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Alan Pelz-Sharpe

EMC-Documentum continues to anger with impromptu audits

14-Jan-2011

Tags: Document Management (ECM), Implementation, Marketplace at Large, Vendor Viability & Financials, Documentum

When I wrote about EMC imposing audits on long-term Documentum customers in February 2009, I received several communications from very disgruntled customers.  I posited that this was a bad way of going about business, and figured EMC would temper their policing a bit.

But it seems I was wrong. Despite customer fury, EMC & KPMG continue to invoke out-of-the-blue audits on some of their best licensees.

To be clear, there is nothing wrong per se in auditing. It's a necessary evil. But in those instances where by the vendor (seller) is unable or unwilling to provide you the buyer with any information whatsoever on what they sold you, and instead puts all the burden you to prove what you've purchased, the grounds are ripe for a clash.

This past week I heard from yet another disgruntled person and thought it worth revisiting their situation.  In this latest case the customer again has the entire burden of the audit placed on them; the auditors have refused to disclose any details at all of the Documentum licenses sold.  As with most companies, over the years many people have passed through the IT and Procurement departments at this firm, and it's a tough slog to dig out every agreement, contract, PO, and invoice for past decade.

And in this case there's a particular twist: the customer argues that licensing for the Development and Testing environments was bundled into the original deal by their Documentum salesperson.  EMC doesn't deny that this commonly happens, but unless the buyer can produce written evidence of such an agreement, they will charge them retroactively.

What's the result of this clash? The customer is now actively, and with intent, looking at ripping out the Documentum installation and replacing it with an alternative option.

The advice I first gave in 2009 still holds. If you receive a notice of a pending audit, you should:

1. Ensure that KPMG/EMC first compile a list of all the licenses they have sold to you -- this in contrast to what is currently happening whereby they turn up and expect you to magically tell them
2. Offer to review that list and verify one way or another as to whether it is correct
3. In the event the audit is a gross intrusion of your business, you simply respond to the request via your legal department; remember it is EMC contacting you, not the government tax authorities

One final lesson: as a buyer you should keep proper records of what you bought and get all informal understandings codified. Likewise if EMC suspects you have abused the license agreements, they have a perfect right to ask for an audit.  The reality is that some buyers do abuse these agreements, sometimes quite spectacularly.

However, these particular audits do not seem to be motivated by a suspicion that you the buyer have been in default. Rather they seem speculative -- and though they may generate a short term gain for EMC, they are sowing long term anger and disillusionment.

You the buyer have much more choice today than in the days when EMC|Documentum was the market leader -- choice across a multitude of products, licensing, and delivery options as we detail in our own research -- in many cases at a much lower cost than you may have paid originally. 

Ripping out an incumbent ECM platform is no easy task, but it can be done.