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Alan Pelz-Sharpe

Hyland acquires Hershey Software

1-Sep-2010

Tags: Document Management (ECM), Marketplace at Large, OnBase , Finance, Health Care, Higher Ed

You probably did a double take when you saw that Hyland had acquired Hershey's. Sadly the world of chocolate and ECM are not about to merge. Hershey Software is both cocoa and lactose-free - it is a firm that sells a document management system for higher education.

This acquisition is an unusual move, as for many years Hyland has been synonymous with document management and workflow solutions for the mid-sized banking and healthcare sectors. With this acquisition, Hyland takes a fairly serious stake in the higher education sector. But not a dominant stake: the higher ed sector has many players; for example Perceptive Software has over 400 clients there, and its a highly competitive market to get into.

Of course it's up to Hyland to decide how to run their business, and where to target their efforts, but it's for their customers and the likes of me to question if this acquisition will prove to be a distraction to the current customer base. I can't help but conclude that it will, as the Hershey acquisition not only takes them into a big new market (though to be clear Hyland did have a few higher ed customers prior to this) but it also delivers a completely new and overlapping ECM technology set. Hyland have not just bought market share, they have bought a lot of new technology. For a company that has long built and developed its own technology, it's hard to predict how this will play out. 

It may be that Hyland will take the best of both technology sets and develop something impressive, but that is hard for even the likes of Oracle and IBM to pull off. They may continue to run the two product sets completely separately, but then there will be overlapping resources and functionality and potential rivalry and confusion. Hyland could just let Hershey do their own thing but as Autonomy and Open Text can attest, that isn't easy either.

Many analysts including yours truly, as well as Hyland's arch competitors, tend to speak respectfully about them as they epitomize the ideals of midwestern honesty and friendliness when doing business.  This acquisition though will test that culture I think, and though I can see no reason for existing customers to get worried quite yet, it wouldn't be a bad idea to watch how things progress with a cautious eye. There may be lots of kisses now at Hershey, but they may not last. (Sorry, I couldn't resist that one!)