Tuesday, May 27, 2008

Is SharePoint a Disruptive Technology?

First, a brief history/overview/introduction, with the release of Microsoft Office SharePoint Server (MOSS) 2007, Microsoft (MSFT) delivered a product which provides some of the enterprise content management features already available through the leading Enterprise Content Management (ECM) vendors, but at a fraction of the price. SharePoint was first released in 2001 as SharePoint Portal Server and targeted at the Enterprise Portal and Collaborative software market. MOSS 2007 however, positions Microsoft to directly compete with the leading providers of ECM software.

AIIM, the Enterprise Content Management Industry Association, defines ECM as the technologies used to capture, manage, store, preserve, and deliver content and documents related to organizational processes. ECM tools and strategies allow for the management of an organization's unstructured information, wherever that information exists. An ECM software system typically has the following components: (1) Document Management, (2) Digital Asset Management, (3) Document Imaging, (4) Business Process Management/Workflow, (5) Record Management and (6) Collaboration.

The ECM software market is currently estimated at about $14b with revenues expect to reach $67b by the year 2010. The leading providers of software in the industry are FileNet (an IBM company) and EMC Corporation (EMC), with market shares of 22% and 13% respectively. Both became major ECM vendors through acquisitions. EMC, the leader in information storage, acquired Documentum, the leader in enterprise content management software, in October of 2003, in a move designed to strengthen its Information Lifecycle Management strategy, for $1.7b. The acquisition gave EMC access to technology which manages enterprise content that can be stored on EMC’s storage devices. In a similar move three years later, IBM acquired FileNet to advance its On Demand strategy. The acquisition of FileNet according to IBM will make it the clear industry leader in the growing Enterprise Content Management and Business Process Management. On July 26, 2007 MSFT reported that its Office SharePoint Server business unit generated almost $1b in revenue for the fiscal year. This announcement, which is an unprecedented move by Microsoft as it does not generally comment on revenues for individual products, is a clear indication that SharePoint has crossed the chasm to the mainstream of ECM software. It is no longer a technology for the innovator and early adopter types, but is now a stable mainstream ECM software product for the early majority to consider.

The Disruptive Innovation Theory by Clayton M. Christensen, points to situations in which new organizations can use relatively simple, convenient, low-cost innovations to create growth and triump over powerful incumbents. The theory holds that existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But establised companies almost always lose to attackers armed with disruptive innovations. SharePoint is a relatively simple, convenient, low-cost ECM platform that has brought 100million non-consumers into the ECM world. ECM purist will argue that SharePoint is not a "real" ECM platform/solution or that it is not an "Enterprise" Content Management solution. This is certainly true especially when SharePoint functionalities today are lined up against the ECM definition provided by AIIM. However this is the nature of a disruptive technology.

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