Enterprise software vendor Oracle Corp. yesterday disclosed that it would acquire the enterprise content management provider Stellent, Inc. for $440 million, or $13.50 per share.
The addition of Stellent's specialized ECM capabilities will augment Oracle's database with the ability to better manage its customers' unstructured data -- including e-mails, text documents, images, etc. Once an ECM system applies structure to that data, enterprise applications can make better use of it.
Stellent describes its products as "multi-platform and service-oriented." They include Universal Content Management, a platform for managing all of a company's data from creation to archiving; the Imaging and Business Process Management suite, which offers imaging capabilities for document capture as well as business process management tools; and Stellent Compliance and Records Management, a tool for content management specifically focused on compliance functions.
To address broad governance, risk, and compliance efforts, the company offers the Stellent GRC framework, with components such as the Stellent Sarbanes-Oxley Solution integrated with the aforementioned ECM applications.
Oracle currently markets its own ECM offerings. These will likely receive an infusion from the newly acquired Stellent products, which offer best-of-breed functionality. In October, the enterprise software powerhouse released Oracle Content Database and Oracle Records Database as tools that could be added to Oracle Database Enterprise Edition. The offerings provide for management of Microsoft Office documents, PDFs, and image files, which account for much of the traffic in enterprise data.
Oracle has not announced a plan for integrating the Stellent applications, and today declined to comment on the deal.
On a conference call yesterday with investors to discuss Stellent's second-quarter results and the Oracle acquisition, Stellent President and CEO Bob Olsen said the deal was expected to close by the end of this year or in early 2007. Investors appeared to be pleased with the deal: Trading of Stellent shares increased sharply following the announcement.
In his statements, Olsen seemed to hint at further consolidation in the ECM space, where only a few stand-alone providers -- notably EMC and Open Text, which acquired Hummingbird in August -- remain. "Leading industry analysts believe enterprise-wide ECM deployments will ultimately be the domain of infrastructure vendors such as Oracle," Olsen remarked.
As to the question of where Stellent's products will fit within Oracle's business model, Stellent officials said that remains to be seen, noting that the middleware group, as well as the applications and database groups, is a key driver of ECM applications.
Olsen applauded the outlook for ECM and Oracle's foray into the market. "They've built a $15 billion business around the management of structured data through the Oracle database, and recently have been extending this database to effectively manage unstructured content as well."
Stellent will bring Oracle a diverse stable of manufacturing customers, including Daewoo in the automotive sector, Arch Coal and North Star Steel in industrial manufacturing, textile manufacturer Burlington Industries, and St. Gobain, a global plastics company, among others.
The enterprise content management space has been a busy one of late. As companies across the industrial spectrum make the transition from unstructured digital and paper-based communications to a more regimented accounting of enterprise data, the competition among vendors that provide such functionality is heating up.
Another driver of ECM's adoption is the effort to institute governance, compliance, and risk solutions. Over the past several years, the landscape of governmental mandates has grown to a degree that has forced manufacturers into better practices for corporate governance and compliance, including improvements in the way they handle product and financial data.
ECM applications are primarily the domain of the IT department, since any attempt to organize enterprise-wide data must be deployed from a central point, notably the databases that touch all nodes of the digital office. That has produced a novel mix of competitors in the space, with enterprise application stalwarts like SAP and Oracle throwing in with the likes of IBM, whose expertise has traditionally been in the data center, and Microsoft, the business productivity specialist.
In April, SAP took the uncommon step of acquiring its way to a strength position in a burgeoning market, adding governance, risk, and compliance vendor Virsa to its ranks.
A month later, SAP launched its Governance, Risk and Compliance Management Business Unit, with Virsa's technology as the cornerstone.
In August, IBM solidified its position in the ECM race with a $1.6 billion acquisition of rival FileNet. In commenting on the deal at the time, Barry Murphy, a senior analyst at Forrester Research, said, "What IBM is doing is basically saying, 'This stuff, content management, is becoming the domain of big software infrastructure vendors,' and [the FileNet deal] just shows that the dominos are falling. Oracle's going to have to make its move, EMC's going to have to make its move ... And to some extent, Microsoft will have to make some kind of move as well."
Microsoft, whose applications create much of the data that is corralled by enterprise content management systems, is still crafting its ECM strategy, which revolves around its "people ready" concept. In comments posted on the company's Web site, Robert Bernard, general manager of the Global ISV group, outlined upcoming developments. "With the upcoming release of Microsoft Office SharePoint Server 2007, which provides a broad set of ECM capabilities on a unified platform based on the widely adopted Office/SharePoint foundation, Microsoft reduces the overhead of ECM," Bernard said. "The new technology enables information workers to participate in their company's ECM strategy using desktop tools that are already familiar to them, such as Microsoft Office and SharePoint technologies."
Disclosure of Oracle's acquisition offer comes on the heels of Stellent's second-quarter earnings announcement. The company reported year-over-year revenue growth of 12%, to $33.7 million, along with a surge in net income of 139%, to $1.3 million. At the close of the quarter, on September 30, Stellent had $70.4 million in cash and marketable securities.