OpenText CEO Mark Barrenechea
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OpenText Restructures to Focus on Cloud

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Mark J. Barrenechea, president and CEO of OpenText, is once again at the helm of the company after a three-month absence for treatment of leukemia. But that's not the only news at the Waterloo, Ontario-based enterprise information management company.

OpenText last week announced a comprehensive restructuring.  

It's cutting five percent of its 8,500 employee workforce in unspecified locations worldwide — about 425 jobs — as it streamlines operations to generate more revenue from is cloud business. The restructuring will save $50 million and drive operational efficiencies, Barrenechea said in a statement May 20.

Shares of OpenText fell more than 13 percent in the wake of the restructuring announcement, dropping from a high of $49 last week to $42.53 yesterday.

What It All Means

The new structure will allow OpenText to scale as it "continues to acquire complementary businesses over time, and will provide additional focus on winning the customer and capturing the lifetime value of that relationship,” the statement reads.

The statement raises several interesting points, not least of which is the stated intention to keep buying new companies and technologies to fill holes in its portfolio.

In response to a query from CMSWire about the restructuring and its impact on the company, Tim Brook, director of Corporate Communications for OpenText in the UK, reiterated that the restructuring is about “supporting is cloud strategy.”

However, he also noted that the changes will streamline and simplify the organization:

"To accelerate our cloud growth, drive operational efficiencies and achieve strong customer satisfaction, the business structure has been simplified around three core business units — Enterprise, Information Exchange (iX) and Analytics — with distinct strategies, all reporting directly into the CEO,” the statement noted.

Learning Opportunities

All of the job cuts will be complete by the end of the first financial quarter of 2016, OpenText confirmed.

OpenText also indicated that its business strategy moving forward would focus on new customer acquisitions as well maximizing the business potential from those relationships.

"Business Units will provide better alignment with customers, buying centers and competitiveness. Business unit leaders will drive both customer and market success, ensuring effort is focused on driving higher rates of customer satisfaction," the statement continued.

Cloud Focus

OpenText has historically bought what it didn’t develop itself. In respect of its cloud development the most notable acquisitions were EasyLink, GXS, and Actuate, which were quickly integrated into the OpenText portfolio.

In the past three years, OpenText reports it has grown cloud income from zero to more than 30 percent of total revenues.

Brook stressed to CMSWire that the company has no intention of changing their financial philosophy or "its view on being a value-based acquirer" as it executes its cloud business strategy. "The company remains focused on delivering superior shareholder value,” the statement said.

Barrenechea also announced a number of new appointments that align with the new cloud focus as well as the departure of Jon Hunter, executive vice president of worldwide field operations.

This week, it also announced the availability of Tempo Box Premium Edition, a secure and governed solution to share and synchronize personal and enterprise content across different platforms and devices. The product "provides a centralized platform that facilitates mobile access to both personal and enterprise content in a modular and scalable manner," the company noted.

Adam Howatson, chief marketing officer at OpenText, said Tempo Box Premium offers "organizations the flexibility and efficiencies of mobile and desktop access without exposing them to risk from content shared on consumer sites.” 

About the Author

David Roe

David is a full-time journalist based in Paris, who spends his time working between Ireland, the UK and France. A partisan of ‘green’ living and conservation, he is particularly interested in information management and how enterprise content management, analytics, big data and cloud computing impact on it. Connect with David Roe: