SUCCESS STORY
KnowledgeTree Takes Root in New ECM Markets

In 2004, KnowledgeTree CEO Daniel Chalef had no idea his interest in developing an open source document management product would thrust his South African company into prominence. That's the time a government agency there approached him to help the Medical Research Council retain control of its documents and track shared access.

That South African council is an agency much like the U.S. NIH (National Institutes of Health). Being summoned to help such an influential group was an unexpected boost in growing his business. Chalef maximized the opportunity by using the open source model to his company's best advantage -- he developed a community-based free version to get his product known. He then grew its sales potential through a commercial version available as both stand-alone and Software-as-a-Service (SaaS) products.

Today, more than 60 percent of KnowledgeTree's subscribers are based in the U.S, supported by a Raleigh, N.C., office. A large portion of the company's chain is located in South Africa.

KnowledgeTree, a turnkey electronic content management (ECM) provider with a focus on document management, developed the software for business people to easily install and use without a lot of hand-holding from IT. KnowledgeTreeLive, which issued an updated version just last month, offers all the features available in the on-site version of KnowledgeTree 3.6.1, including its Microsoft (Nasdaq: MSFT) Office add-on, which allows users to view, edit, save and email documents in the KnowledgeTree repository from within Office applications. KnowledgeTreeLive also integrates with Zoho Writer, making it possible to edit documents without desktop software.

"We target the small- to medium-size company and governmental agencies. We are seeing a momentum pick up. The product has received 650,000 downloads of the open source community edition. Also, we have 300 plus commercial subscribers. Many of these users are small-to-large government agencies," Chalef told TechNewsWorld.

Nifty Niche

Entering the ECM market with an open source product gave Chalef a leg up. The ECM world of documents and files has few open source options in it, according to Alan Pelz-Sharpe, analyst at CMS Watch.

"Currently, it remains dominated by the likes of IBM (NYSE: IBM), EMC (NYSE: EMC) and Microsoft, with some other larger vendors such as Autonomy and Open Text making up the numbers. This is in direct contrast to the world of WCM (Web content management), where open source vendors make up half the market and regularly win deals," Pelz-Sharpe told LinuxInsider.

ECM has so few open source players due to the sheer complexity of internal information management requirements, which are typically workflow-driven. This field is highly differentiated from industry to industry, he explained. Open source vendors tend to be more of a vanilla platform from which to develop. Many buyers do not want to do that. Instead, they want a solution that will work to some degree out of the box, he noted.

That is the approach Chalef uses. Plus, KnowedgeTree is one of three open source vendors in a field of several commercial contenders. So Chalef's company stands a fairly even chance due in part to the fact that anyone specifically looking for open source options has few options to choose from, noted Pelz-Sharpe.

Money Crunch

Chalef faced the early growing pains that are typical of most new companies. Chief among them was getting capital.

"Having access to funding was a problem in South Africa. So I had to go outside the continent for backers," noted Chalef.

He solved that dilemma with organic funding from institutions. He also tapped into venture capital funding.

Chalef also faced design challenges in building up capacity. That went along with developing the system.

Growth Targets

"KnowledgeTree is well-known globally but oddly enough has little visibility in Europe and the U.S., which are the main commercial markets," said Pelz-Sharp.

That assessment is driving Chalef to raise his company's profile. A U.S. office in North Carolina is helping to get a focus outside South Africa. So are new product versions with more features.

Those efforts gained KnowledgeTree more notoriety recently. The company was nominated for the Forge.net Community Choice Awards this year.

Field Wide Open

Open source vendors are starting to make a mark in ECM, according to Pelz-Sharpe. For instance, Alfresco has captured a few headlines, as they have the marketing savvy that many open source projects lack.

Alfresco, as an example, has strong funding and is staffed by former big wigs from Documentum, Business Objects and Interwoven. Nuxeo, from France, has also done well with open source in this market, though on a more more low-key level. They have exploited France's penchant for all things open source and used that as a bridge, expanding first into the UK and now the U.S., explained Pelz-Sharpe.

"KnowledgeTree has a fairly substantial following too and is well-known particularly in markets not well-served by traditional vendors, such as India and Africa," he said.

Without a doubt, 2009 has been the year for open source ECM providers due to the troubled economy worldwide and the perception that open source solutions are cheap, he concluded.

Measuring Success

"We saw a very vast undeserved market. Many small organizations lack an ECM solution because they can't pay a high price for one," Chalef said.

KnowledgeTree sells its ECM solutions at a price point that allows the manager to undertake the purchase without major corporate funding. For example, a typical purchase starts at US$2,000 and ranges upward depending on the number of users, he explained.

That pricing strategy appears to be working. The company experienced 22 percent in quarterly growth between Q1 and Q2 this year. In addition, KnowledgeTree saw an 88 percent year-end growth in 2008 over 2007, Chalef noted.

"Open source has seen a significant growth spurt," said Chalef.

More To Come

Chalef has set his sights on developing new versions of KnowledgeTree that will include a social application to document management. This will allow collaboration among users of the program, adding a Facebook-like element, he said. Among his targeted new sales will be two new markets.

"It will allow more interaction with users and offer a trust platform," he said. "I have seen significant uptick in interest from federal government and life science spaces in meeting compliance regulations."

KnowledgeTree already has a Web-based platform for Linux and Windows. The company is adding the ability for users to access Mac platforms. Another feature soon to be added is interdependability among platforms.

Two more features Chalef sees as rocketing new sales for the company will be a built-in Web content management capability that will allow users to publish documents to Web sites. KnowledgeTree will also provide access to other repositories.