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Setting for the Case
In November 1993 Jeff Miller, Documentum's CEO, is faced with the challenge of pursuing either a vertical or horizontal marketing strategy to route Documentum towards profitability. Situation and Business Issues

Documentum enjoys a leading role in an emerging and potentially lucrative space. But profiting from this opportunity will require overcoming several immediate hurdles including a limited customer base, formidable competitors and unforeseen development costs. Key Information, Facts, Assumptions

Documentum was founded in June 1990 by Howard Shao and John Newton, seasoned database engineers who aimed to develop a new class of software for automating the management of documents across an enterprise. Following three years of losses, Documentum gains traction by combining an elite management team with $5.8MM of Venture Capitalist funding. Analysis

Enterprise document management (EDM) is a new, paradigm-busting product category with few substitutes. The category growth is small, increasing at a rate of 1%-2% year over year . Competition within the EDM category is low, as no other company was developing the "whole elephant" solution. Profitability was extremely low, given the low number of customers and long lead time to develop and deliver the product solution. The combination of these characteristics wholly describes the EDM category as being in the Introduction Stage of the Category Life Cycle .

With regards to the Mode of Innovation analysis , Documentum is a new product in a new category3. No previous EDM category existed, and Documentum had no prior products in other relaunched or repositioned categories in the EDM category.

In analyzing the Competitive Set , Interleaf was the only product of similar form, whilst the product category level was more populated with substitutes from Notes, Oracle, PC DOCS, Saros, and Soft Solutions . Generic level competition included manual and paper processes , desktop and backend systems ,...
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