Open Text's Jenkins explains the strategy behind his firm's approach to R&D

Behind every successful innovative company is an R&D strategy to match and Open text Corp is no exception. The Waterloo ON-based developer of enterprise content management (ECM) software has grown into a globally competitive firm poised to capitalize on the explosion in social media and their uptake in the business and government sectors.

From its roots as a Univ of Waterloo spin-off to a globally focused entity with a workforce of approximately 4,500, Open Text has experienced a dramatic transformation in the way it manages its R&D activities. There are 2,000 employees devoted to R&D working in a dozen global R&D centres, with each taking on specific tasks in either developing new applications or adopting products to regional requirements. Of its R&D staff, about half are employed in four locations in Canada, each with a global product mandate (see chart).

In the past seven years, Open Text's R&D spending has soared by an average of 15% a year from $41 million in FY03 to $160 million in FY09, with about half performed in Canada. Tom Jenkins, the company's executive chairman and chief strategy officer, says listening to customers and anticipating technological trends inform R&D decisions, determining where the R&D should be conducted and whether it should be done in conjunction with university researchers.

"As you grow bigger and become multi-product, you need to develop an internal research capacity … There's the complexity of managing research over many products so we do portfolio management," says Jenkins. "We spend about 15% of revenue on R&D and have thousands of technical people. We develop core research teams that work on fundamental, hard problems that are applied, and we also work in cooperation with pre-competitive research at the university level."

Among the various company research centres, operations in Waterloo, Richmond Hill and Munich are the largest, although all centres have in excess of 50 people. R&D growth has been a combination of organic and strategic, the latter exemplified by Munich which was created through an acquisition five years ago. Ottawa's focus on records management and governance is also strategic, stemming from the acquisition of two firms, including Hummingbird.

"We still have customer feedback but it's of a different flavour. There's input by region according to type of product," says Jenkins. "My role as CSO is a combination of strategic capital acquisitions and internal organic development."

Open Text's R&D strategic also reflects a critical transformation AND rapid growth of web enabled applications that Jenkins describes as a shift from technology to its applications. In many cases, the applications are also becoming the distribution channels for content as the web 2.0 evolves into web 3.0 applications.

"It's called the semantic web and it's characterized by highly personalized mash-ups. The key is to monetize the mash-up," Jenkins recently told a media gathering to publicize his latest book — Managing Content in the Cloud. "It's approaching critical mass (and) organizations have to recognize the tipping point and react."

And while the growth of a new generation of applications doesn't lessen the need for R&D, it changes the inputs.

"We need to continue our R&D because the need is everpresent. There's no rest for the wicked," says Jenkins. "There's a competitive factor. If you stop R&D you're no longer competitive. We're in a race here."

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