The working world is changing before our eyes and we need to change, hopefully for the better, or instead, be left behind.