Empire strikes back at Net upstarts

After a long period where the stock markets of the world rewarded anything with an "e" at the start or a ".com" at the end of their name, and marked down companies with solid off-line revenue, many of the former heavyweights of the information management industry have come back with a vengeance.

The phenomenon happened at around the same time as the "pure play" Internet industry found that having some revenue generated by real-life businesses in real buildings - so-called "bricks-and-mortar" businesses - was quite beneficial to a Web-centric start-up which desperately needed some cashflow. The idea of the hybrid "clicks-and-mortar" business gave new life to previously overlooked companies who had been elbowed aside in the rush for "dot com" stocks.

In this atmosphere, companies which had not quite dominated discussion in the budding knowledge management market started to look good again. The mainstays of the industry have started hitting new yearly highs as they release modernised Web-centric product lines.

Perhaps not surprisingly, they have also done it by embracing their opponents' business models.The most striking example of this started last year when Open Text, one of the nouveau Net-rich start-ups, tried to take over PC DOCS, a celebrated member of the old firm. After that storm had buffeted the stock down, fellow Canadian vendor Hummingbird took the opportunity for a friendly take-over, and the combined company has now weathered the worst of it and come out ahead. Its forthcoming portal product has made the market prick up its ears, and the company's stock has been marked up in the hope that it will deliver strong sales in the coming year. Its future directions will, ironically, take it to the groupware industry where Open Text has been battling for years.

FileNET has been bunkering down in its US headquarters over the northern winter, hatching its own plans to conquer the world of "e". The results were in the process of being announced as Image & Data Manager was going to press, but first impressions are that the company has committed to a firm movement towards Web-centric content management and intranet publishing. FileNET has been suitably rewarded by the share markets, with expectations of good returns to follow.

Documentum has benefited most from "Webifying" its product lines. As we showed in a comparison with Open Text last year (Image & Data Manager, May/June 1999, page 81), the company had had its market valuation cut by half within one week of news getting out that its revenues for the year would be "flat". Although the company was not talked about as a juicy takeover target, the disparity between its capitalisation and some of its fledgling competitors almost defied logic.

The year 2000 holds much better prospects for Documentum, and the stock has run back up to a level more than six times its low point. The company's financial position is now much more respectable - and more financially reflective of the company's heritage.

Staffware, however, has been the star of the bunch. Despite being stuck on the London Stock Exchange, far from the madding crowds of Silicon Valley and NASDAQ, its stock has increased sevenfold since news got out that it was developing software that could see it become one of the key software providers for electronic commerce companies. In the gold rush mentality which still exists on the Web, Staffware is building picks and shovels to sell to the prospectors. It remains to be seen how the old and new will perform in the long run.