“Never interrupt your enemy when he is making a mistake” – Napoleon
One of the strategies used by Napoleon, when faced with superior numbers, was the use of speed and focused attack to gain the central position. This allowed Napoleon to drive a wedge to separate the enemy armies. He would then be able to overwhelm his enemy in smaller targeted battles against mightier forces.
The reason I mention this, was that it occurred to me late last night that the WCM sector is still very segmented and may be vulnerable to such a strategy against some of the less focused players, who also operate in the sector. By a few well timed strategic acquisitions there is an opportunity to gain a dominant hold on the WCM sector.
Although there are massive repercussions across all industries and sectors due to the credit crunch the WCM sector will probably do better than most. This is a technology that is coming of age. There are still massive opportunities as companies continue to buy WCM solutions.
FatWire Software has reported 40% revenue year-over-year growth in 2008, taking it to $44m. The company reportedly rebuffed acquisition approaches last year, as it focused on growth and updating its product line under new management.
The opportunities for consolidation are evident. Vignette have been a potential likely target for some time despite with 2008 revenue down 11.6% from 2007 and Q4 specifically down 29.4% year over year. License revenue is especially weak, with just 19.5% ($7.3m) of total Q4 revenue coming from licenses. Overall, the company reported a net loss of $6.3m for the year. However, this could be seen as systematic of them possibly struggling with internal issues of integration and capitalisation, given their acquisition of Tower Software in 2004, when they added workflow and imaging.
Sitecore claimed 100% growth in its fiscal 2008, which ended June 30. However it must be taken in to consideration that this is from a relatively small base circa $10m for fiscal 2007. Sitecore's fiscal 2009 revenue is expected to be in the $30m range.
There maybe an opportunity to gain new business against slower less focused forces. The likes of Interwoven who have been recently swallowed by Autonomy, are one of a number of larger but less focused players in the WCM sector.
Would a multiple consolidation in this sector gain battle advantage by following the Napoleon strategy, to create a relatively large but more importantly focused and specialist force in WCM?