OpenText World – Our Thoughts on the Year Ahead

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opentext world 2023

OpenText World – Our Thoughts on the Year Ahead

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The coming year will be pivotal for OpenText, as it now has the potential to not just quietly turn a modest profit each quarter, as it has done successfully for decades, but to soar and become a true tech giant.

Earlier this year, OpenText bought the troubled UK tech giant Micro Focus for just under $6B, their largest ever deal, dwarfing dozens of previous big deals in OpenText’s long history of acquisitions. Financially, the deal makes enormous sense, and we previously explored why – you can read that analysis here. But it brought the colossal task of assimilating, supporting, growing, and frankly, making corporate sense of absorbing another 300 new products, thousands of employees, a starkly different corporate culture, and a legion of customers into the body of OpenText. The conference provided an early insight into how that is, and potentially will, play out over the coming years. And what became immediately apparent was that this is very much a work in progress, a state of flux.

The corporate and investor playbook demands that keynotes and messaging from an annual conference provide a positive and cohesive narrative. In OpenText’s case, this was packaged through the message that everything is now focused on the power of AI and a rebrand of its products around the term ‘Aviator.’ Of course, every other vendor follows the same path from the smallest startup to the biggest hyper-scaler; they all have an AI story, and though they may all differ under the covers, the stories seem the same on the surface. Though I don’t doubt OpenText sincerity in driving forward on the theme of AI, it’s not the differentiator it was just a year ago, and it doesn’t get to the heart of the challenge it faces. That’s a long-winded way of saying OpenText did what it needed to do regarding positioning and messaging in the short term in the context of this event. In the long term, a portfolio of over 600 products spanning the gamut from mainframe COBOL to eDiscovery needs curation, tough decisions, and severe restructuring. Though OpenText is no stranger to acquiring and onboarding companies, this latest deal may mean they revise their playbook.

But first, let’s look at the specific ‘Aviator’ product announcements at OpenText World. Wrapped up in its Cloud Edition 23.4 launch, it unveiled several new (primarily generative AI) related products for business and back-end technologists across its stack. The unifying element and message across these products is that OpenText gives you the freedom to choose and use your preferred selection of LLMs, something it sees as an imperative for enterprises in the future as the range of specialist LLMs continues to grow.  In this first batch, with more Aviator products to come over the coming year, are options for Security, ITOps, DevOps, CCM & EDI, etc. The one that most caught our attention was OpenText Content Aviator, which, at a basic level, provides a chat interface to enable natural language queries to improve search and discovery tasks. However, in truth, our interest was triggered by a show floor discussion with OpenText partner AnswerModules, who gave an impromptu demo that showed how this could not only improve the search experience but also create and feed high-quality content back into the system, creating a virtuous AI cycle. It’s a concept we have seen discussed but not practically demonstrated before, so that is certainly something we want to explore further in the coming months.

As for the broader conference floor discussions, though I spoke with many OpenText employees, I purposefully sought out long-term Micro Focus and OpenText partners to get their take on the event. A recurring concern in those discussions (echoed by other industry analysts) was that OpenText may find it challenging to adapt and change. OpenText needs to heed that, as it is currently, at least, a well-grounded concern. It has long relied on buying distressed firms, moving them to maintenance mode for cash flow, and centralizing its operations around a small coterie of executives. That approach can and has worked for OpenText for quite some time, but there is a “Tipping Point” where it no longer scales or works effectively, and OpenText is either already at or close to it. But frankly, it’s beyond this blog’s scope and this analyst’s expertise to define how OpenText should proceed. It’s here that the likes of McKinsey, Kearney, and BCG earn their keep. Among this vast portfolio of technology, some gems must be given wings to fly, and others must be quietly sunset. 

As to the event itself, hats off to the OpenText team that organized this, as it was well run, and considering all that is going on at the firm, a credit they pulled off so well. Did everyone belong in one location, from company execs through attendees to exhibitors? I don’t think so, nor did many I spoke with. I don’t know what else OpenText could have done, as they only closed the Micro Focus deal earlier this year. Moving forward into 2024, consideration should be given to staging more focused and smaller conferences that bring like minds, buyers, and sellers into cohesive tech and industry-focused communities. A single, unified, and dedicated OpenText investor conference makes good sense, but the diversity of customers the company now supports, from AI & ITOps through security, legal, business networks, content management, and beyond, probably requires a rethink.

In summary, the coming year will be pivotal for OpenText, as it now has the potential to not just quietly turn a modest profit each quarter, as it has done successfully for decades, but to soar and become a true tech giant. Yet, it will have to make some tough decisions if it is to do so. At the start of this blog, I used the term ‘state of flux,’ and that is the term that I think best describes OpenText in late 2023; it’s in transition, there is constant change, and things will take time to settle down, and that’s not at all a bad state of being, as a state of flux is the path to transformation. As the industry analyst who has likely followed OpenText the longest, it will be exciting to see how this change period will manifest.

October was a month of back-to-back conferences; you can read about the others we attended here:

Microsoft Power Platform

UIPath Forward Conference

Hyland CommunityLive

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