HP (Hewlett Packard) has announced that it has signed a pre-bid agreement with TOWER Software to acquire the Australian Enterprise Content Management (ECM) vendor. TOWER Software’s strength lies in its Document and Records Management (DRM) capabilities, although with the addition of Web Content Management (WCM) it has moved further into the ECM space, despite lacking some functions that the larger ECM vendors have added to their portfolios. The acquisition, which is expected to close in the second quarter of 2008, will be conducted via an off-market bid for all the outstanding shares of TOWER Software. The board of directors of TOWER Software have unanimously approved the transaction and the three largest shareholders have stated they intend to accept the offer in the absence of a higher third party offer. Between them, these three shareholders own more than 90% of the shares.

TOWER Software’s TRIM Context already forms part of HP’s Integrated Archive Platform (IAP) – formerly branded as RISS. The acquisition of an ECM vendor will remedy a serious shortfall in HP’s portfolio.

In competitive terms, the new integration with TOWER software has finally brought HP nearer to its closest competition in this product area. EMC, IBM and Oracle, through its acquisition of Stellent, all had the products required to build a secure information management stack. The fact that HP were already closely integrated with TOWER Software’s platform will mean that the time required to get up to speed will also be minimal. The acquisition will also benefit TOWER Software as its capabilities will be extended through the addition of HP’s discovery and compliance capabilities in information collection and retention. The financial strength of HP should allow it to acquire additional functionality when required to ensure that TRIM remains competitive with the larger ECM platforms. However, in the short term TOWER/HP needs to build solutions on top of the TRIM platform in order to remain competitive against other ECM vendors that have already invested heavily in both vertical and generic solutions.

This is an excellent move for HP and one that is long over due. In order to compete effectively with IBM, and strengthen its information management portfolio, HP needed to move into the ECM market. In the increasingly competitive archiving market by the time HP entered with its RISS product (now IAP), EMC had already established a huge market lead, and with NetApp, IBM and other vendors also moving into this space it is rapidly becoming crowded. The ability to provide an end-to-end information management solution is a huge advantage to any vendor and the fact that the products are already integrated means that HP should be able to hit the ground running with its information management stack. It is worth noting however that the boundaries of information management are continuing to expand, and HP will require further acquisitions if it is to be a genuine powerhouse in this broader space.

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