OpenText Strengthens Its Cloud Security Portfolio with Acquisition of Carbonite

OpenText expands the breadth of its cloud security offerings with its announcement on November 11, 2019 to acquire Carbonite, Inc., a provider of cloud-based data backup and protection services. The purchase price is estimated at $1.42 billion, with each share of Carbonite valued at $23.00. The transaction is expected to close in 90 days.

OpenText is firmly rooted in the enterprise information management (EIM) market from the company’s foundation as an enterprise content management (ECM) provider. This recent purchase extends OpenText’s previous investments in endpoint security and data forensics.

Increasingly, locking information “behind closed doors” on the edge or in the cloud is critically important, as businesses seek to comply with regulations and prevent reputational damage and financial losses from a data breach.

This purchase sets OpenText on a path to potentially become a major player in the fast-growing cybersecurity market (projected to hit $248 billion in 2024 by Statista), especially with the company’s track record of growth through acquisition. In fact, cybersecurity spending is expected to reach $170 billion by 2022, according to Gartner.

The acquisition of Carbonite is also aimed at significantly growing cloud revenue and cloud margins in 2021 for the Waterloo-based company.

The Growing Importance of Governance and Information Security

Cybercrime is an increasing threat to every business. Ransomware attacks can disrupt a business’s ability to operate by preventing access to information until a ransom is paid (if then). With cyberattacks on the rise and the cost of data breaches rising yearly (IBM and the Ponemon Institute report that the average cost of a compromised record in 2019 is $150 and the average cost of a data breach is $8.19 million), organizations of every size are looking to defend their data.

One of the best defenses against a ransomware attack is to have a backup strategy in place. The addition of Carbonite to the OpenText portfolio will create the opportunity to be a one-stop-shop for both EIM as well as data loss prevention, digital forensics, and endpoint detection, plus Carbonite's data protection and endpoint security solutions.

AIIM research illustrates the real threat that exists by noting that 62% of information that must be managed in an organization is unstructured data. Much of that data remains ungoverned on servers and endpoints throughout organizations, and 55% of organizations have serious security concerns about this. Further, 60% of digital businesses will suffer major service failure due to the inability of information technology (IT) service teams to manage digital risk.

As Mr. Barrenechea noted in a conference call for investors, companies need to own their edge. As information migrates from central servers to users’ phones, laptops, and other edge devices, endpoint detection, threat hunting and analysis, data protection, and response must move too.

The Cross-Pollination Opportunity

Carbonite brings with them 300,000 small and medium-sized business (SMB) customers, seven million prosumers, and 50,000 endpoints currently managed. OpenText sees opportunities for growth via Carbonite's strong distribution channel, including original equipment manufacturers (OEMs), to push the company’s EIM products downmarket to SMBs and prosumers. At the same time, Carbonite would enlarge its enterprise footprint. Carbonite is predominantly a US-centric company, opening the door for OpenText to carry Carbonite into all of its non-US markets.

OpenText expects to fully integrate Carbonite within 18 months. The company is giving itself a little wiggle room beyond its usual 12 months to ensure a smooth integration of all technologies, including Carbonite’s own purchase of Webroot, an endpoint data protection company, in February of this year.

Final Notes

OpenText becomes one of, if not the first provider to combine data protection and endpoint security to include digital protection and endpoint forensics. This is the ninth cloud provider acquisition by the company.

This acquisition is aimed squarely at protecting the endpoint for any size business, from the Global 10,000 to a single prosumer. The 100 million end users transacting business on the OpenText Cloud will now have access to one of the most basic security needs from a single vendor—the ability to backup and secure data.

Bryant Duhon is a Staff Writer and Contributing Editor at DOCUMENT Strategy, covering the latest technology trends and solutions in customer communications, marketing, customer experience, and information management markets. He was a longtime Editor, Community Manager, and Marketer at AIIM. Follow him on Twitter @bduhon.