The other Waterloo tech titan: Open Text is the anti-BlackBerry; Unlike BlackBerry, Open Text has kept its focus squarely on the lucrative enterprise market — and has been rewarded with a stock surge, up 60% this year

November 20, 2013 Leave a comment

The other Waterloo tech titan: Open Text is the anti-BlackBerry

Matt Hartley | 19/11/13 | Last Updated: 20/11/13 6:57 AM ET
Open Text Corp. may not be a household name or have achieved the international acclaim of its more famous Waterloo neighbour, BlackBerry Ltd., but there’s something to be said for consistency. Unlike BlackBerry, which branched out into the consumer market only to find itself spread thin when extraordinary competition devoured its market share, Open Text has kept its focus squarely on the lucrative enterprise market. Investors have continually rewarded the company for making acquisitions, including its largest-ever buy earlier this month, and the stock now stands near its highest-ever level, up 60% so far this year.Now, as Open Text prepares to open its annual Enterprise World summit in Orlando, Florida this week, chief executive Mark Barrenechea is getting set to unveil the next evolution of Canada’s largest software company as it seeks to court CIOs looking to find new ways of extracting value from the volume of data generated inside enterprises.

At the heart of the company’s new offerings is Project Red Oxygen, which takes several hundred of the company’s software products and packages them into seven distinct software suites, simplifying the company’s products while providing developers with new tools to parse and access data.

“We want to be able to enable enterprises,” Mr. Barrenechea said in an interview.

“We’re not a consumer company. We’re not a mid-market company. We automate big enterprises and large governments. We want to help them be able to — in a single place — find, manage and secure their unstructured data. On top of that platform, they can build applications … and get all that unstructured information into a single piece of software.”

Open Text plans to unveil the Project Red Oxygen platform — which is designed to help companies manage unstructured content, such as records archiving and web content management — on Wednesday.

Open Text has seen revenue increase each of the last five years, to US$1.37-billion in the most recent fiscal year, up 74% from the US$785.7-million the company generated in 2009. At the same time, net income for the Waterloo-based company has gone up 160%, topping US$148.5-million in the most recent fiscal year (ended June 30) from US$56.94-million in 2009.

Analysts and other attendees at the Enterprise World conference will also be anxious to hear Mr. Barrenechea discuss the company’s recent US$1.17-billion acquisition of GXS Group Inc., the largest purchase in the history of Open Text, and one which will expand the company’s offerings into “B2B integration services,” which help companies manage their transactions with their trading partners.

BlackBerry is a story of innovation, but it’s also a story of perhaps not recognizing what your most strategic asset is: your network

“We’re going to continue to invest in our EIM (enterprise information management) platform and we want to connect that EIM platform over the cloud to a trading community or a digital supply chain,” Mr. Barrenechea said.

“GXS will clearly be a large driver of growth for us. Nearly half a billion of revenue we’ll be onboarding.”

While GXS marks the fourth major acquisition for Open Text in the last three years — after buying easyLink for $310-million in 2012 and acquiring metastorm and Global360 for a combined $440-million in 2011 — Mr. Barrenechea said the company isn’t looking at acquisitions as the company’s only path to growth.

“One is organically through what we’ve built and how we go to market, and Red Oxygen is a real driver there … we’ll continue to acquire GXS which will contribute to growth over the next two years and we’ll continue to look at partnerships with companies like SAP and others.”

Still, even with the troubles surrounding BlackBerry, Mr. Barrenechea said he doesn’t believe Open Text’s position in Waterloo’s technology industry has changed.

“A stronger BlackBerry makes a stronger Canada, including Waterloo,” he said. “A strong Open Text means a stronger Canada. BlackBerry is a story of innovation, but it’s also a story of perhaps not recognizing what your most strategic asset is: your network … we’re very community driven in Waterloo, and as we’ve grown, we’ve just gotten more ingrained in the community.

“I don’t think of it as filling something from somebody else, I just think we’ve grown and we’ve naturally become more a part of the community.”

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Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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