IBM adds FileNet to info-on-demand plan

In a move to bolster its information-on-demand business, IBM Corp. has acquired FileNet Corp. for $1.6 billion in an all-cash transaction.

FileNet, Costa Mesa, Calif., offers enterprise content management software. IBM will pay $35 per share of FileNet stock, the company said. IBM expects to close the deal in the fourth quarter.

IBM estimates the information-on-demand market will grow to a $69 billion opportunity by 2009. FileNet is IBM's 20th acquisition supporting its information-on-demand initiative, which the company launched in February.

Information on demand allows better flow of data independent of format, platform or location, thus creating more efficient business processes. Enterprise content management, the practice of managing the capture, storage, security and distribution of documents and content, is a segment of the information-on-demand market.

The company estimates the enterprise content management market will grow more than 10 percent over the next five years, from a $3.9 billion opportunity in fiscal 2006.

"Freeing up information contained in content management systems is critical to unlocking the potential of information to improve business processes and performance," said Ambuj Goyal, general manager for IBM's information management business.

When the acquisition is completed, IBM plans to combine FileNet's operations with its content management business, which Goyal will oversee. IBM also will integrate its business process management and service oriented architecture with FileNet's platform.

IBM, which has more than 329,000 employees and had annual revenue of $91.1 billion in fiscal 2005, ranks No. 17 on Washington Technology's 2006 Top 100 list of the largest federal IT contractors.