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As storage industry heavyweights go, EMC Corporation is one of the definite gorillas in the market. Over the last few years, EMC has picked a number of significant suppliers that has greatly strengthened its range of storage offerings, along with certain acquisitions, such as VMware and Documentum, which are valuable in strategic terms. Last week, the company announced yet another acquisition, this time of Captiva Software Corporation. Whilst being a good complementary fit to EMC’s strong storage management portfolio, Captiva could also turn out to be a very strategic purchase.
Captiva is a provider of so-called ‘input management’ solutions that are used to convert paper documents into digital format. Today the world still generates an awful lot of paper documents despite considerable effort on the part of some organisations to operate with ‘paperless’ processes. The digitising of such paper-based material, to make the information contained therein available to business systems and services, is essential if the business applications are to operate on the most accurate information available.
Captiva’s systems transform paper documents to digital information using scanners, fax machines or other electronic means and then seek to extract meaningful information from them. The systems then automatically apply pre-defined business rules and processes to ensure accuracy, and feed the captured information transparently into the appropriate business IT system or systems.
Captiva has been around since 1989 and now employs around 400 staff and generates annual revenues of approximately $68 million. The definitive agreement by which EMC will acquire Captiva will see EMC pay $22.25 per share in cash, or approximately $275 million net of Captiva’s cash balance when the deal closes later this year or early in 2006.
EMC and Captiva have enjoyed a working relationship that extends over more than ten years, so it should be relatively straightforward for Captiva’s technologies to be integrated within the EMC range of offerings. Indeed, it is easy to see the alignment between Captiva for ‘front end’ information capture and EMC’s Documentum solutions for document lifecycle management. Captiva’s products include: InputAccel, document capture software; FormWare, an automated forms processing / data extraction platform; b-Wyze DispatcherT, an input management engine; and PixTools.
Coupling these with EMC’s backend storage platforms and its rapidly developing Information Lifecycle solutions provides a very compelling story. In particular the combined solution will add significantly to EMC’s presence in the digital imaging market. The ability for a single supplier to provide end-to-end information management solutions is likely to prove attractive to verticals that struggle with high data volumes, both paper and electronic, and where strong process management is either highly desirable or compulsory. Expect EMC to target, very strongly, the financial services, healthcare and government sectors in the short term with other industries following on quickly thereafter.
It is important to note that EMC intends to continue to develop the Captiva offerings as tools that will operate with the solutions of other suppliers. This ‘open platform’ approach is likely to mirror the operations of both the VMware and Documentum offerings as systems that interoperate with a very wide range of solutions from many IT suppliers.
The acquisition of Captiva by EMC is a shrewd move for the storage giant. EMC is rapidly extending its storage management software offerings and continues to invest wisely as it seeks ways to grow its business. We can surely expect to see further acquisitions in the not too distant future.