Salesforce.com Buys Into ECM (AMR)

Salesforce.com is acquiring on-demand content management provider Koral, Inc., and while the deal is so small that salesforce.com isn’t required to report its size, it’s a big enough deal for the press and investment community to take heed. But even after wiping the hype off, the acquisition points to looming changes in the content management market. Koral, a $2.5M venture-funded startup, had already demonstrated its capability, ease of use, and ease of integration as a salesforce.com AppExchange partner. Salesforce.com will deploy Koral in a two-pronged content management strategy:

Salesforce.com’s vision for content management is aggressive, suggesting competition with long-standing, firmly established enterprise content management (ECM) providers like Documentum, FileNet, and Open Text and more pointedly, Microsoft’s rapidly growing SharePoint product. Established ECM vendors have far too frequently expressed their growth potential in terms of how much information is unstructured (industry lore has it as about 85%) versus structured. Warning customers that their information is unstructured incites neither fear nor urges to buy. The better point, one that Koral and salesforce.com express aptly, is that only 5% of employees use any content management system. Productivity, collaboration, and knowledge management needs dictate that far more people should; compliance mandates that far more must.

Of course, the value of getting to more users is not lost on Microsoft, already in front of most business users and seeking to retain and leverage the position. It may only come to a salesforce.com-Microsoft showdown if someone can successfully evangelize a software-as-a-service (SaaS) model for content management; not an easy task considering companies’ efforts to consolidate their content management investments while addressing growing compliance concerns. These days, compliance is a primary or secondary concern in almost every content management inquiry AMR Research takes. In many industries and for many business processes, systems must meet rigorous regulatory standards, some advising and some requiring that documentation must reside within the enterprise’s control. A deeper look at this acquisition, its ramifications in the ECM market, and the future of SaaS in ECM can be found in, “Salesforce.com Buys Into ECM: Is Content Management Ready for SaaS?”