Three Recent Acquisitions - Hyland, OpenText & Alfresco | Analyst Notes | Deep Analysis

Three Recent Acquisitions – Hyland, OpenText & Alfresco

Though one can speculate that these deals may not have gone through had they been delayed a week or two, the fact is they did, and the industry continues to move forward. Recently, Hyland acquired Learning Machine, OpenText bought xMedius, and Alfresco closed their first significant deal by catching TSG (Technology Services Group). Each one, are interesting and significant deals that may well herald similar deals in the future.

First, let’s look at OpenTexts acquisition of xMedius. In 2014 OpenText made its biggest acquisition to date of GXS, an EDI business network business. Since that time, it has added more deals to the business network side of its operations. Over this time it has also been slowly connecting its traditional Content and Process management activities to the business network. xMedius was a relatively small Montreal based business that provides secure document, fax, and unified communications exchange services. xMedius had a footprint in sectors like Healthcare, Government, and Education. The deal was a logical one on many levels, and if nothing else shows OpenText’s long term commitment to expanding services into its core Business Network infrastructure.

Alfresco acquired long time partner TSG and bought not just a system integrator that knew its customers and products well. But also one that has been a pioneer in developing community/open-source products, and experimenting at the edges of ECM. The services side of the business alone would have been a boost to Alfresco, but the addition of expertise and products ranging from annotation to migration makes it doubly so. But maybe the most interesting aspect of this deal is the innovative bent of TSG; as they were the first to experiment with Hadoop, NoSQL and have done a lot of work with AWS over the past few years. This experience will be integrated into Alfresco through Dave Giordano TSG’s former CEO, becoming head of strategy at Alfresco.

Finally, a quick look at Hyland’s acquisition of Learning Machine. Again, its a buy that checks the right box in that Learning Machine was focused on higher education, a key vertical for Hyland. But more importantly, its the first Blockchain acquisition by an ECM vendor. It’s a relatively safe one as it’s a logical upsell to Hyland’s existing customers. Still, the ability to use Blockchain to verify credentials has the potential to reach much further into healthcare, government, and financial services and will surely spur other ECM vendors to look more closely at the use of Blockchain.

Taking a step back, if there is a unifying factor in these three deals it is that in each case, they are all deals that expand the reach and depth of each vendor. Most acquisitions in the content and process sector in the past have been very conservative and risk-averse. Few deals are ever focused on simply gaining IP, and startups seldom get a look in. Transactions have typically been of established firms with decent revenue streams that found themselves struggling for one reason or another. I think in the future, that will start to change a little bit. No doubt deals will remain somewhat conservative, but as pressure mounts on legacy revenue, new approaches, with new technologies and strategies need to form. ECM & BPM have become cash cows, and that’s not necessarily a bad thing. But as of today, far too little investment has gone into developing next-generation stars and revenue streams. These three deals may herald the start of a slow but inevitable shift.

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