Case Write-up: Documentum, Inc.
Howard Shao and John Newton founded Documentum in 1990. Their vision was to develop a new class of software database for automating the management of structured and unstructured documents across enterprises. Traditional databases only managed structured information that could be neatly stored in rows and columns. Such examples include but are not limited to inventory levels, financial statement and manufacturing data. These traditional databases were limited in their ability to store unstructured documents such as compound documents, graphics, electronic mail, scanned images, multi-media, training manuals, marketing collateral, and regulatory submissions. After listening to repeated complaints from customers at Ingress about the problems with unstructured data, Shao and Newton began to pioneer solutions. Initially, they worked to compile documents from different departments using relational databases. In the process of finding the solution for the unstructured data issue they founded Documentum, calling their service enterprise document management. The system’s primarily focus is the capture, storage, retrieval, and dissemination of digital files for enterprise use. Early in Documentum’s life, they managed to land contracts with big enterprises like Boeing in Aircraft Maintenance Documentation and with Syntex in Pharmaceutical NDA. As Shao described during his presentation to the Boeing tech writers: “The new Documentum systems would assemble a manual at the push of a button as fast as a printer could print”, a software with structured and unstructured data that would be simple to use. The contracts with Boeing and Syntex were not particularly profitable but did permit Shao and Newton to test their technology and gain some worldwide known references that could vouch for the successful implementation the start-up company had executed. Shao, Newton and even Rob Adams (initial venture capitalist from Xerox Technology Ventures) background’s suggest a thorough understanding of the technology and engineering aspect of the business. However, not having a growth-motivated entrepreneur in the team presented an initial set back. The founders came to the same conclusion when after completing the Boeing and Syntex contracts they realized that at the rate at which they were acquiring new customers, they would never be profitable. They needed to change their strategy and someone to help guide them make it a profitable one.
In order to get a deeper understanding on the position of Documentum within the marketplace I will conduct a SWOT analysis, which will also help to get an overall view of the company. Depending on the outcome of the analysis specific recommendations on a possible strategy to implement at Documentum will be suggested to Mr. Miller, the newly appointed CEO of the company. The fact that Xerox backed Documentum from the get-go, even with their large share of 80% equity in the company, was a strength and brought upon the start-up a series of different advantages. Documentum was able to use some of Xerox’s physical assets as well as their worldwide known name. Some of the resources Xerox included when they took equity in Documentum were office space and a 4 million dollar commitment to cover payroll and other expenses. In addition, Xerox’s reputable name could influence potential clients to trust Documentum with the innovative technology the start-up offered. Another of Documentum’s strengths is that they are early entrants in the market for unstructured databases, which gives them an advantage over other firms who have not started to develop the technology. Furthermore, by successfully implementing the software at Boeing and Syntex the company gained credibility within the industry, another convincing factor for potential clients to trust Documentum’s technology. Like many other start-up companies, building a name can be as hard as building the product. One of...
Please join StudyMode to read the full document