Private equity firm Accel-KKR has purchased web content and experience management (WCM) vendor EPiServer while taking what looks like a controlling interest in a competing player, Ektron. What should we make of this? And more importantly, what's the impact for you the customer?
It's not clear what Accel-KKR will do with these two stepchildren. They may not have made up their minds yet.
However, I think they have three broad options, each with different impacts for customers.
- Merge the two firms and technologies
- Operate a single "portfolio" company with multiple tools
- Don't make any changes at all
Option 1: A Merger (a.k.a., EPiServer take-over)
This sort of "roll-up" strategy, combining the companies and the technologies, often seems attractive on the surface. Owners usually tout "synergies" in these sorts of mergers, like a kind of marriage between Mr. Ektron and Ms. EPiServer. His brand recognition plus her great technology! His North American office plus her European presence! His direct sales operation plus her great integrator channel network!
Well, opposites attract, but they don't always make good long-term marriages. I can't think of single instance where two WCM firms or technologies merged successfully into a single entity.
Ektron and EPiServer compete in the mid-market, but their toolsets are very different. The most meaningful difference: they live on different sides of the product vs. platform divide. As subscribers to RSG's WCM Evaluation stream know, EPiServer is a more extensible but complicated platform; Ektron is more of a website-in-a-box product.
So in this case, realistically it would be Ektron technology getting supplanted by the more modern EPiServer toolset, essentially an acquisition by the Swedish firm.
If you're an Ektron customer, you'd want to think twice before defaulting to a wholesale replacement of your system, particularly for a more complex offering that typically requires an outside partner to implement. Such a distraction would suck up months if not years of your digital plans -- and budgets. You would be just as well served to investigate other tools.
Option 2: Together But Separate
The idea here is that investors build a single "portfolio" entity where sales and marketing people can offer both products as alternate solutions based on customer needs. Want simpler and US-based? Go with Ektron. Want more customizable with European footprint? Pick EPiServer.
Sounds appealing, but here again, there's no precedent for this working out in the WCM marketplace. Mediasurface tried it, at one time offering three different WCM systems. They all died.
Then there's the grand-daddy of content management portfolio companies: OpenText. By my count, OpenText built or acquired no less than six WCM tools. The result? Four are dead, the fifth (RedDot) is on life support, and the sixth one (Vignette/WEM) lives in a nursing home.
Note that originally, OpenText had ambitions to combine the best of RedDot with pieces of Vignette and vice-versa. It proved technically impractical, and in any case, customers don't like frankensteined technology.
Option 3: Leave Well Enough Alone
Perhaps ironically, the best option for customers is the least "disruptive."
Both Ektron and EPiServer have been on a journey to catch up to their higher-end competitor Sitecore. Both vendors need more scale and technical acumen, among other improvements, to get there. Both are taking a different tack on the journey, which is not a bad thing. We're about to publish some research suggesting they are closer to Sitecore than you might think. Not a great time for a disruption.
It may be awkward for Accel-KKR to oversee two competing firms that operate independently, but for customers, I think it's the best option.
And North Plains?
It's worth noting that Accel-KKR also has an apparent controlling interest in North Plains, a Digital Asset Management vendor evaluated in RSG's DAM research.
So you could imagine a mega-roll-up across technology sectors here, though I don't see it. The underlying technologies presents a mis-match, as North Plains Telescope runs in Java. Also, WCM vendors in the mid-market typically need to partner with multiple DAM vendors and vice-versa.
There will be a lot of pressure on industry analysts who market their services to vendors and analysts to declare that these transactions are a good deal. The question you'll want answered is, good deal for whom? Right now, the answer may be nobody.
But we'll keep watching.