In order to go ahead, the transaction requires the support of two-thirds of the Hummingbird shareholders at a meeting expected to be held towards the end of July this year. It will also require the approval of the courts as well as the regulators. If approval is received, then the transaction should close around the end of July 2006.

Hummingbird is one of the major enterprise content management (ECM) players, and started as a consulting firm specializing in mainframe communications in 1984. Within five years, the company had expanded into software development, initially in the area of connectivity software. Through a series of acquisitions Hummingbird moved into providing managing software for unstructured and structured content. It introduced an integrated suite of ECM applications under the brand of Hummingbird Enterprise.

However, the company has not been as active in the acquisition market as some of its rivals, only adding web content management (WCM) to its portfolio in 2005, following its acquisition of the WCM vendor RedDot. It is still lacking an email archiving capability, which many of its rivals have, instead partnering with Symantec to provide tight integration with Enterprise Vault, an email and file system archive solution.

Acquisition by a much larger company should provide Hummingbird with additional funds, enabling it to extend its ECM capabilities to match those of its larger rivals, and in the short-term it is expected to remain ‘business as usual’ for Hummingbird, with the company retaining much of its independence.

There are, however, some concerns regarding the longer term. Symphony Technology Group is a holding company that also owns companies in other technology areas. Part of the Hummingbird acquisition is being funded by Tennenbaum Capital Partners, a venture capitalist, which will obviously expect a return on its investment. Another company owned by Symphony Technology Group was Intentia, which it sold to Lawson in April 2006, and it is to be hoped that this fate does not befall Hummingbird.

The worst possible outcome would be to break up the company and sell off the various parts. ECM has become a platform or infrastructure that manages information, both unstructured and structured, across multiple repositories and applications. It incorporates a number of core capabilities including document management, records management, workflow, and collaboration. Most ECM solutions also provide additional capabilities such as WCM and email archiving. To sell off any of the capabilities that Hummingbird has would seriously damage the company’s ability to compete with the other major ECM vendors.

On a more positive note, Symphony could decide to invest heavily in Hummingbird and extend its capabilities through the acquisition of vendors in complementary areas, such as email archiving, content publishing, or content and data capture, which could provide a competitive advantage over at least some of its rivals.

If Symphony takes the latter course of action and invests in the appropriate technologies to extend the capabilities of Hummingbird, then both it and Hummingbird will benefit from larger revenues and a greater market share, which will enable Hummingbird to emerge as a much bigger ECM player.

Source: OpinionWire by Butler Group (www.butlergroup.com)