Has Your Ektron Investment Just Gone Down the Drain?

Dream. Dare. Do – that is Suyati’s work principle in a nutshell.

Feb
06
2015
  • Author:
  • Nayab Naseer

The private equity firm Accel-KKR, the primary backer of Ektron CMS acquired 100% stake of the CMS in December 2014. The company also acquired EPiServer, another content management system, and now Accel-KKR is merging these two CMS companies. Technically, Ektron is merging into EPiServer.

However, reports of Ektron’s “stunningly disappointing end” are exaggerated. 

For starters, while the merged company will be known as EPiServer, it will continue to use both Ektron and EPiServer brand names. Fears regarding the end of the Ektron line are unfounded, as no sane financially-savvy investment firm would acquire a company only to bring it to an end. It makes little sense to merge two complex yet similar platforms into something like “Epiktron.”

Combining these two platforms into one is theoretically possible, as they are both built on .NET. However, it would be technically challenging as both architectures are radically different. Ektron runs as a website whereas EPiServer is more of a web app. A merger would be very complicated, and would in all probability take months or even years. Even then, the effort and time consumed would be far in excess of any benefits that come out of it, and the move risks frittering away the brand equity in the process. Many private equity firms do own more than one product in the same sector. In fact, Accel-KKR already own North Plains, a digital asset management product company, indicating that Ektron as a brand would indeed survive.

With Ektron as a brand surviving the acquisition almost certain, the question remains how the development would actually impact Ektron.

The odds are that the merger would actually help Ektron in many ways. Far from customers, partners and other investors losing out, the merger is likely to benefit them by infusing Ektron with improved technology and new capabilities.

EPiServer has stressed that the merger will protect customers’ and partners’ investments in both platforms and that security updates and patches for the Ektron brand would roll on as usual for now. Webmasters who use Ektron to manage their sites have no cause for worry, as these websites would remain functional and secure.

Over that, the merger would be a win-win for both Ektron and EPiServer, with Ektron poised to emerge stronger post-merger. The official release on the merger states that the two companies merged to “create a new global digital experience leader of scale, with potent technology capabilities and a broad partner ecosystem.”

Ektron Gets Financial Backing that it Need to Thrive in the SaaS Space

Ektron has over the years carved a strong niche in the mid-market space of the CMS market, and continued to grow by expanding the product to add new capabilities. However, of late, it started to face stiff competition from other players who tried to undercut Ektron on price. Ektron rose up to the challenge rather well by launching its Software as a Service (SaaS) platform early in 2014. The SaaS model allowed Ektron to offer low up-front procurement costs and lower annual TCO costs for customers, and helped to improve internal efficiency by having fewer versions of software to manage and support. The move to the cloud makes sense financially as well, for while a typical perpetual license software firms sell for 2 to 5 times revenue, SaaS generally sells for 10-20x times revenue.

However, sustaining the growth and making a wholesale transition to SaaS requires huge cash investment, as it is with any SaaS project. Any SaaS model requires significant upfront investment. In the long run, the average SaaS customer is worth far more revenue than their traditional counterpart, but all customer acquisition costs are invested upfront while the revenue comes in slowly month after month. The merger has provided Ektron with adequate financial backing that would allow it to establish itself in the SaaS space successfully.

Ektron Gets Access to a Wider Market

Ektron’s base is in the USA, and has minimal traction in Europe. On the other hand, EPi is strong in Europe and has nominal presence in America. The merger would offer Ektron more visibility in Europe and EPi more visibility in America. The two brands are unlikely to compete against each other, for while both are focused on the mid-market space, their toolsets differ radically. Ektron is now more of a website-in-a-box product whereas EPiServer is a more extensible but complicated platform. There is a strong possibility of both technologies drawing from the strengths of the other, to get stronger.

This apart, the merger provides both brands with a vibrant community of more than 8,800 customers spread over 30 countries, and backed by a robust network of more than 880 partners. Support and maintenance is also likely to get a boost. If the new EpiServer takes inspiration from the merger of Adobe and Acquia, it could lead to a new business model in the support and maintenance space, bringing in changes to contractual agreements with the customers for the better.

Ektron Gets Added Functionality

For all its strengths, Ektron remains weak in some areas, especially in the Commerce space. Post-merger, there is the possibility of the Ektron brand being complemented with EPiServer Commerce, the commerce with cloud support module, and an add-on store. Ektron could gain as an enterprise level eCommerce platform as a result of this add-on.

EpiServer releases real-time updates on a weekly basis, and if this is ported to Ektron, it would get a continuous product release process that it presently lacks. Ektron could also gain additional features such as a streamlined persona management and editing experience, by co-opting other EpiServer modules. There is a real possibility of the Ektron platform upgrading itself to offer a complete Digital Experience Cloud for customers, complete with web content management, multi-channel marketing, e-commerce capabilities, and extensive connectivity.

EpiServer too would gain by co-opting many Ektron features, such as eSync, the content synchronization capability, a more robust taxonomy solution, smart forms that facilitate one-to-many structured content types, and more.

Ektron-EpiServer is not the first instance of merger in the CMS space. In fact, CMS acquisitions are so common that more than one in three of all major CMS players have gained at least some of their content management USPs through acquisitions. The obvious benefits of synergies and innovation would work in this case as well, provided the imminent practical glitches on the road are ironed out well.

The 2013 Forrester Research report “Wave on WCM” indicates that there is presently no dominant leader among the digital experience delivery platforms. The Ektron-EpiServer merger may just be the catalyst that either of these two brands require towards claiming that position.

Image Credit: thinkpanama on Flickr

PS: On second thoughts… if you are attending Ascend, let’s meet up. meet us at ascend 2015 

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