Open Text and Vignette not a CA-style acquisition

I just read a post on OSTATIC that compared the Open Text acquisition of Vignette to the old days of CA. I am guilty of that kind of thinking as well, since that was the first thing I thought and said. But it only took a few minutes to remind me of how wrong I was.

First, a reminder of how painful the old CA acquisitions were. CA would track down software companies with strong annual renewals and declining sales, buy them, gut them, and hold customers hostage in perpetuity. Customers hated CA, but often continued to use the products because they fulfilled a need. They had nowhere else to go for the niches they products filled. This is hardly the case for Open Text and Vignette.

Some things are similar. Vignette has strong annual renewals and declining sales and Open Text did buy them at a bargain price. (They did not have to gut Vignette, since that company shed costs [people] over the previous year to continue to show profitability.) But the final key for the CA-Open Text analogy to work would be holding the customers hostage. That is not going to happen. Yes, some companies are entrenched with Vignette to the point where it would be quite painful to move away. But, a failure to continue to enhance Web Content Management solutions to handle an ever-changing set of web technologies would make even the most ardent Vignette supporters look elsewhere. And, unlike the niche CA products, Vignette has strong competitors: Interwoven was outpacing them when Autonomy acquired them earlier this year; open source solutions continue to add features and customers to build credibility for that market segment; and a host of smaller WCM solutions are awaiting the chance to grab some market share.

According to the press releases, Vignette will remain a wholly owned subsidiary of Open Text. This is probably due to the location of Vignette in United States, while Open Text is a Canadian company. Still, it has the benefit of preserving the Vignette brand and thus keeping the focus on WCM for the company. Open Text is seen as an ECM vendor without a clear focus on WCM, so the Vignette brand provides immediate visibility into the Web market. This type of acquisition would never have happened with CA. The first thing the old CA would have done would have been to destroy the brand by either changing the name or adding the obligatory “CA” prefix to the products (e.g., the XOSoft acquisition by CA resulted in product names like “CA XOSoft Content Distribution”.) Retaining the name, retains visibility, which means if Vignette fails to keep pace in the WCM space it will be much more noticable than if they were operating under the Open Text brand and attrition will come that much more quickly.

I actually like the acquisition for two reasons. First, Vignette has a stronger financial position to build upon. Second, Open Text probably has some ideas on what to do with the transactional content management solutions within the Vignette portfolio. These types of solutions are the bread and butter of Open Text, while Vignette often saw them as a distraction. A renewed focus and funding for Vignette can only be good in the short term. Long term, it is still all about execution.

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  1. #1 by Jon Marks on May 25th, 2009 - 11:45 am

    While I agree it isn’t a CA-style acquisition, I don’t think it is clear whether the Vignette Content Management solution is going to be enhanced significantly. Vignette have struggled to enhance it much for the last 5 years – I doubt this will change.

    I see these possibilities for the VCM if it is going to continue:

    - VCM becomes the “Enterprise” offering, while RedDot becomes the “Corporate” edition. Alterian style. I don’t think this is likely – would be a bit on an embarrassing step-down for RedDot which OpenText have been touting as Enterprise Ready
    - They both become Enterprise ready. VCM becomes the Java solution, while RedDot becomes the .NET edition
    - They split on vertical. Vignette could become the solution for Media/Telco/etc where they are traditionally strong

    VAP will stick around and become the defacto Open Text portal. I don’t see which of the other offerings will survice.

    Full thoughts here:
    http://jonontech.com/2009/05/10/will-vignette-give-open-text-food-poisoning/

    Jon

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