EMC's £1 bn acquisition of Documentum is a bid by the enterprise storage supplier to address a requirement from business to store information for longer due to a raft of data retention legislation such as the Sarbanes-Oxley Act in the US and the UK Data Protection Act.
By basing the level of protection, accessibility and storage media used for electronically stored information on the value of the data through an information life management (ILM) strategy analyst company Gartner said users could cut costs. In terms of ILM, EMC's aim is to provide organisations with a means of selecting appropriate levels of availability, protection, and speed of access for data, across storage media from disc arrays to tape back-up systems.
Chris Gahagan, senior vice-president at EMC, said users could lower their total cost of ownership by moving documents across a range of EMC systems such as enterprise-class Symmetrix and mid-tier Clariion machines.
So where does the Documentum acquisition fit in? Documentum's enterprise software is designed to provide users with a way to manage a wide range of data, from electronic documents such as web pages and spreadsheets, to medical records and audio/visual content. EMC claims the takeover will eventually make it cheaper for users to transfer documents around their storage systems.
Gahagan said the EMC acquisition would allow Documentum users to manage their content more efficiently. "You have a choice about how long you want to retain the data with Documentum, but with EMC you also have a choice of how much you are willing to spend for storage [availability] and performance."
The question for Documentum users is whether EMC's vision for ILM would alter Documentum's product roapmap.
Forrester Research said the Documentum acquisition would prove beneficial for users, with EMC moving quickly to integrate enterprise content management, data management and storage management.
Gartner said that although the 2003 product roapmap for Documentum was not likely to change, it warned that Documentum's long-term strategy could be put on hold. In particular Gartner urged users considering the new Documentum Records Services for E-mail to put off any buying decision until EMC's acquisition had been completed.
On the other hand, Meta believes Documentum users evaluating the latest version of the company's eRooms collaboration suite should upgrade to this product, rather than wait for EMC.
This has been a busy year for EMC, with the company finalising its £800m acquisition of Legato last week.
Eric Sheppard, research manager at analyst firm IDC, said, "For the past few years EMC has been very public about its desire to move to a mix of software, hardware and services - its roots are in hardware so it makes sense for it to grow its software business through acquisition."
Nigel Ghent, EMC's UK and Ireland marketing director, said, "We are trying to do what is right for customers and to do that we have to widen our technology and services offering - it is not just about the underlying storage infrastructure."
The acquisition of Documentum is also evidence of EMC's strategic shift towards growing its software business, which it hopes will represent almost a third of its total revenues by the end of next year.
In the third quarter of 2003, software accounted for 23% of the company's total revenue, as did services. That said, hardware and systems were the main cash cow for EMC, providing 54% of revenue. By the end of next year, however, EMC expects software to make up 30% of its total revenues, with services down to 20% and hardware and systems accounting for the remaining 50%.
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EMC announces a £1bn deal to acquire document management specialist Documentum. It strikes a deal with IBM to extend interoperability and compatibility for their disc storage products. Legato acquisition completed.