Magic Quadrant for Enterprise Content Management, 2006
11 October 2006
Karen M. Shegda Kenneth Chin Mark R. Gilbert Debra Logan Toby Bell Lou Latham
Source: Research
Note Number: G00143653
This Magic Quadrant assesses vendors and their product sets' completeness, maturity and suite integration. As firms deploy content infrastructure and some core functions become commodities, these aspects will be crucial.
Content management is a critical technology that helps organizations manage important documents and other unstructured information. Enterprise content management (ECM) was a $2.3 billion software market in 2005 (based on total software revenue) and has a forecast compound annual growth rate of 12.8% through 2010. However, the vendor landscape continues to consolidate, as shown by several recent high-profile acquisitions, and shift toward infrastructure vendors such as EMC, IBM and Microsoft for enterprisewide deployments. Content management vendors address a spectrum of user needs and offer a range of functionalities, with some focusing on process-centric applications and others on basic content services.
Strategic Planning Assumption(s)
By 2010, basic content services will be essential infrastructure, deployed across 60% of enterprise desktops (0.7 probability).
Figure 1.
Magic Quadrant for Enterprise Content Management, 2006
Source: Gartner (October 2006)
The content management market is changing rapidly, driven by the commoditization of some content management components by Microsoft, Oracle and IBM, and by the recognition by end user organizations that one size doesn't fit all when it comes to content management. These trends are causing basic content management features to become part of the infrastructure, shifting the vendor landscape toward the software stack vendors (such as IBM, Microsoft, Oracle and SAP), and driving the remaining content management vendors to focus on content-enabled vertical applications (CEVAs) or heritage functionality like imaging or Web content management (WCM). The rapid change is also driving mergers and acquisitions, as shown by Open Text's acquisition of Hummingbird and IBM's of FileNet.
Vendors are continuing to move to deliver fully integrated ECM suites, and many are adding complementary functional components such as archiving, digital asset management, electronic forms and e-mail management. At the same time, many organizations have found that ECM remains more of a strategy and an architectural vision than an installed reality. Most enterprises still have multiple content management products, often divided into the traditional domains of document management, Web content management, records management and so forth. The high cost of implementing ECM suites and the complexity of the user interfaces and applications have prevented true enterprise deployment. Organizations want to get content functionality from fewer vendors, but most recognize that their multiple functional requirements and different categories of users make this goal challenging. Stack vendors have responded by leveraging their infrastructure platforms to deliver basic content services (BCS) offerings (see Note 1).
Content management really constitutes a spectrum of capabilities, with BCS at one end for basic and horizontal capabilities and full ECM at the other for process-centric applications. BCS promises affordable, easy-to-use document management, often with some collaboration or Web editing features, suitable for mass deployment in both large and small organizations. BCS has the potential to spur market expansion — that is, to create demand at the higher end for the ECM suites by fostering more content under management, more opportunities to create content value hierarchies, more content reuse and the need for more content federation. But as BCS offerings mature and expand their capabilities, they will present a significant challenge to well-established ECM technology providers. ECM suite vendors are moving quickly to differentiate themselves from BCS providers and stack players by developing horizontal and vertical solutions. Many traditional ECM suite vendors are already beginning to embrace and extend BCS tools, like SharePoint and Oracle Content DB, ceding the commodity components to the infrastructure players and focusing on higher-value content applications instead.
Gartner defines today's ECM suites as encompassing the following core components:
The market and customer requirements are evolving rapidly, and vendors are adding capabilities that can extend or interoperate with the ECM suite. These components include:
At the other end of the spectrum, BCS typically addresses only document library services and document-centric collaboration, with minimal support for imaging and workflow.
Inclusion and Exclusion Criteria
To be included as an ECM vendor in this Magic Quadrant, the firm must sell licensed content management software for installation on buyers' premises and have references that are actively using the product in production. Application service providers (ASPs) or hosted service providers are not included. Vendor must have at least $10 million in content management software license and maintenance and professional service revenue. The vendor must actively sell its products and services in at least two major regions; for example, in North America and Europe or in Europe and Asia/Pacific.
Vendors must have a content management suite that includes the following components:
Vendors should have all of these capabilities, but they do not necessarily need to have all the components integrated. They must have at least four capabilities natively; other components can be delivered through formal partnerships. To be a Leader, a vendor must have all six components. As the market evolves, other functional components are being added to the suites. Vendors that understand the shift in customer requirements, and that are adding appropriate components to their suites, demonstrate greater vision.
EVER TEAM is a French company gaining traction in Europe with a comprehensive ECM suite.
SunGard Data Systems has evolved from a focus on integrated document management for healthcare to a full ECM suite vendor and CEVA provider.
Xythos Software, a BCS software provider, now meets our inclusion criteria.
Mobius Management Systems has shifted its focus away from ECM to content archiving and no longer markets itself as an ECM vendor.
Hummingbird and FileNet have both been acquired and were not evaluated as independent vendors. Open Text finalized its acquisition of Hummingbird on 2 October 2006. FileNet shareholders approved the acquisition by IBM on 3 October 2006.
The ability to execute measures how well a vendor sells and supports its ECM products and services on a global basis. In addition to rating products' capabilities, we evaluated the vendors' viability, installed base, pricing, customer support and satisfaction, and product migrations from one major release to another (see Table 1).
Source: Gartner
Completeness of vision focuses on potential. A vendor can succeed financially in the short term without it, but the company won't become a Leader without a clearly defined vision or strategic plan. A vendor with average vision will anticipate and respond to change by accurately perceiving market trends and exploiting technology. However, a vendor with superior vision can anticipate, direct and initiate market trends, particularly if it integrates its vision into a broad range of areas, and leverages product and service development (see Table 2).
Source: Gartner
Leaders have the highest combined scores for their ability to execute and completeness of vision. They're currently doing well and are prepared for the future with a clearly articulated vision. In the context of content management, they have strong channel partners, a presence in multiple regions, consistent financial performance, broad platform support and good customer support. In addition, they dominate in one or more technology or vertical market. Leaders can deliver a comprehensive ECM suite by having all six core components and proven enterprise scalability. Greater emphasis was given this year to suite integration (for example, a common user interface, common code base and single repository), demonstrated enterprise deployments, integration with other business applications and content repositories, and a vertical process/solutions focus. As a result, there are four leaders in this year's Magic Quadrant.
Challengers have good functionality and a substantial number of installations, but they lack the vision of Leaders. They don't "own" all the core components of ECM; rather, they leverage partnerships to round out their suites. Hyland Software remains the lone Challenger.
Visionaries may own all capabilities natively or partner for several core ECM components. In some cases, Visionaries will need to integrate their acquisitions into their product suites. They typically show a strong understanding of the market and anticipate shifting drivers. However, they have a lower ability to execute than Leaders. They are building market presence and focus more on horizontal applications than targeted vertical solutions.
Niche Players focus on specific areas of ECM technology (such as document management, WCM or records management), but not on the entire suite. This category may also include vendors that are still ramping up their overall ECM efforts and have neither the vision nor the execution to break out of the Niche Players quadrant. Seven vendors are included in this category, including some powerhouse vendors that primarily deliver BCS. These BCS vendors are included here because user organizations see them as strategic, viable choices for their content management needs, but they may not have the full functionality to deliver on the more complex ECM applications. Some niche players are "boutiques" that serve only specialized regions, vertical industries or functional domains, but do not compete effectively in the broader market.
Cimage, a Sword Group company, is a global, vertical specialist focusing on the oil and gas industry, utilities and power markets, and manufacturing and life sciences. Cimage markets its own application, Cimage e3, and also works with third-party repositories. Fusion is the firm's new Web services-based platform for building CEVAs on top of popular ECM platforms, such as Documentum and Microsoft's SharePoint products and technologies. Cimage has begun gaining market penetration with this approach.
Day Software started as a WCM provider, but has expanded its focus to include digital asset management, workflow and basic document management capabilities. It has been an early supporter and proponent of the JSR 170 integration standard, while its Content Bus, a powerful content aggregation and integration tool, generates growing OEM revenue. Day has a presence in Europe and is gaining momentum in North America. The firm is increasing its size and limited geographical reach by expanding its indirect channels and developing its systems integrator (SI) network.
EMC continues to gain market momentum, winning large enterprise deals against its two main ECM competitors (IBM and FileNet), while achieving revenue growth that outpaces the market. The company, which encompasses the Documentum brand, has made a number of strategic acquisitions (including, Captiva, Acartus, Authentica and ProActivity) to provide capabilities for addressing the entire document life cycle, as well as business continuity. EMC's longer-term success in the ECM market will depend on sustaining its growth and product leadership in an increasingly competitive marketplace, particularly in the face of rising demand for basic content management. It needs to build out richer vertical applications and reduce product complexity and deployment times. In this market, value-added solutions, vertical solutions and domain/industry expertise will be critical.
EVER TEAM is a technically capable vendor with a full suite of ECM products, including document, records and e-mail management, IDARS, WCM, and workflow. Based in France, the company is seeking to expand geographically. The firm's limited geographic reach relegates it to the Niche Players quadrant, but its architectural and technical strengths, which utilize Java 2 Platform, Enterprise Edition (J2EE), XML and a service-oriented architecture stand the firm in good stead to take market share in Europe, as fewer stand-alone vendors remain. It has also seen good traction in the Middle East since entering that market nearly two years ago.
Hyland Software has established itself as a strong contender in the midmarket ECM segment, addressing both departmental and enterprise needs. It continues to grow at a rate that has consistently outpaced the market, thanks to its channel partners and a focus on vertical solutions. The firm has developed targeted solutions for healthcare, financial services, higher education and state and local government. Hyland's strength resides in its OnBase imaging and workflow capabilities, which can be deployed with minimal professional services. It is also slowly gaining momentum with OnBase Online, a hosted offering. In keeping with the trend toward broader ECM suites, Hyland has added richer document management, collaboration and e-mail archiving to OnBase's core functional capabilities. To move beyond its Challenger status in ECM, Hyland must continue building its presence outside the Americas.
IBM is one of the Leaders in terms of ECM market share and is often a finalist in enterprise-level sales opportunities. It has an ECM vision that stretches across three of its core software brands: DB2, WebSphere and Workplace. Its core focus and main successes in ECM have been with the DB2 product family. Though IBM has all the core ECM components, its WCM product has historically been weak. The most recent release improves on this by incorporating some WebSphere portal functionality to give it a better front-end, some analytics and multi-site management. In addition, FileNet offers more robust optional WCM capability through an OEM agreement with Day Software. IBM must put together a strategy for basic content services and execute in this area to fend off competition from other infrastructure players.
This emerging category of ECM is poised to see significant market penetration, yet IBM is being overshadowed by Microsoft and Oracle in terms of messaging and market awareness. It has some of the key elements of basic content services, such as document-centric collaboration, core library services and Web publishing, in its Workplace and WebSphere Portal products, but it has not capitalized on them. Adding to the confusion, IBM also markets a version of a full ECM offering, Content Manager, to the small and midsize business (SMB) market, a key audience for BCS. IBM's acquisition of FileNet adds greater complexity to an already complex product portfolio.
An early WCM innovator, Interwoven became an ECM vendor in 2003 with a series of acquisitions. Interwoven has all the core ECM capabilities, plus complementary components such as DAM. The company has good technology in WCM and document management, and has a strong presence in the professional services vertical markets. It has improved its financial performance over previous years and developed strategic alliances with Microsoft, BEA and Sun. Interwoven is getting back on track with new leadership in executive management and sales. It now needs to continue building out is partner "ecosystem" and delivering on vertical solutions.
Microsoft's current iteration of Windows SharePoint Services (WSS version 2.0) falls short as a major content management contender, but has drawn user interest for BCS. Microsoft WSS 2.0, which is free for users of Windows Server 2003, provides team collaboration, document storage and version control (but for major versions only). Its lack of document-level security and workflow has limited its adoption by enterprises for anything other than team support. Microsoft does currently address WCM needs with a separate product, Content Management Server (CMS) 2002. WSS 2.0 and CMS 2002 together give Microsoft a minimal entry into ECM. The pending release of WSS version 3.0 and Microsoft Office SharePoint Server 2007 (MOSS) give Microsoft greater market credibility and a better ECM vision. The company promises cost-effective BCS functionality in WSS 3.0, and is moving closer toward ECM with MOSS 2007 (both are expected to ship by the end of 2006). With the content management improvements in WSS 3.0 and MOSS 2007, Microsoft is likely to gain a leading position among the BCS providers, garnering a sizable share of BCS seats by the end of 2008. Microsoft's content management offerings alone will not address back-office functions or provide the rich, process-focused capabilities of major ECM vendors like EMC Documentum (for new drug submissions and regulatory compliance) or FileNet (for loan origination or claims processing), but they will be sufficient for many application scenarios.
Objective, with beginnings as a document management and workflow implementer, is a growing ECM software provider in Asia/Pacific and Europe, the Middle East and Africa (EMEA). It has just begun developing a presence in North America, but will need to build out its partner channel to gain any significant market penetration. It has developed a full ECM suite with specialized native capabilities for engineering drawing management, leveraging a single repository, single code base and single user interface. Objective primarily targets public sector, defense and intelligence, energy/utilities, and engineering and construction markets.
Open Text has embarked on a strategy to become the leading pure-play content management provider, largely through acquisitions, including the recent acquisition of Hummingbird. Open Text has gained strength in Europe through the IXOS acquisition. Open Text currently finds itself at an important juncture — it has begun articulating a strategic vision and product road map that capitalizes on its numerous high-profile acquisitions and aligns it more deeply with infrastructure players (Microsoft, Oracle and SAP). The firm has also renewed its focus on partnerships for systems integration and content-enabled vertical applications. It has an opportunity to succeed as a first mover in a rapidly changing content management market, but success is not a given. By acquiring Hummingbird, Open Text gains its stable installed base, its successful RedDot WCM subsidiary and its expertise in certain vertical markets (such as the legal segment), plus a set of packaged solutions for correspondence management, contract management and geospatial information systems (GISs). The combined company will be able to leverage a larger technology base, more vertical industry expertise and combined R&D. It will be a larger player with greater capability to compete against its primary competitors: EMC and IBM. Despite what it gains through its acquisition of Hummingbird, Open Text will still have weaknesses compared with its primary competitors in certain ECM capabilities — specifically in workflow — as well as expertise in traditional ECM markets, such as financial services, insurance and banking.
Oracle's Content Database and Records Database products provide a platform for content management. Oracle Content Database is its latest content management product, released in June 2006, and evolved from its Oracle Files and Oracle Content Services 10g predecessors. Oracle Content Database provides capable basic content services, but is still a work in process, as it still needs to bring all the content management components together, including adding more functionality and integration to other content repositories. We expect that when Oracle Application Server 11g is released, Oracle Content Database will be integral to managing content within the application. Oracle has had limited market traction, but Oracle Content Database can be considered by enterprises that want a content management solution that leverages their Oracle infrastructure.
SAP's strategy is to offer customers a product that enables them to leverage their investments in SAP infrastructure. SAP does not sell a stand-alone ECM suite, but rather offers basic content management capabilities as part of the NetWeaver platform. It also includes document management and records management functionalities in its mySAP Business Suite. Of the infrastructure vendors marketing basic content management capabilities, SAP has the least market visibility. To be viewed as a serious contender in this market, SAP must improve its content management capabilities and deliver on its vision of a comprehensive application framework.
Stellent's good technology, client focus and solid vision demonstrate an understanding of client requirements and market drivers. The company's ECM suite addresses all six of the core ECM components, as well as some optional functions (including e-mail management and DAM), within a single platform. It has been equally strong in document management and WCM. Differentiators include its Sarbanes-Oxley compliance offering. Solid execution and conservative financial management has yielded consistent new license revenue growth for content management. Stellent is growing organically at a rate that has outpaced the overall ECM market. Its strong ECM technology platform, but limited market presence in enterprise-level deals, shows that Stellent would benefit from concentrating on "pull through" partnerships with larger, global SIs and other channel-based execution strategies.
SunGard Data Systems has evolved from focusing on integrated document management for healthcare to become a full ECM suite vendor and CEVA provider. The firm has leveraged a number of acquisitions to gain the functional components, including recognition capabilities and WCM, in its suite. SunGard focuses its EXP suite on financial services, insurance, healthcare and higher education. Despite its technical capabilities, it has minimal brand recognition as an ECM provider. It needs to improve its market visibility and penetration.
Tower Software has a strong track record in delivering electronic document and records management applications for the government segment in Australia, the United States, Canada, New Zealand and the United Kingdom. Although it provides some of the core ECM capabilities, and partners for others, Tower has been adopted mainly for its document and records management capabilities. Tower added native WCM capabilities to its portfolio in January 2006 with the acquisition of .NET-based WCM technology from Rapid Web Solutions. To extend its position in the mainstream ECM market, Tower must continue the geographic expansion it has begun to achieve and continue developing its channel presence.
Like many of its competitors, Vignette became an ECM suite provider through acquisitions, which have given it solid complementary products in all six ECM applications. Its products, however, have remained largely independent at the code level, and users have implemented them primarily as best-of-breed solutions. Vignette has good technology, especially in WCM, where it has pushed the boundaries of functionality, especially for large, complex Web sites. It has struggled to grow license revenue and achieve consistent profitability on a generally accepted accounting principles (GAAP) basis. This year, Vignette has revamped its management team with a new CEO, CFO and CMO all coming on board. This new team is focused on growth, profitability, product innovation and a better marketing message. The company has shifted toward solutions and targeting vertical markets such as healthcare, financial services, telecom/media and the public sector. Vignette needs to rationalize its process components as well as build on its heritage WCM/portal strengths.
Xerox has a dual-product strategy for content management. It targets the BCS segment with its DocuShare product and intends to become a serious contender in the full ECM suite market with a higher-end offering, DocuShare CPX, which it announced in 2006. Xerox has strong brand awareness and presence as a global hardware company, but software in general, and DocuShare sales in particular, represent only a small portion of its total revenue. Xerox has accelerated acceptance of DocuShare by integrating the software with its multifunction products (MFPs) for knowledge workers who need to capture paper documents in real time, as well as by leveraging DocuShare in MFP deals. The opportunities for DocuShare are broader than those afforded by the typical MFP channel, however. The immaturity of Microsoft's BCS offering and Oracle's Content Database has provided opportunities for Xerox. It can succeed here by capitalizing on its name recognition and the marketing channel offered by Xerox Global Services. Success will also require building alternative channels with independent global systems integrators and leveraging CPX toward CEVAs.
Xythos has been able to leverage its open standards-based BCS offering to grow revenue and customer base. It now meets the required revenue cut-off for inclusion in this Magic Quadrant. Xythos is a fully Web-based and WebDAV-compliant tool that provides file management and basic document management in its core server platform. Xythos is used frequently in higher education, state and federal government, and healthcare sectors. It faces increasing competition from Microsoft and Oracle, and will need to focus more heavily on vertical market solutions as opposed to horizontal BCS.
Acronym Key and Glossary Terms
| BCS | basic content services |
| BPM | business process management |
| DAM | digital asset management |
| ECM | enterprise content management |
| EMEA | Europe, the Middle East and Africa |
| IDARS | integrated document archive and retrieval system |
| J2EE | Java 2 Platform, Enterprise Edition |
| SI | systems integrator |
| SMB | small and midsize business |
| TCM | total content management |
| WCM | Web content management |
| WSS | Windows SharePoint Services |
Note 1
Basic Content Service
This can be differentiated from ECM as follows:
Evaluation Criteria Definitions
Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets and skills, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit to continue investing in the product, to continue offering the product and to advance the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all pre-sales activities and the structure that supports them. This includes deal management, pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel.
Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message in order to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional, thought leadership, word-of-mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups and service-level agreements.
Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.
Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those with their added vision.
Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the Web site, advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling product that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements.
Business Model: The soundness and logic of the vendor's underlying business proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including verticals.
Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.
Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.
