In our Supply Chain Matters coverage of the B2B and supply chain technology space, we had previously provided commentary related to GXS, Inc. The roots of GXS stem back to the late sixties with its initial founding as General Electric Information Services (GEIS) providing computer time-sharing to general users, migrating to support value-added network (VAN) services such as EDI for both GE and external clients. By 1998, GEIS’s global electronic trading community exceeded 100,000 trading partners, and in 2002, the renamed GXS was spun out as an independent technology services provider purchased by venture capital firms Francisco Partners and Norwest Venture Partners.

In June of 2012, Supply Chain Matters declared that GXS was a hidden gem in the B2B information services and application support arena. In November of 2013, GXS was acquired by OpenText Corporation, Canada’s largest software technology provider. The purchase price at the time was reported to be approximately $1.2 billion, roughly 2.4 times GXS Fiscal 2012 revenues. T

The crown jewels of GXS is the GXS Trading Grid a global platform to support e-business and supply chain information integration that supported upwards of 550,000 trading partners and included some big-name and rather influential industry supply chains. The question was what Open Text’s strategic intent would end to be regarding the acquisition.

Earlier this month, this author was invited to attend a one-day industry analyst briefing hosted by members of the senior management team of OpenText. By the end of the day, I had acquired a broader understanding of OpenText’s business strategy, particularly as it concerned the leveraging of the newly acquired B2B transactional support network.  However, we walked away with some remaining open questions regarding the broad scope of the strategy.

For readers unfamiliar with OpenText, this vendor classifies itself as a broad-based Enterprise Information Management support provider.  Product support areas are rather broad and include:

  • Enterprise Content Management (ECM) – areas such as content management, secure email and electronic content, data and cloud integration.
  • Business Process Management (BPM) – classic business process workflow tools suite.
  • Customer Experience Management (CEM) – areas such web based content management, customer communities, and digital assets management.
  • Information Exchange and Discovery- areas such as B2B communication and transactional integration, secure messaging and information discovery.

Because of this rather broad technology support footprint, the OpenText vertical industry targeting strategy is broad ranging from manufacturing and retail to financial services, government, public utilities and other industries. Open Text’s prime targeted customers are CIO’s and internal IT, but with this broadened strategy and the acquisition of GXS, customer constituencies will have to include cross-functional supply and value chain groupings.

It was rather obvious to this analyst that OpenText acquired GXS for the value of its B2B supplier and trading partner network.  However, the evolving strategy is more about leveraging the Trading Grid in the context of EIM, document exchange, quicker on-boarding of supplier and trading partners and managed services support.  The current OpenText strategy assumes the existence of other business applications that touch or interact across the network and that business value is derived from the ability to leverage content among various business applications within and across the network.

The provider has placed a rather large emphasis on its partnership with SAP, which it classifies as its most strategic partner. The vendors’ EIM technology is positioned to support needs for SAP Business Suite, Ariba, and Microsoft Sharepoint content access, information management and electronic document exchange needs. The current most attractive interest among SAP installed based customers was described as a supplier electronic invoice solution where OpenText sits aside the Ariba Network. Briefing presentations emphasize that the firm was one of the first SAP ISV’s to run Archive Server on HANA for customers needing to manage combinations of both structured and unstructured data. Having achieved recognition as an SAP Solution Extension, 14 OpenText product offerings are currently sold jointly by SAP and OpenText sales teams. That implies that the SAP salesperson is directly compensated for selling OpenText technology in a deal. Asked by this analyst as to which other vendor in the current market is viewed as a prime competitor, the answer turned out to be IBM and its Sterling based B2B network. I would disagree, but that is subject matter for an additional commentary.

From our lens, it would appear that SAP is positioning OpenText for near-term customer requirements in EIM, B2B transactional and content integration needs.  A very open question is how SAP will position such partner support once Ariba and its Ariba Network platform become more integrated with broader SAP Business Suite, SAP Supply Chain Management, SAP SRM and SAP HANA enabled information and business intelligence needs over the longer-term window. Joint customers will need to continue to monitor the evolution of the partnership. Another open question would be the overall cost of layering these various technologies vs. the market appearance of a more holistic business network platform that marries infrastructure, content, application and business intelligence.

As for OpenText and its continued support for B2B and end-to-end supply chain business network and BPM support, a lot will depend on whether the OpenText management team can place more concentrated emphasis on manufacturing industry, retail and online commerce business process support needs.  The vendor further needs to alter its current product marketing messaging to be more in-tune with today’s industry specific business process challenges and desired business outcomes for supply, services and value chain networks. The entire day of briefings included very little mention of vertical industry focus and approach.

If readers require more specific intelligence and insights, give us a call.

Bob Ferrari

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