Open Text Corp. - Analyst/Investor Day

| About: Open Text (OTEX)

Open Text Corporation (NASDAQ:OTEX)

September 06, 2012 9:00 am ET


Greg Secord - Vice-President of Investor Relations

Mark J. Barrenechea - Chief Executive Officer, President and Director

Gregory W. Corgan - Executive Vice President of Worldwide Field Operations

Muhi S. Majzoub - Senior Vice President of Engineering

Paul J. McFeeters - Chief Financial Officer and Chief Administrative Officer

Greg Secord

Thank you for joining us. Today's investor briefing here at the New York Palace Hotel. In today's investor briefing, we'll review formal presentations from our executives, followed by on-site question-and-answer session. And just as a reminder, this event is being webcast for those that can't attend in person. And all presentation materials are available at the Investor Relations section of our website, where the Investor Events section is. The webcast for those on the -- dialed in or listening on the Web will be approximately 3 hours. Also just as an FYI, we have posted a summary table on our website highlighting OpenText's historically trended financial metrics.

I'm going to move ahead for a sec here. Pleased to announce in the coming weeks, OpenText will be presenting at several investor conferences, including the Deutsche Bank Technology Conference next week in Las Vegas. We'll also be having investor/analyst program on November 14 at our Annual Users' Conference in Orlando, Florida. We'll be at the Credit Suisse Annual Technology Conference on November 27 in Arizona. And we'll be at Raymond James Institutional Investors Conference next year in March in Orlando, Florida.

Details of these events and all other events are available on the website. So just moving back, before I move forward with today's program, I'll read our Safe Harbor statement. Please note that during the course of this meeting, we may make statements relating to the future performance of OpenText that contain forward-looking information. While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast or projection in the forward-looking statements made today. Certain material factors or assumptions were applied in drawing any such conclusion or while making any such forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and material factors or assumptions that were applied in drawing a conclusion while making a forecast or projection as reflected in the forward-looking information, as well as the risk factors that may affect the future performance of and results of OpenText are contained in OpenText Form 10-K, which may be found on our website.

We undertake no obligation to update these forward-looking statements unless required to by law. In addition, our meeting today will include a discussion of certain non-GAAP financial measures. Reconciliations of all non-GAAP financial measures and their most directly comparable GAAP measures have been included in our fourth quarter and fiscal year 2012 press release, which may be found on our website as well.

So thank you. And with that, I'll hand the meeting over to Mark Barrenechea.

Mark J. Barrenechea

Good morning. And welcome, everyone. Let me just start with today's agenda. I'm going to kick off the morning speaking about the company and our direction and vision for Enterprise Information Management. We'll then hand the presentation over to Greg, Greg Corgan, who's going to speak about our field operations and sales organization. Muhi Majzoub, who's here, will then go through our product roadmap. And I think you're going to see a part of the company that you haven't seen before. So I'm quite excited about what's in Muhi's content, as well as Greg's, of course. And then Paul will -- Paul McFeeters, our Chief Financial Officer and Chief Administrative Officer, will go through our financials and our target model. I'll come back and wrap up the day. Then I'm going to open it up for Q&A. And then we're hosting a lunch after our prepared remarks and Q&A and hope you all can join us for that. So that is our agenda for today.

And what you'll hear from us, what you'll hear from the team, you're going to hear the expanded market opportunity around Enterprise Information Management. And this is a market, where from enterprise content management, roughly a $5 billion market. EIM is growing to a $19 billion market by 2016 at a 10% CAGR between here and 2016. What you'll hear today from the management team is our growth plans: our growth plans for revenues, our growth plans for license, our growth plans for earnings. Revenue, license and earnings. You'll hear from the team, you'll see from the team. We have a few other members here in the audience that I'll introduce when we get to that point in time. We're going to go through our innovation strategy and our 2013 fiscal model. So these are the things you'll hear from us today in our presentation.

I'm going to start with consistency and growth. Consistency and growth. When we look back over the last 6 years, 6 fiscal years, we have doubled our revenue and 3x our earnings, doubled our revenues and 3x our adjusted earnings over 6 years. We've taken the company -- the company has grown from $596 million to $1.2 billion in fiscal year '12. We've gone from generating $1.48 in adjusted EPS to $4.60 last fiscal year. This is a fantastic baseline for us to build on for the next decade within OpenText.

So I want to start with consistency and growth. Over a 6-year period, we've 2x-ed our revenue and near 3x our adjusted earnings over the previous 6 years, and nothing is changing in our approach to leading the company. On top of that, we've applied $2 billion in capital and acquisitions over the last decade. We've put $2 billion of capital to work, most recently with EasyLink, EasyLink Services. EasyLink will add a fourth revenue line to the company in fiscal '13. It will add a Cloud Services revenue line, where obviously we have license today. Our maintenance business, our Professional Services business will be adding a Cloud Services revenue line here in fiscal '13, and that's our most recent.

Global 360 and Metastorm, most of you are familiar with, I'm sure, really built out our BPM category. Nstein is sort of an anchor offering within our Discovery product line. IXOS, certainly within our ECM category. Hummingbird as well as Captaris, with our Information Exchange category. Vignette within our Customer Experience Management category. And StreamServe, also within our CEM category.

And I want to start with consistency and growth as well as acquisitions because this really leads me to sort of my observations of the business prior to joining and my day 1 observations of the business and my updated sense of priorities, 9 months in. It's been 9 months since I've been at OpenText. When I think of my day 1 observations in our addressable market, the company was very focused on enterprise content management. A fantastic market, it's our heritage, it's our foundation. It's not unlike in the ERP space, where financials is sort of the anchor category of ERP. But we've moved -- we've expanded our aperture, and then expanded our view of the market. Our customers were asking us to expand that aperture from ECM to Enterprise Information Management. $5 billion TAM in 2012 to a $19 billion TAM in 2016.

Again, a day 1 observation of OpenText. Growth and consistency, strong earnings, revenues, cash flows, great CAGRs over that period of time. This remains an absolute priority. As we set out to grow organic license faster than we have done historically, we are not going to do that at sacrificing this great growth and consistency and financial platform that we've had within the business.

Another day 1 observation, moving on to a go-forward priority, is that our organic license growth has been below market rates. We set out on a track to be at or above market rates for our organic license. Number one lever for the company is to grow organically our license at or above market rates. And you'll hear from us today how we intend to set out to go do that. We're clearly a proven acquirer, again, a day 1 observation of applying $2 billion in capital over that decade, over the last 10 years. We will continue to acquire. It remains a priority for the company as we look at each of our categories to continue to build scale in the categories of scale in the company.

Innovation, day 1 priority. I'd say a bit siloed and a bit incremental, all right? And it is more of a critique versus a criticism that I'd say we looked a bit more within each of our categories and a bit more in incrementalism and capabilities. So I think you'll hear today from Muhi that we're looking at a bit more of an integrated strategy and a bit more strategic approach to driving forward our product category.

And again, day 1 observations, we were structured in what I call the general management/business unit model. And in April, we transitioned to the company to a functional model. And that functional model is where our functional owners own each of the functions. Our geographic leaders in each of our big geos, EMEA, America, APJ, were responsible for CS, they were responsible for PS, they were responsible for sales operations, they're responsible for field marketing, and they're also responsible for license. We felt that, that wasn't quite the structure to really get organic license growth moving, so we transitioned that to a functional model where we have 1 leader for worldwide CS. He's here with us today, James McGourlay. James has 15 years of experience at OpenText, and is leading worldwide CS for us. That's our maintenance business as well as tech support. We consolidated our Professional Services business under 1 leader, Walter Köhler, who's now leading worldwide PS. We consolidated all our marketing functions under our marketing lead, James Latham. And we set up a traditional enterprise selling structure with a capstone of bringing Greg Corgan on board to lead field operations. So this is one of the larger changes we've made in April, and we enter our fiscal '13 executing against that model.

So I wanted to start with growth and consistency in applying $2 billion of capital, building an incredible baseline for the business as we look to grow our licenses faster within the market and the transition to the functional model. With that, this has created the expanded executive team here at OpenText. I think most folks know Paul. And Paul will be up here speaking in a few moments. Greg will be speaking after myself. Muhi Majzoub, leading engineering; James McGourlay, leading customers service. We have Gordon. Gordon, if you want to raise your hand, you're not speaking today, our Chief Legal Officer. James Latham, our CMO; Steve Hunt, our CIO; and Manny Sousa, leading human resources. I am delighted with our executive team. I'm really pleased with the team that we've put in place. It's a world-class team, it's a team that has incredible experiences in large, global, complex enterprise software businesses. So I'm real delighted to have the team brought together. We also have 2 invited guests today. I'd like to invite them. We have Kate Stevenson, member of the Board of Directors at OpenText; and Debbie Weinstein, member of the board at OpenText as well here. So Kate and Deb, welcome.

Paul and I announced fiscal '12 just a few weeks ago, I guess, it's September already. And it was -- the team delivered a solid fiscal '12. Record performance in revenue, record performance in profit, record performance in earnings per share and record performance in non-GAAP operating cash flow. $1.2 billion in revenue, $293 million in license, $287 million in non-GAAP operating cash flow, $270 million in non-GAAP net income, $4.60 adjusted earnings per share. So very solid, the new team delivered a very solid fiscal '12.

We've also built a global business, and we wanted to highlight today some of our major locations around the world, including New York City. So we think of our business in 3 large geographies: the Americas, EMEA and Asia Pacific. In fiscal '12, FY '12 revenues in the Americas was $635 million; year-over-year growth, 16%; and percent of business, roughly 53% in the Americas. Our worldwide headquarters is in Waterloo, Ontario, which I'm based out of. Operations at Richmond Hill, Ontario, as well as Ottawa. We have a large presence here in Battery Park South in New York City; D.C.; Atlanta, Georgia, where Greg is based out of and where EasyLink headquarters was; Austin, Texas; Tucson, Arizona; San Francisco; and Bellevue, Washington. Those are our main presences in North America. And we run Latin America out of São Paulo.

EMEA, $474 million in fiscal year '12. 13% growth year-over-year, roughly 40% of our business. We lead EMEA out of Grasbrunn, Germany, just outside of Munich. If you will, a large presence in Reading, Paris, Stockholm. We have other locations as well. But these are the main highlights. And we cover the continents of Africa out of South Africa in Johannesburg.

In Asia Pacific, just under $100 million in fiscal '12. With EasyLink in our own growth plans in Asia Pacific, this will be above $100 million in fiscal year '13. We've been able to grow -- the company has been able to grow Asia Pacific over the last 5 or 6 years to really emerge as a greater than a $100 million business. And EasyLink has a fair amount of scale in Asia Pacific. But in '12, it was roughly $100 million at 42% year-over-year growth and roughly contributed 8% of our business. I wouldn't be surprised if Asia Pacific was in double-digits in fiscal '13, given its growth rate and the addition of EasyLink Services in APJ. And we run APJ out of Sydney, Australia.

I want to get on and speak a little bit about EIM. And I want to use a few analogies to describe it. And I want to use a markets evolve analogy and use 2 examples that we all may be familiar with. I think of the platform. If we think back 10, 15 years around the database market, application server, business intelligence, developer tools and think of all the companies we know that were in those spaces, all the database companies that we knew that were in that space, all the developer tool companies that we knew of in the space, application server companies, business intelligence companies. 15 years later, there's a platform. Markets evolve, they expand, they consolidate and they build a bigger category. That's happened in the platform, right? And now you think of a platform, and you have IBM's platform, you have SAP's platform, Oracle's platform, Microsoft's platform. We've gone from hundreds of companies in these subcategories to 4 leaders in the bigger category. This market has evolved.

It's evolved in applications as well. If you -- a market that I've grown up in a little more than on the tool side. That if you look back over 20 years or so and think of all the HR providers, all the CRM providers or even before it was called CRM, we have sales, service, marketing providers. Heck, you even had in the financial side, providers who did nothing but accounts receivables or accounts payable before it became financials. PLM, supply chain, MRP, there are hundreds of application providers. That market evolved, categories got created, financials, categories got created, HRMS, payroll, benefits other things. And the bigger category then emerged, called the business suite. And today, over that course of 15 to 20 years, we've gone from hundreds of providers to really 3 large providers in the business suite category, SAP, Oracle and a wonderful disruptor,, which comes at the market in a different model for the most part than Oracle and SAP. But just like the platform, it shares common characteristics, where we've gone from hundreds of providers, categories have grown up, they have consolidated and grown into bigger categories.

We feel the same is happening in what we call Enterprise Information Management. When we look at the categories of Fax, EDI, Discovery, Capture, Information Exchange, Customer Experience Management, Business Process Management, these categories are growing up, consolidating and building a bigger category that we call Enterprise Information Management. We see similar characteristics that happened on the platform. We've seen similar characteristics that happened in the application space that are happening in Enterprise Information Management. Not unlike the platform where the database is sort of the anchor category, not unlike in applications where financials is sort of the anchor category, in Enterprise Information Management, the anchor category or our heritage is enterprise content management.

And part of Enterprise Information Management is all about managing unstructured enterprise information. Unstructured enterprise information. So I want to spend a moment on defining what that means to OpenText and what that means to our customers. Think about PDFs, PowerPoints, Word documents, Excel files, email, folders, fax information, calendar information, local information on that iPhone or iPad you may be holding in your hand or the tablet. That information needs to be discovered. You need to be able to connect to it. You need to be able to capture it. In some cases, you need to be able to digitize it. And then from there, you need to flow that into controlling the content through records management, classification, to get a lot of metadata around that information and security. You then need to be able to extract value from that information. And that value may be stored in ERP, CRM, email or other repositories, where you then want to go off and be able to provide insight from portal search, mobile, et cetera, and build applications on top of that information. A lot of those applications are around case management, contracts, invoicing, approvals, governance applications. So unstructured enterprise information. We want to just spend a moment because EIM is all about managing, securing and providing value to that unstructured enterprise information. And we wanted to define a bit more precisely what that means to OpenText and to our customers. And of course that all needs to be processed and data-driven with process and data orchestration. And that's what unstructured enterprise information means to us.

And that leads us to our vision and strategy, which is enterprise information management. We also see it being delivered mobile, social and in the cloud. You're going to hear Muhi speak about our new social community product, 8.2, which we're moving into cloud by the end of the calendar year. You'll hear Muhi speak about Tempo moving into the cloud at the end of the calendar year. If you think of Jive and Dropbox-like capabilities and think of social communities and Tempo moving into the cloud, we'll have all those enterprise capabilities built on 20 years. I could out talk that hammer any day if I have to. So if I need to speak louder, just let me know. We'll be moving both of those products into the cloud by the end of this calendar year with all the enterprise capabilities, security, records management, governance, audit controls and security that's expected of large enterprises.

With that, there are 2 big information pillars inside an enterprise: ERP, EIM. These are the 2 big enterprise information pillars. ERP is mature. There's not a CIO I don't speak to who says, "Thank you, ERP, for the 20 years of great service. Whether I've invested $10 million or $100 million in my 10 to 20 years of an ERP journey, thank you, ERP. You've extracted the value that I wanted to get out of ERP." And we've seen that. We've seen the results of that in the G&A line of companies' disclosures that are going from 20% G&A of cost structures down to sub 10%. ERP has done its job. It's mature. CIOs can't really extract more value out of ERP today. There's always the next module to deploy, always the new interface, so the next version to upgrade to. But for the most part, CIOs have extracted all the value they can out of ERP. And we know ERP: financials, HRMS, order management, CRM, PLM. And it's primarily around structured information. It's a nice market size, $33 billion market, $33 billion TAM by 2016, growing at 6.5% to 7%.

Right next to it is the second pillar, this second information pillar for enterprises, and that is EIM. ECM, BPM, CEM, Information Exchange and Discovery. And this is unstructured information, unstructured information sitting right next to structured information. 80% of an enterprise's information is unstructured, 20% is structured, right? Actually, if we would kind of draw these circles, an area -- if they represent an area of amount of information a corporation has, the blue circle would far be bigger than the yellow circle. EIM, you've got a $19 billion TAM growing at 10% over this period between here and 2016. So we see 2 important enterprise information pillars. ERP as being very mature, EIM as emerging. CIOs turning their attention to EIM, turning their budgets to EIM to begin to extract the value out of that unstructured information.

Part of the state of EIM today is that the data is very fragmented. These are still early days in EIM, but it's our vision and strategy. The market is still maturing, relatively young. There's data fragmentation. There's process fragmentation. There are a lot of bespoke or custom applications in EIM. There's a fair amount of data vulnerability. I mean, we pick up a newspaper and look at information about records being stolen or extracted. There's not a day that doesn't go by when we read a newspaper about a major corporation of data vulnerability, right? If data was professionally managed in these repositories, that would be much less of an issue. EIM today is very costly, too many point solutions and lots of missed opportunities. Think of all the islands of data sitting in ERP: email, paper, databases, file systems, desktops, SharePoint. A lot of custom applications in varying formats: PDFs, Word document, Excel. And there are a lot of important data objects living inside of ERP of customers, employees, projects, invoices, et cetera. And there's lax standards to go after that. So sort of the state of EIM today is, I said, at the highest level, there's a fair amount of data and process fragmentation with lack of standards across these islands of data and important data objects.

Where we're driving the market and where we see EIM in the future or tomorrow is that these information flows are going to be integrated that go across these data types and these data objects. Muhi will speak to a particular information flow, from Capture to Archive, being able to capture information, digitize it, manage it, being able to put signatures and processes around it, extract a value and then archive, from Capture to Archive. That's an information flow that goes across varying data types, varying data stores with an application. There will be process integration. There will be standard flows. There will be information governance and security. And just like on the platform and just like in the e-business world, suites will emerge and suites always win. We envisage a world where there's a virtual stack. EIM state today, EIM tomorrow. We're driving towards the vertical stack, where there is a common information store, common middleware, common tools and information discovery and out-of-the-box applications built on top of those tools, middleware and information stores. So this is the state that we see in the future around EIM, which is integrated information, integrated processes, integrated business flows, delivering information governance and security, a suite provider on a vertical stack.

And this leads us to the 5 categories that we're focused in, in Enterprise Information Management. Our heritage of ECM, roughly a $5 billion market here in 2012 of capabilities of content management, archiving eDOCS Records Management. Business Process Management, roughly a $2.6 billion growing at 8% from high-volume imaging, case management, process-centric apps. Customer Experience Management, $1.3 billion market, 14% growth rate. Web content management, social communities, portal, media management. Information Exchange, a new category that we've sort of put on the front page. We think this is very, very important that when that information is captured and managed, needs to be exchanged, whether that is through EDI, through managed file transfer, through fax. This is a $3.2 billion market growing at 11%. EasyLink, an anchor tenant in here, and then Discovery, which is an emerging market for us, $1.4 billion growing at roughly 14%. We look at search, Semantic Navigation, eDiscovery, Auto-Classification and Content Analytics in this category.

Our product priorities, are number one, building applications. Building applications on top of information, of unstructured information. Second is data and process integration. So third priority -- second priority. And our third priority is functional excellence in each of our categories. So I'm not going to spend a lot of time on this slide, but Muhi will kick off with this. But our top 3 priorities are applications, data and process integration and functional excellence. You'll hear the company speak about these 3 priorities for quite some time because they're long-lasting priorities for us, built on an integrated platform and delivering these capabilities, mobile, social and in the cloud and in the new OpenText cloud. So 3 priorities, applications, data process integration and functional excellence.

We also want to provide an update on how we look at the market. I'm asked this question a lot and we thought we'd put it into a table. So the columns are the categories for Enterprise Information Management: ECM, BPM, CEM, Information Exchange, Discovery. The rows are the competitors in the markets. And this is our view. This is how we look at the market. This is not a third-party analysis. This is how we look at the market of whom we compete with. We look at IBM of having capabilities in ECM and BPM; Hewlett-Packard of having capabilities in ECM and Discovery; Microsoft, primarily in ECM; EMC primarily in ECM; Oracle in both ECM and CEM; Adobe within CEM; Pega and TIBCO, primarily in Business Process Management; j2 Global in Information Exchange; SDL in CEM; Epiq in Discovery. You get below Oracle, and these become point solution providers. Above the line, between IBM, HP, Microsoft, EMC and Oracle, these have more capabilities of being suite providers in the marketplace. Again, if you go back to how the market evolves, hundreds of providers, categories emerging, consolidating to a larger category and a handful of leaders emerging in the new category. This more line, there are hundreds of providers, right? And you can pick your favorite list in each of the major pillars.

How do we win? We win by being the category leader in our 5 categories. Being best in ECM, we're tied for #1. Being best in Information Exchange, we lead the market in Information Exchange. We're a top 5 provider of 1 year in, in Business Process Management in the top 5. And we're top 5 in CEM 4 years in, right? We're not going to rest until we're #1 in each of our categories, and Discovery is emerging for us. So the first way we win is to be the category leader in all that we do. The second is being the EIM leader and having integration, having it makes sense to have this information be integrated, just like it makes sense to have financial information integrated to order management. That dataflow makes sense. It makes sense to have business processes, BPM integrated to ECM. Or being able to have your social communities integrated to your content repository. So the second way we win in the market is being the EIM leader.

The third is our expertise. This is all that we do, right? This is our singular focus. We're not focused on building printers or laptops or servers or mobile devices. We are the experts in unstructured information, right? This is a large market, this is our singular focus, we are the experts in being able to partner with customers, help them on their transformation to leveraging and extracting the value of their information to be more competitive or to reduce cost of their organization or to reduce risk in their organization. We win by being able to prove the return on investment for our categories or our Enterprise Information Management. And again, this singular focus within this space. So we thought this would be helpful to look at how we think of the market.

This leads us to our growth drivers. As I spoke about on the last earning call, first and foremost, replatforming the enterprise with Enterprise Information Management. Second is looking at new markets. And Greg will go through this in a fair amount of detail. We're looking at our expansion in emerging EMEA, Asia Pacific, Latin America and a few select set of new industries on top of what we're already focused on. Distribution expansion, both direct and indirect. We're entering a new product cycle, right? We've gone through over the last 6 to 9 months of structural change, which is behind us, having a great Q4, executing well with a strong license quarter. So we've gone through kind of our internal organizational changes. And as we enter into the fall and into the end of the calendar year, we'll be entering a new product cycle, which Muhi will speak about.

Fourth -- fifth growth driver is Cloud Services. The introduction of EasyLink is very important, right? We very much like the EasyLink business as it is, but we'll be moving new services into EasyLink. We'll be moving Archive, Business Process Management and Capture into the EasyLink service by the end of the calendar year, which we'll bring -- these are additive revenues, which we'll bring to EasyLink customers. We'll also be moving Tempo and Social Communities into our cloud, the EasyLink infrastructure, for enterprise teams to go south. And we'll be expanding the presence of where EasyLink is. So Cloud Services is another big growth driver for us as we enter fiscal '13 and '14, and we'll continue to look at acquisitions. So EIM, new markets, distribution expansion, product cycle, cloud services and acquisitions are our 6 swim lanes -- 6 on-ramps to growing our revenues in the year.

And with that, I'm going to pause and hand the platform over to Greg Corgan, Executive Vice President for field operations.

Gregory W. Corgan

Thank you, sir. Good job. Thank you, Mark. Good morning. Everybody okay? Yes? Good. Mark, thanks, I appreciate that. I appreciate the time today. And what I want to talk about is it's my job to figure out how to capitalize on the opportunity we have. And I'll give you the bottom line right out of the shute on what we have to do to grow our business and grow our license revenue. It's taking a substantial increase in our field headcount and deploying it much more effectively in our account base. Also deploying it to the new markets geographically that we're going after. And the third point is building a world-class partner organization and an ecosystem around our partners that helps us drive that business. It's not rocket science, it's those 3 pieces. And that's what I'm concentrated on. So I'll talk a little bit about that, some of the details, how we're getting there, what all that means.

I thought I'd start with a little background on myself. I guess, I've got a -- 24 years with IBM. This location actually brings back a lot of memories, this was my first territory at IBM. New accounts, knocking on doors, selling computers, a long time ago, unfortunately. Since that, I also ran the software business in North America. And I had responsibility over time for starting up our ERP business, which surrounded the ERP providers with software services and hardware. I left in 2000 and I did 2 startups. And to be honest with you, those were learning more than earning experiences for me, but I enjoyed it. I came back to my roots in technology and software at CA Technologies, where I did run the worldwide sales organization. And before OpenText, I ran the worldwide field operations group at Infor. Infor is a provider of ERP solutions mostly to the mid-range customers set.

So for the last 16 years, I've been a software guy, infrastructure, plumbing and on the application side. And so this kind of fits into my wheelhouse. I'm happy to be here. And what I learned -- again, what I learned is there is no magic bullet when it comes to driving revenue and increasing your penetration in customers. It's all about 3 things: it's focus; it's deploying your resources smartly, which we need to do; and then in the end, it's execution. And that's what we're on. Get them right, deploy them right and let's execute. And to that degree, my charter is the following. It's grow license revenue, and I've got some pretty big targets. It is do that by building a world-class selling organization and services organization to support it and ensure that we deliver it in a satisfactory way so that we've got happy customers who are buying that and are going to buy more. That's essentially my charter.

And I give you the to-do list for 2013. We were talking about this, Dan [ph], right? Yes. Dan [ph] and I were talking about this earlier. Cross-sell and upsell into our customer base. We've got a great customer base. We've got to do better at that. Better discipline around deal structure and discounting. We've got the deal desk now in place, and one of their jobs, and it's important to us, is really to monitor the market price for our software so that we can do a better job of pricing, particularly in competitive situations. We've got emerging markets, geographically I'll talk about. SAP is a wonderful partner that we continue to work with. I've got to build a world-class partner organization and ecosystem that augments what we're doing from a direct standpoint. That's a key component of our growth strategy. And then we talked about the sales force expansion, which is substantial and taking place as we speak. So that's what I'm going to get measured by. Those are the checklists I've got to deal with.

I liked Mark's chart on the first couple of days. I've been here a little bit more than 2 months. And I'll talk a little bit about my first day observations. The first thing is I've got a solid management team around the world. And I was able to put the pieces of it together quickly in the spots that weren't there yet. And I'll show you who they are. Steve Best runs the Americas, very successful running one of our regions. We promoted him in April, I believe, to run all the Americas. Great opportunity for Steve, and he's already off to a great start. Ted Harrison, the same deal, ran the U.K., promoted in April to run all of EMEA. Graham Pullen has been running APJ for a while and has made his numbers dead-on for the last couple of years consistently. And then I'll go down to the last 2, Walter Köhler. Mark talked about him. Walter runs our services organization in Europe but also overseas, what we do worldwide, has been in services for most of his professional life, brings a great deal of professionalism to that organization.

The 3 I added, and I was able to do this fairly quickly, is Gary Weiss, who I worked with. Mark and I worked with him at CA. He runs our portfolio business, which includes EasyLink. He's done that before, done it successfully before, great professional, a great addition to the team. Patrick Barnert, some of you may know -- may or may not know, but he's responsible for the successful partnership we've had with SAP, so we've just elevated him to take that program and build it worldwide into our partner program. So he's got a big new job and a big key responsibility. And then the last hire I made to complete this team is Brad Keller. You can't do anything worldwide without a world-class sales operations organization. Building quotas, putting common process in place, how do I forecast, what's the pipeline looks like, all the things that are fundamental to building and running a sales organization, you need an operations team to do that. We put Brad in place to do that. He's excellent, he's already making a huge difference. So that's the team. What they have to do is build out their teams. I want world-class leadership all the way down to the first-line folks who deal with our customers. And that's their charter. Build out those teams, so we're world-class around the world, all the way down to that first-line level in front of the customers.

The other things. We've got a great customer base. It is the who's who of customers, and we're in most of them. We're in over 80% of the top Fortune 1000 in some way or other. But we need to expand that coverage. We need to optimize where we are. And that's where the cross-sell, upsell opportunities come to play. That's a key component of where I'm going moving forward. We have an outstanding SAP partnership. I've been around this business for 30 years, I have broken my pick in many cases, trying to establish and build partner relationships in some of the various jobs I've been in. Some of them work, some of them don't work. This is one of the best I've ever seen, how we work with SAP, how we go to market together, how we leverage each other. And what I've got to do here is drive that relationship harder, fuel SAP and their growth, lever what they do and what we do together, both of us getting more involved and leverage it more productively so that we're not in the I-formation, what I call the I-formation, a U.S. football term. So we're not in the I-formation. We're driving different opportunities in the same account but based on that count [ph] and that connection. And we're getting better at that. And I want to build additional relationships that are like SAP. That's part of what a partner organization is going to be about.

From a distribution standpoint, here's where we've got to get better. We've got coverage gaps. So what coverage gaps mean this to me, big customers, big opportunities, not enough focus on them. So let me give you an example. I did a -- we do deal reviews. I get on the phone with our guys and do deal reviews, right? What are we doing in this customer? What's the deal look like? How do we make it better? How do we close it? When can -- all those sorts of things we do on a regular basis. I was doing one with a rep at British Petroleum. Great opportunity, doing a great job. British Petroleum, big customer. So at the end, I say to the rep, he loves this, "How many accounts do you have?" "I've got 26." He had 26 accounts. Where do you get most of your revenue from?" "6." "Where are you going to get most of it from next year?" "3." "So who's covering the rest? And if I just focused you on those top 3, could you go wider and deeper?" I actually asked him those questions, I expect him to go, "No, I need all 26." And he said, "Yes, absolutely." And that's what I mean by coverage gaps. We have AEs with 15 to 30 accounts. Now we're fixing that, and we're taking them down to a manageable number. But that's how we get wider and deeper in these accounts. You build the relationship, you understand where the problems are, you understand how we go after opportunities in different parts of organizations. I see it already happening. We've got great BPM examples, where it's already happening division-by-division in key banks, for example. That's where we have to get to.

And we had geographic partners. We didn't have a common partner strategy worldwide. That's why Patrick is in this job. Asia did one thing, Europe did another, the Americas did another, our portfolio group had a whole different strategy. And there's a reason they have those. They need them, but we need something that's common across the world that gives us process, gives us an enabling strategy, gives us an ability to recruit, train and position our partners in a way that makes sense for us around the world. That's what Patrick is going to do. So we're going to hire to grow. That's why we're putting more of our direct field force in place. We're going to hire to focus fewer accounts, go after them wider and deeper, and we're building a world-class partner organization. That's our strategy and that's the execution point I've got to get on.

From a process standpoint, here's what I found out -- not only do we have different partner strategies worldwide, we had different processes. We had different commission plans in Europe than we did in Asia, than we did in the Americas. So getting that all common is a big part of what Brad has to do from a sales ops standpoint. So we have a worldwide comp plan that makes sense. We have a methodology to measure and build pipeline. We have terminology that's the same, and so we can lever everything around the world. That's Brad's role and that's what he'll continue to do. And we'll get worldwide alignment of actually how we do things.

Love our services organization. It's a great -- they're great implementers, great margins. Their role, higher value content, continued good margins and their job is to help me build an ecosystem, a partner ecosystem, so I can drive license, right? We're a license company, we're a software company. We love our services business, but it's there to enable our customers to put quality technical expertise in place, and in my view, to enable our partners so we can build an ecosystem, allows us to expand that pie substantially. That's their role and that's where they're going to go as well, okay?

So kind of where I saw where we are, and like Mark was talking about, my go-forward priorities. When you get to our distribution model and you get the focus, this shouldn't be new to anybody. You've probably seen this a million times either in the pyramids or how ever folks put it together. But it is what it is always in the enterprise software world. You've got to get this right, so you get the focus right and you deploy the resources right, right? So here's where we are, we have key accounts. It's our top revenue producers historically and where we think our future opportunities are. Most of it is existing customers. Many of them are target customers we haven't gotten to before, particularly some in the key industries we're going after. I want key account AEs, meaning account reps that have not 15 to 30 accounts but 1 to maybe 10 at the most. And you're going to stay on that account for at least 3 years. You're going to build that relationship, drive opportunities, build pipeline. An AE has 2 responsibilities, close business, build pipeline, short-term, long-term. That's what they've got to do. That's how we measure it. You can't do that if you've got 30 accounts. That what a key account AE is going to do. And they'll get the highest level of support. We've got a value engineering team that is world-class, going to establish that around the world. That's going to be focused on the key account customers. We've got SCs and resources that we're going to pile on top of this set of key accounts. So that's our focus arena. And as you might imagine, that's drives a substantial amount of revenue in our business. The 80-20 rule, while not exact here, is obviously in play as you go around your customer set.

The next set of accounts is what we call named accounts. And they also have an opportunity but they're not in the key account group. But they drive revenue for us. We'll have territory AEs and they will have 15 to 30 accounts, and they'll be opportunity-based. Let's find opportunity -- they'll work with partners, right? These will not be the accounts that we're going to have the ability to get wider and deeper without leveraging some of our partners. But they'll cover those accounts and do it in an opportunistic way. And they'll have access to the resources we need to drive an opportunity when we find it. And that's not a bad model in a named accounts set.

And then the rest of it is what I call territory accounts. And they'll be covered by inside sales, by our partners, by distribution partners and by virtual AE teams. We'll probably build 3 or 4 teams of account execs that we can deploy in a virtual way when we discover an opportunity in territory accounts. This is our segmentation model. This is what is going to allow me to focus the additional resource we're bringing on board into opportunity areas. Makes sense?

Here's where we sell and here's how we're organized and here's where I want to talk about, the emerging markets. In the U.S., in the Americas, we have organizations that are focused on Canada, the eastern part of the U.S., the western part of the U.S., the public sector, big growth opportunity area for us, not only DoD but state and local. We've got -- we're going to put a lot of investment and a lot of focus on public sector. And by the way, that extends to many of the public sector organizations worldwide.

And then Latin America. And that's one of the areas that we think is an expanding geographic opportunity. As you all probably know, it's mostly Brazil, where we did a reasonable amount of business, where we've got an opportunity there. Big financial institutions there, big logistics institutions there. Banks, insurance companies at big sizes. We've got to get there, we got to get there better, we've got to get there fast. Chile, Colombia, to a degree, we'll focus on. But those are partners. And then I know Mexico isn't Latin America, but we're going to have a foray into Mexico as well. So that's the emerging geography in the Americas.

And in Europe, we're organized like most companies, like most software companies are organized. I have a U.K. organization, which is obviously all of the U.K. Northern Europe, which includes Benelux and the Nordics, a solid performing group. Southern Europe, which is France, Iberia, right, Portugal and Spain, Italy, a lot of challenges in that geography these days, as I'm sure many of you know. And then DACH, which is Germany, Switzerland, Austria for us. And those are our key organizational components in Europe. And then we've got a great emerging opportunity in Europe as well. The Central Europe, Eastern Europe, Russia. Russia, a big opportunity for us, partner-driven for the most part. We include South Africa there and our Middle East businesses handled out of this organization as well. So Middle East, Central Europe, Russia, Turkey and South Africa.

And in Asia, it's probably what you would think as well. The ANZ organization, ANZ is Australia and New Zealand. We have a group that's focused on Southeast Asia so that's Singapore, it's Malaysia, it's Indonesia, it's Thailand, it's Vietnam. We've got a partner organization that goes after Vietnam, it's that group. And then an organization that just handles Japan. And our emerging focus there, as I'm sure you would imagine, is India and China. We're probably a little bit ahead in getting into India, and then we're following fast behind with our investments in China. So that's the landscape around the emerging markets geographically Mark was talking about and where we're going after and where we see it happening, okay? So that's around a lot of the direct strategy.

Here's what I'm talking about from a partner standpoint where we've got to get better. Strategic alliances with SAP, fantastic. And we'll drive that. We'll drive -- fueling them to go after accounts better but also leveraging the installed base with them and focusing on certain product areas with them. That's the SAP strategy. I'd love to have 5 more SAPs, but I don't know where we they are. And if I could find them, I'd get them because that is a great partner for us and we work together well. Where we've got to do better is around the system integrators. We've got a good relationship. We do well with Deloitte. We're pretty good with Logica and Cap. I've got to get better with Accenture. And I've got to leverage the federal systems integrators more. Now you can't do all those because you do lose focus and they take a lot of time. So we're going to pick and choose the ones that we can lever over time, particularly in the commercial environment, and then get a group of federal systems integrator. That's the only way you leverage the federal government with federal system integrators. Get a group of folks that we can count on and work with strongly. And that's a huge focus of what Patrick has put in place and where I see our leverage. We have VARs in the BPM space. We have distributors around our writebacks business and some of the portfolio businesses that Gary Weiss runs. And then strong technology alliances across the bottom set with Microsoft and Oracle, you can see Cadence there, Cisco. But the point is our businesses are around alliances, integrators, the territory accounts with VARs distributors. I love the OEM business. We've got a decent OEM business. I'd like to drive that more if I can find the right partners. You get those -- you get that technology embedded in somebody else's technology and have them take you to market, that's a nice cost of sales model, it's a great cost of sales model, okay, then our technology alliances.

So just a little bit on the services organization. It is a presence around the world. Revenue last year was about 250 -- $260 million and a great margin number, and compared to some other places I've been, an extraordinary margin number. Their mission is really to make sure when we sell something, our customer get it installed and they're happy with it. And in many cases, we will be the subcontractors to other SIs, which is fine with me. And as I mentioned before, their mission is expanding to enabling our partners to build that ecosystem so that the software pie becomes bigger. Today, they do a lot of things in that lower left-hand box, from consulting to implementation that we do, do a few managed services operations. But today, they're mostly in and around product installation, product implementation, which is okay, we want that. Over time, we'll move them to higher-value services offerings, business process, reengineering, bigger kinds of projects, at the same time, keeping that growth and profitability in check. So this is a solid organization operating really well. And this is one we've just got to fine-tune, and that's where I'm headed here, okay?

Leaders buy from leaders. One of the things I didn't mention that I noticed in the first 60 days, and I spent this -- and it dawned on me when I spent time with customers in London. EIM is real, they want it. They like what we're talking about. They really do. They like what that represents in terms of an end-to-end solution. But what they also like is the fact that the products underneath it that build up that EIM strategy are world-class. And you can see, not very clearly, but you can see on the charts where we fit in some of those product categories. And that makes for an exciting marketplace. It gets our sales guys excited, our services guys excited and our customers listening to the story. And for me, in the first 60 days [ph], that's fine. It's an opportunity. It's about execution for us. And that's where we're headed.

So I thank you for your time. I guess, I'll spend some time at lunch in the question-and-answer period answering any question kind of questions you may have about this and look forward to meeting a lot of you at lunchtime, okay? Thank you. With that, let me introduce Muhi.

Muhi S. Majzoub

Good morning, and welcome. Let me start by giving you a little bit background about myself. I'm new to OpenText. Before OpenText, I was head of products for NorthgateArinso, based in the U.K., working on HR and payroll global applications. Prior to that, I worked at CA Technologies for 6-plus years, managing their application management business unit and their common platform, the Catalyst platform. And before that, I spent 17.5 years at Oracle, where I did multiple development roles, including the development of the Oracle Store and the e-commerce division,, and in the CRM division, managing the sales automation and marketing automation products.

Mark talked to EIM, our vision and strategy. And I'm going to share with you for the next 30 minutes our plans, how we translate that in product deliverables and what we're planning to. We have few announcements, but also I will share with you what will be coming in our product roadmap for the next 6 months. Before I do that, let me share with you a little bit of what challenges are we trying to solve, and Mark touched on that. He spoke a little bit about how products today and information is siloed in the enterprise. The data is sitting in different databases, in different areas on the file system, different servers, multiple geographies. It's not connected, you cannot easily search for information, you cannot easily find information when you need it. There are multiple formats, there are multiple objects stored in different databases, again, making it very, very hard for you to find the information, manage it and properly secure it in the enterprise.

EIM means to us a common data store that is properly managed, secure, available if you need it in the cloud but also on premise for some customers, who want it to stay internal. EIM means to us a common set of tools, making it easy for you to search information across these different data types, different areas. And I'll speak a little bit more about some of these tools. And EIM means a common set of standard applications that can easily be extended to support your business process, taking you away from the route of custom applications that are often not upgradable and very, very hard and costly to maintain.

Mark also touched on this slide what the product priorities means to me and my team. Applications is our #1 focus. How we integrate data across different areas of our EIM pillars is very, very important. And thirdly, our functional excellence and how we become #1 in every pillar of EIM; how do we become #1 in ECM, including our Content Server products and many of our archiving record management tools; how we become #1 in CEM, web content, social media management, portal and few others; how we become #1 in data and process management with our BPM solution; and how we become #1 in Information Exchange and in eDiscovery, our emerging area.

On the application side, it translates for us -- Greg and Mark both touched on the importance of application. Today, we have a great partnership with SAP. We deliver a solution on top of the SAP product that allow you to manage information much easier, secure it better and integrate it into different SAP applications. We plan on enhancing that and growing it into more areas in the SAP portfolio. We have some products, like Oracle Payables, Oracle Content Access, that are available today in production in our portfolio. We look at enhancing that and adding archiving for Oracle, record management for Oracle, and also delivering these in the cloud, as Mark mentioned.

We look at some standard set of applications that include: contract management; enhancing our existing case management solution; digital asset management is very big for us because of customer demands and customer requirements; asset management; and in the future, many more other applications that will be developed in a standard and delivered in a standard way, secured part of EIM.

Our second priority, data and process management. Our BPM tools today offer you process engines that offer you great modeling tools and designer tools to our ProVision product. We're also announcing today our InfoFusion middleware. And let me tell you a little bit about InfoFusion. It is the method that will allow EIM to connect today to a multiple data stores and to virtually create an information index of the content, structured or unstructured, and make it available to you to search globally. Let me give you an example. Take a customer that is today running Content Server, running IBM FileNet, running Documentum, running SharePoint, running proprietary applications in their environment. InfoFusion, through connectors, will allow you to connect and discover all this content in the different content store. It will create an index for you of information that is available to you to do a global search across all the systems. Today, if you have multiple data stored, you first look into FileNet, see what you have, I then move to Content Server, see what I have, then move to SharePoint and so on until I've reached and touched all of the areas, and I then have to consolidate the information. InfoFusion will allow you to do that. It will allow you to create a virtual index and a virtual workspace that you could then put -- and I'll share with you later a few screenshots of the product. That virtual workspace can then be shared with colleagues or other employees in your enterprise, who could then access it, search against it, retrieve some of the information, and if they choose to, do information movements from 1 data store to another through these connectors.

Functional excellence, and Mark touched on that, means becoming #1 in every area. We are #1 in ECM, we are #1 in Information Exchange. We are in the top 5 or top 3 in CEM and BPM, depending on what report you look at. We want to be #1 in each one of the categories. And eDiscovery is an emerging area for us, so we're working very hard to become #1 and be the leader in that space. Some of the key areas in ECM is delivering data sovereignty and globalization. Every one of our tools, and Mark touched on Tempo which I will share with you a little bit more, will be available in the cloud, will be mobile-enabled and will be integrated to social tools.

CEM. The ability to publish content on the Web. The ability to do social, communications, communities, blogging, chats, all of the social tools that you expect in the enterprise today. The ability to enable that for the enterprise that wants it to be in the cloud and wants it available on the iPad, the iPhone and smartphone available from other companies.

BPM. Process modeling is very big for us with our ProVision tools. We are only making it better, making it easier for our customers to deploy new processes, to migrate information, to leverage the content that they create through that tool. EIM integration data processing is the most important thing to allow integration between the different areas in EIM because that's your publishing, that's your e-signature, that's your approval, that's all of that information combined through our processing tools.

Information Exchange. Capture and archiving, InfoFusion, which I touched on and we're announcing today, and making these available in the cloud. On the Discovery side, semantic search, eDiscovery and analytics are very, very big for us.

Mark touched a little bit about information flows. In every enterprise, information moves depending on your business process following sometimes a standard flow, depending on what you're doing with the information. Sometimes it's a custom flow that the enterprise have developed specifically for a company, for a department or for a line of business. Let me walk you through a couple of examples. One example is capturing information or discovering information, storing it, going through certain approvals or certain signatures, if you're in the real estate, financial area, all -- and use that information in a secure way until the time comes where the information is no longer needed for you and you need it archived but you need it governed and also available at your fingertips should you choose to retrieve it back. A second flow and an example of a flow is take a company that is publishing information internally. They publish the information, they use process management to approve and push the information through different departments internally. Now the information is approved, it's ready for presence on your external website or on your external extranet, made available to your customers and partners. The information has a life cycle. At a certain time, you need that information taken off the public presence and archived properly but also available and governed and secured at your fingertips. All of these flows are going to be available that allow integration across the different pillars of EIM in a very standard way but can easily enhance to accommodate specific business processes that companies sometimes will tweak or adjust in their enterprise.

EIM in the cloud is very, very important for us. When we talk to customers, a lot of them, the cloud is the new thing for the enterprise, the cloud is the new thing for the CIO. They want to understand what it means for their business. They want to understand what it means for information. How do they leverage it? How do they enhance it? Our products will be available, Tempo, Social, Content Server, BPM services, all of these will be available in the cloud. Mark talked about EasyLink, which supports our Information Exchange, I'll share with you little bit more about that. Our data and process services that could be delivered through our ECM Content Server, Tempo, our BPM products. Social services that could be delivered through CEM, allowing you social communities, blog and chat capabilities in the cloud and platform services through our managed hosted business today. I forget to mention on the top, the OpenText Cloud is open for business. We have 1.5 million users across 25,000 customers and supporting 2-plus billion transactions per year and growing. Every customer we talked to had interest in the cloud and wanting to learn more and many of them are using it today.

Now let me speak a little bit to innovation. And I shared some screenshots. I was hoping to give a demo, but the network in the hotel is not very reliable. But during lunch, maybe I can open up my computer and show you little bit about the product. Social Community and Tempo is delivering social capabilities to the enterprise in the cloud. It's the ability for you to create an account for every user, where they could log in and they could subscribe to certain communities, where information is shared, collaboration happen in real-time. You can offer some -- there are companies that are offering help desk services through social communities today, where if you have a question about IT, if you're having problem with your email, before you open a service ticket, you go in and first search a knowledge base or communicate with someone who may be live and available in that community and active at that time. And you can share information, which then is available in the future for anyone that runs into similar questions or similar need for that information. It has the ability to do real-time chats. It has the ability to upload libraries of images, whether it's a branding library, whether it's a catalog of new products, many others. All of that working side-by-side next to Tempo are content sharing. The ability for you to create a folder structure, to share it through roles and responsibility with different people in your organization, even if they are not in your organization hierarchy. If I'm collaborating with marketing on a product datasheet, the ability for me and my product managers to share with the product marketing team and with the branding and imagery designers documents in a secure way in a virtual folder. The data is stored once. It's properly virgin, it's properly secured. And then to be able to move the data when I need to across different folders based on certain structures of approval or certain business process, and then deliver it at the end or archive it if I no longer need the information.

InfoFusion. And I spoke a little bit about that. This is the ability to create a virtual workspace. I can index my documents, my information, different types, different formats across multiple data stores and have them available through a single screen, where I could then search against it regardless of where the information is and have the ability to say, "Show me where the data exists." It's in Content Server, it's in SharePoint, it's in FileNet. And if I choose to, I can move it from 1 folder to another, from the 1 data store to another, would easily migrating a certain folder or a single file document, but also the ability to put an [indiscernible] tool on top of it that allow you to do all kind of intelligence and allow you to make decisions based on facts instead of based on guessing where the information is or if you have that information or not.

Innovation cycles. We have a lot of new capabilities coming. As Mark mentioned, Tempo in the cloud is committed for end of year. Social Communities in the cloud, Archive in the cloud are all committed for end of year. We have a new mobile platform release that is coming up with a lot of new enhancements, making it easier to deploy mobile application in a consistent way across multiple platforms: Android, BlackBerry, RIM, iPhone iOS, Microsoft, Nokia, the mobile platform. We have BPM releases and we have a new release of Enterprise Connect, one of our integration tools.

And in summary, I'd like to close where the commitment and the focus is. It's continued innovation. Innovation that comes every 6 to 9 months, where you see new product announcements in different areas to support our vision and strategy of delivering EIM, to support our goal of becoming #1 in every pillar of EIM and to continue to push innovation for EIM forward. Predictable product cycle is very, very important. My customers demand of me a consistent method of delivering product enhancement and releases to them that they could base their plans, their upgrade plans, their implementation plans on. When we commit to delivering a product in a month, we will deliver it in that same month with quality. Quality and performance is an ongoing work for my team and myself. We continue to push the bar up, to increase the performance and scalability and reliability of our product, to support EIM and our additional innovation but also the quality and reliability of the product on day 1 is very, very important. Everything we deliver will be social-enabled, mobile-enabled and delivered in the cloud for customers that want to use it in the cloud or on-premise for customers who choose to stay on-premise.

Thank you very much. And with that, I'll hand it to Paul McFeeters, our CFO.

Paul J. McFeeters

Well, good morning. I think most of you do know me. I've been around for, as Mark said, just over 6 years. Actually, FY '12 was my 7th year in. I came in just before we closed the books in 2006, and that was just before we acquired Hummingbird. So of the team that's presenting this morning, of course, I've got kind of the continuity. And I want to make a statement right upfront. We've got great success in the last, not just the 6 years, of course, built a strong company. Mark talked about the last 6 years, doubling of the revenues, tripling of the earnings and it's created a tremendous foundation. But I've never been more excited than I am today in the last 6 years because the enhancement of the executive team that Mark brought in, and especially starting with Mark. I can tell you, from an internal standpoint, from an employee-based standpoint, the focus and the drive and the excitement has never been higher at OpenText. And I want to make that comment upfront because I do have, as I said as a presenter here, the continuity. So I'm very positive about that.

Now one of the things that happened coincidentally -- I'm not the cause of not specific guidance. But coincidentally, when I came here is when the company stopped giving guidance. And it had a lot to do at the time with the fact that we were about to take on a very large acquisition relative to our size. We were $400 million, Hummingbird was $250 million. That was a significant transformational acquisition for the company. And I will recall that even when the company was giving guidance prior to that, there were concerns or complaints from a number of individuals saying, "Well that range is too wide." So it doesn't help us that much even though you're saying, "Here's your revenue range and here's your earnings range." So it's less with the challenge of trying to give you, the investors and our analysts some data, some information that would continue to help you with the predictability of our financial results, and came up with the target model. We've been running this target model for a number of years now to give you -- and again, we keep saying, "Well, this is not specific guidance." But even since the introduction of the target model in progressive steps, I think, through our recent results, we've talked about additional data points. So clearly today, I'm not going to give you new financial information. But as I emphasized, some of the information we've already given you, and perhaps just continue to drive the point of the predictability of our results.

So I have the model that we published last year for 2012 in the middle of this chart. And on the left, we're going to show you actual results. And thanks to the Safe Harbor statement, of course, and it's not guidance, you see that we are a little light on the license side, expected at 25% to 30% and we are at 24.3%. It's not a surprise to you, right? We had a bit of a hiccup, I'll call it, in our BPM acquisitions, which thankfully we fully recovered in Q4, as you know, and a bit of a regional challenge in a quarter, which we've also corrected. So if I was going to do this model again without the fourth line I'll get to in a minute, of new revenue, I would not be lowering this range. I'd be very comfortable reproducing the FY '12 chart in FY '13 in that same range. And I'll jump to the other area where we missed a little bit on the target model, which is the gross margin of 72.3% versus the target of 73% to 75%. That had 100% to do with revenue mix because our license at a 94% margin. It was little lighter than expectations. That's how the math worked out to add us a little bit less in the gross margins.

So once again, given the same revenue profile in FY '13, I would not be going those margins. Otherwise, we came within the ranges of FY '12 model. The other statement that we made at the end of fiscal '11 for looking forward in FY '12 was our net operating margin, our adjusted operating margin. And you might recall, if you were following us then, that we said, "Look, it will be relatively flattish from the ending 27.5% that we had in FY '11 because we were onboarding a brand-new acquisition, Global 360, and we were only about 6 months into a Metastorm acquisition prior to that." And we said, "It will take a year to get it up to our operating model." It was another way of saying that, "Without acquisitions, yes, we will continue to grow our operating margins." I believe I even said it was about 1%.

Now again this year, and I'm going to go to the FY '13 model, but just staying on that operating margin, we made a similar statement this year about expectations of the operating margins being relatively flattish this year. Because one, we're onboarding another acquisition, a fairly sizable acquisition as a percentage of our revenues, EasyLink. And although its margins are better than some of the previous acquisitions, we'll expect to get the synergies of the back office in the normal time, 90 to 180 days. But the different business is the front office. So there's not as many overlaps that Greg Corgan is going to manage. He's got a different distribution system, different partner system that he'll maintain, so we're not going to get significant synergies from that. So even getting their onboarding margins in the low 20s up to our high 20s. It will take this fiscal year. And that was one reason that we said, "Look, that net operating margin will stay relatively flat." And the other is, as Mark talked about this, certainly in the last few quarters, is that as Greg builds out the distribution system that he talked about and the sales force that he talked about, we're going to find savings in other parts of the company that we'll reinvest there as opposed to just put it in the bottom line because we think that will create more value for you, for investors.

So here again, a lot of information we're giving you about really refining how to think about the business going forward without giving you a specific number. Now let me talk about the FY '13 target model. Of course, the big change is the introduction of a fourth line of revenue, Cloud Services, and estimate that between 11% and 14%. So just to go back to the FY '12 model, probably, we would have kept those percentage of revenue contributions the same and the only reason they were being reduced is of course the apportionment that we have to take out by building in a new revenue line of 11% to 14% for Cloud Services.

You'll note that in FY '12, I've got a 0.6% there. We had already provided some posting for our customers on some of our solutions and some of our applications, about $7 million. So when we report our financials results going forward, I'll break that out and that was $1.6 million in Q1 last year and $1.7 million in Q2, $1.9 million in each of Q3 and Q4, that's what you'll see in the comparative financials.

The Cloud Services revenue, to be very clear again, is not SaaS revenue. We're not going to be taking the enterprise solutions that Greg and his team is going to be selling and say, you can buy that as you use it. It's not SaaS. This is additional revenue opportunity. Of course, the bulk of it for next year is going to be the revenue that we on board from EasyLink. And the one thing that we've talked about in the EasyLink acquisition as we do in every acquisition is, what can you expect the first year attrition? In a typical software company, we would say 20% to 30% reduction in the license revenue, not in maintenance, not in professional services, but in license. And there's always the reasons why you do that. We take it on profit and revenue in territories of all our acquired companies. When you put -- integrate groups together, you create some disruption. So we've been pretty clear about that from Hummingbird days on, expect some attrition. What we said this time for EasyLink is that, we don't expect that attrition to occur. What we expect is that any attrition that might occur for those reasons would be replaced by new business, new business probably in the Open Text customer base, as Muhi said, creating more opportunities for being in the Cloud.

So when we talk about operating our FY '13 model, we're saying, yes, enterprise sales -- so enterprise sales, perpetual license, yes, we're still getting 20% on maintenance. We're going to add professional service to add value, as Greg talked about. And in addition, we can host it for you for a fee and we'll establish, obviously, the right pricing and the right margins for that. So this is an incremental fourth line of business, not eroding any other line of business.

The other break out and enhancement of information for predictability is our cost of goods sold. I gave one number last year, that 73% to 75%, talked a little bit about why it's a little bit short because of revenue mix. This year, I'm saying, look, I'm going to give you every line, expectations and margin, it's a fairly narrow range of margins for each of the 4 revenue lines and you can see them here, product license. The 92% and 94%, really a cost of sale of that is some of the third-party products that we have. Or reselling of products that we have to make a more complete solution for our customers. It's a small percentage, but it's still -- that's what's in there.

I'm going to drop the product maintenance. That 83% to 85%, 83.2%. James McGourlay is here. James McGourlay have 15 years, as you heard, been in this business, knows it cold, world-class and we've consolidated this worldwide. So you know that as well as providing goods, technical support and renewals for our customers, James is creating more synergies in that operation and you'll expect that margin to grow over time. And we always talk about what we think, particularly on a comparator basis, about the professional services margin. We're not here to drive that margin higher because we want to add value to our customers. But when you compare this to a lot of other enterprise software companies, we're in a very top tier of margins. So we still expect the customers to pay a fair rate for those services.

Now Cloud Services, and that's made a margin of 58% to 60%, and it's -- because if you look at a public company, you can look at their financial statements and say, well they're at 66% margin, why are you putting 58% to 60%. Are you sandbagging? No. They had cost that they ran through their G&A line, which in our way of looking at cost allocation, we think is more appropriate. I'm not saying they did their accounting wrong, but it's just appropriate in our mind or in our view to say, look, what those people were doing for renewals for those customer contracts that were enforced, et cetera, is what we put in James McGourlay's cost of sale line for maintenance for customer support. So it belongs there and that was about 6%. So this is just really an allocation of costs from what would they put in G&A that we would put in cost of sales. That's why I have a 58% to 60%.

On the operating cost side, I've narrowed some of these ranges. You can see last year in the FY '12 model, I have a 2% range for the R&D and a 2% range for G&A. I've put more pressure on Muhi and myself to say, we run our operations a little tighter. There's not much variability in that. And so we're going to go to 13% to 14% and 8% to 9%. The obvious question when you see last year's 7.7% G&A, why are you going back up to 8%? Again, it's on-boarding an acquisition. When I look at the G&A cost, [indiscernible] are obviously quite correct when he talks about ERP solving a company's problems and creating the value. I mean, when I came here, I think our G&A was definitely in the low teens. It's over 10%. We've got it in line. You can expect with scale that to come down over time as well. But I left the bottom at 8% just because we're on-boarding. It's going to take the 90 to 180 days to kind of get the synergies out of the back office of EasyLink.

But I have narrowed it. By narrowing these operating lines, we've increased the predictability of how you think of our results by identifying gross margins by category. And I always talk about the operating margin bottom line. It's Mark's expectation and it's our intention, you'll expect over time that operating margin to grow. I mean, we're not saying that's it. We're at 27.5% roughly and we're staying there. And we had a reason for being flattish last year, we have a reason for being flattish this year, as I just stated.

So to be clear, as we grow this company, you will expect those margins to grow. They've gone from the high teens 6 years ago to the high 20s in that time period. Okay, so, of course, I emphasized the predictability of the model to help you with visibility about how we're going to do and clearly, this is the one area that you want to hear and see more predictability around. We understand that and we've addressed that, we talked about it a lot, Mark has certainly talked about it, Greg has certainly talked about it.

So in the last 2 years, admittedly, the variability between quarters has been a little more dramatic than we would like to see. And we've gone back to a longer historical period of what we would think of in terms of the seasonality of our license. And we put it out here, to say, this is more normal, if I can use that phrase, of how we would expect. There's a reason in our business that we would have seasonality. So the sequential view of our business is this. This is how we -- listen, if we're a little bit outside this, again, it's not specific guidance, but it's -- trying to give you more visibility and a little more predictability around the one number, of course, that is still -- the one that causes your concerns and us concerns, and we're doing everything in our power to improve on this, both in just the absolute growth and predictability.

Probably the most predictable line, which is -- was 55% of our revenue is support revenue. And we've been very consistent of getting, and we always say, about 92%, I give a little bit of a range here because I would include increases. To have our customer base, and we think this is very, again, positive standard in the industry to get this level of renewal year-after-year-after-year. The other part has been consistent and you can be sure that every procurement department and every organization, and particularly through dealing with the large organizations, those procurement departments are -- have real teeth in them. And they're always going after in a software sale the maintenance costs, and we have been able to maintain that 20% consistently over time. And the other thing is when you look at our balance sheet at the end of fiscal '12, we have $274 million of revenue that's in the bag. Customers have committed to it and it's a matter of being, waiting for the time period to elapse. There's no question about that revenue, that $274 million because we amortized our maintenance revenue over 365 days from that start date to the forward year.

So that's in the bag. There's a lot of love around SaaS model with a good predictability and I kind of look at it and say, well, we've got some good amount of predictability around, I'm going to say, half of our revenues. This is an example only of the information we give that could give you, the investor and analyst, great ability to model, I think. Our significant revenue line in our business, the maintenance. And I don't want to walk through all of it, but just so to identify, this is going back -- obviously, I'm not doing this for FY '13. I'm doing this, if you look backwards, at the end of FY '11 and said okay, what if I picked up this 255, that 274 emission, was 255 a year ago. What if I look at Q4? There's not seasonalities here, right? It's flat. As I said, it's amortized 365 days a year. So even to say Q4 is a proxy of in force times 4, picked up on the balance sheet was already committed by customers, the rest was yet to be committed and apply the 92% for that. Put a 1% growth and again, I'm not saying we only get 1%, sometimes it's 0, sometimes it's 3% or 4%, but I'm just giving you an example.

Do that math, add that. Take your FY '12 or -- yes, in this case FY '12 license 295. It doesn't work that way either, right, but it's a proxy. Because every day, we do a license deal and close it. I start at 20% and go over the next 365 days. But you can look at that and you can roll forward quarterly the license revenue, if you like, add the 20%, put that math in, and in any acquisitions, we tell you what the maintenance is. If you did that math -- so in other words, if you did the math based on everything we gave you and everything that we stated, you would have estimated a CS revenue and you would have added on a goal of $260 million when we had the acquisition of about $650 million and we did $656 million, I mean, you would have come very close.

So I'm just really emphasizing -- I'm not trying to be defensive here about not giving guidance. I'm trying to emphasize that we give a lot of information to give you a lot of visibility around the predictability of our results. Well, in 2010, we did a business reorganization and you can imagine that as we acquire entities and we're an acquisitive company, you know that, and every company that we acquire, including pre-acquisition, we're acquiring companies that have developed their intellectual property in different jurisdictions, in different countries. And probably by 2010, we must have had intellectual property being owned by companies in 15 different countries, now we operate in 44, but where intellectual properties are being developed. And the way that it works from a tax standpoint is that, if you own an intellectual property in Germany, but you sell around the world, you have to have a fair cost sharing, revenue-sharing arrangement, transfer pricing is generally the terminology used. And taxing authorities are on opposing sides, right? The country that owns the intellectual property says, I'm going to charge so much to the selling country for their tax and I'm going to receive that. And the company that has to pay it [indiscernible] well, you're paying too much. And there's things called, covenant of [ph] authority. If the one side says you're paying too much, you go back, and the other say, well, I charged too much and it comes back and forth. But it gets to be a maze, highly complex. And the way to address this from a business stand point is to say, "Listen, we're going to consolidate our intellectual property, and we're going to put it in one jurisdiction. We're going to pick a jurisdiction that has good intellectual property protection, obviously. But while you're going to do that business reorganization in any event, you might as well find a jurisdiction that has favorable tax regime. This was not a Bahamas company. This is in Luxembourg, lots of major corporations who reside and have head offices in Luxembourg. So we chose Luxembourg because it's a commercially strong country, well known for having corporate offices and we admire [ph] the management there. We manage our initial property there, we have a Board of Directors there, we present a budget on IP to that board, they approve it, product roadmaps by Muhi are presented to that board and they are the owners now of the intellectual property. As a result of that, yes, we do have, some tax benefits. And after that reorganization, which was done at the end of fiscal 2010, we've generated an effective tax rate on our adjusted operating earnings of 14%, probably more importantly, at least I think so, is that the cash taxes of being 5% and 7%. And again, in FY '12 last year. And I'm giving you an indication of what's going to be for FY '13, 14%, cash taxes 5% to 7%. I would like to emphasize again the predictability. Yes, I think we did a good job here in OpenText, this is a major undertaking, it's a business reorganization. We simplified a lot of our operations, we made a consistent transfer pricing around the world, it was very hard for tax authority to say I don't like this when you're doing that to every other country in the world. So we think this is a very solid base and structure, of course. And it is getting the results we expected from a cash tax standpoint. The only other area of cash taxes that occur at OpenText, of course, is moving intellectual property on acquisitions into Luxembourg. Because when you buy shares of a company, you know that the real asset base of that is almost 0, so you have to value intellectual property, you have to value customer list, and then what's left over from the net asset value are those intangible assets are -- is goodwill. And when you sell that, you're selling that value with a cost base near 0. And so depending on the tax attributes of the company that we acquire, i.e., do they have lost carry forwards and to what extent can you take the lost carryforwards and shelter a gain on that sale, will result in how much tax you have to pay on exiting that country and selling those assets into Luxembourg. So it's my intention going forward to give more visibility on the separation between cash taxes for ongoing operations, which is about 5% to 7% and one-time exit cash taxes on acquisition to moving that intellectual into Luxembourg. That -- there will always be a payback, I mean, depending on the tax. If it's fully sheltered, that's great. We pick up good tax attributes. If it's not fully sheltered, and we say, well, here's the exit cash tax, we'll have a payback on that over a certain period of time with the lower cash taxes that we'll pay under existing business organizations. So great visibility as I said on our operating earnings, and, then there will always be some onetime events that we'll talk about when we acquire companies going forward.

Last, I was actually in this room in November speaking to a group of lenders who lent us $600 million, and that $600 million that we borrowed, half of it we used to repay our previous term loan B debt. And our leverage covenant for debt was 3x EBITDA. So you look at that left-hand top right, you can see we're at 1.7x on a covenant of 3x. If you look at the one below, that means we have a headroom of about $475 million. Our pro forma EBITDA for trailing 12 months is $361 million. And by the way, just definitionaly, that's really our adjusted earnings EBITDA, because this is per the loan agreement. You can see that even the lenders agree that when we talk about adjusted earnings, they except that in a sense also for what they're measuring and adding back depreciation.

And then again, our loan interest coverage covenant is 3x and we're at 19x. So lots of margin, lots of safety here. But just doing this math again, the bottom part of this chart, I just went over that, $475 million, you'll recognize is, this is how you do the math, trailing EBITDA times 3 equals $1 billion, current debt, $600 million that includes mortgage on our Waterloo property leaving capacity of $475 million. That $475 million will grow. The ability will grow because: one, [indiscernible] has some debt repayment; two, our earnings will grow and so that trailing EBITDA, which is always the trailing number, will -- that $361 million will grow.

In addition, we have $560 million cash in the balance sheet at the end of June. But on July 1, we wrote a check for $315 million, leaving about $250 -- or $350 million, of course, for EasyLink. So we started the year with $200 million of cash. You all have a fairly good estimate of what our cash flow generation is, add that to debt capacity and you can see that one of the other key strategies that Mark has talked about, that we're going to continue to focus on as a company in addition to the organic growth that Greg is going to drive is the acquisition. And I could title this acquisition capacity. You can see by, if you work to the end of the year, you added another x of revenue, we'd be approaching $1 billion of capability for the right opportunity.

My last slide really on predictability, and I think this is probably the penultimate slide. Back to Mark's comments and the fact that we've doubled our revenues in 2 years and we've tripled our earnings. And I've had discussions on that with some of you in this room, what do we put in our adjusted earnings. We talked about adjusted earnings, we're trying to really create a proxy for cash and this is a demonstration of that. When you look at earnings, adjusted, our non-GAAP earnings and we do all of our reconciliations, we tell you, obviously in all of the tables that we do in our press release, here's what we mean, we're backing on amortization of intangibles, that our cash flow is 30% compounded cash flow over 6 years, we think is good performance, maybe even better than good performance, by the management team. And on performance, you can expect us to continue on because we’re going to contain the focus on the margin. We're not giving up margins, do all the initiatives that you've heard Mark talk about and Greg and Muhi talk about. We're not going to give up margin. So we're going to continue to generate earnings. You know that EasyLink was a very accretive acquisition. So margin's just a percentage, our earning, clearly, will start to grow quite significantly this year through that acquisition and great positive leverage whether you think we took cash or whether we raise debt at approximately 3%. So I think this is the litmus test of predictability in operations and the cash, we talked about on our earnings call. Of course, this is your money, right? If you're an investor, it's your money, we're custodians of that, we realize that every single day. And yes, we can repay that by stock repurchase, dividend payment. But we feel as a management team, that we've done an effective job of increasing shareholder wealth by taking the funds, whether it be borrowed at good rates today and cash that we've generated of effective operations and you're aiming [ph] at more acquisitions. I think Mark has made it very clear, that will continue to be a key strategy for OpenText.

So just in summary again, predictable results. I don't want it to be a defensive remark, as I said, about not giving guidance, but I think when you see the model, and when you think about the data that we give. There's high predictability in our results. We're trying to [indiscernible] acquisition capacity to carry on.

So I'll turn it back to Mark to wrap up.

Mark J. Barrenechea

All right. So I'm just going to spend a few moments on a couple of thoughts, and then we're going to bring the management team back up and open it up for Q&A. Two key observations: Number one, and I love the fact, 80% of enterprise data is unstructured, and the other 20% lives in ERP. 80% of unstructured enterprise information -- 80% of enterprise information is unstructured, the other 20% lives in ERP. This is just fertile ground for innovation for us to be able to go out and help organizations be better governed, better secured, unlock the value of that unstructured information, whether their opportunity is to grow revenues from that information, to be better governed, to lower costs of their infrastructure, and the rate of which that information is increasing is incredible. There isn't -- if you look at Gartner, IDC information, that more unstructured data will be generated this year than in all previous years combined. More unstructured data will be generated this year than all previous years combined. So the rate of which this type of information is increasing is just absolutely phenomenal. And this leads me to our summary. I hope you've seen today our focus on enterprise information management, $19 billion addressable market, that's the TAM by 2016, 10% CAGR between here and 2016. We're focused on being the category leader in each of the 5 key categories, ECM, BPM, CEM, information exchange and discovery, doing that mobile, social and in the cloud. Customers will continue to deploy on premises, and we'll be there to help support them on premises. And with our new OpenText Cloud services for those who want to deploy in the Cloud, we're open for business. Second is growth. We're focused on growing revenue, growing license, growing EPS, and growing cash flow. If we look back over the last 6 years, as Paul highlighted, this is an adjusted EPS CAGR of 28.7%, adjusted operating cash flow, 29.5% and a revenue CAGR over the last 6 years of 19.7%. Right, we're looking at our seventh year of growing in a row of revenue license, EPS and cash flow.

Leadership. The company, our products and our customers. You're going to hear us speaking more and more about our customers' success stories in the coming year, all built on a baseline of this consistency. We've doubled the company over the last 6 years in revenue, 3x our earnings and based on a -- built on a baseline of acquisitions, an incredible foundation for this leadership team, to be able to continue that consistency, continue that earnings and cash flow growth, but start to begin to further unlock the value of the company by growing organically our licenses.

And those are our prepared remarks today from the leadership team. So let's -- I'd like to bring Greg up, bring Muhi up, bring Paul up, and open it up for your questions.

Question-and-Answer Session

Mark J. Barrenechea

This is a postage stamp, so I'm not sure if we can all stand on here. I'll come down as well. So please, first question.

Unknown Analyst

You outlined one specific vertical that you're targeting in terms of the public sector. Could you to talk about other verticals where you feel as though this new platform is going to be most relevant? And let me just add 1 twist to that, I'm sure, I would assume that one of those is going to be healthcare, it seems like there's a great opportunity there. Can you just talk about how you go to that market, whether it's through partners, and how you position yourself to take full advantage of that?

Gregory W. Corgan

Yes. I can talk about that, to a degree. Healthcare, certainly, is one of the ones we've got targeted, as well as financial services and life sciences and the public sector. Mark may add more, but that's what's on my radar screen for now. Where we -- how we go after them is a combination of partners and our own teams. And here's what the partners can deliver and what we'd ask them to deliver, is some of the applications on top of the infrastructure. And we've got examples in the public sector. We've got examples in life sciences where we've got partners that deliver applications on top of the infrastructure. And so our plan is going to be to go after them, to develop what we can on our own and to partner with those partners that can drive some of the applications on top of the infrastructure.

Mark J. Barrenechea

Sure. And if you look at some of the verticals or industries that we're strong in today, actually, if you look at our graphic up here, we have some of those verticals and companies here. You can't quite see it because I guess the draping is covering it, but up in the left-hand side there, is the Times. So media and entertainment, important industry for us. We just won, I think it was last quarter, we completed, all of News Limited properties for Digital Asset Management on a global basis. So entertainment and media, important market for us. Defense and intelligence, public sector, another important market. The Department of Interior win that we announced last quarter, I'm showing some of our momentum there. We see AIG, Munich Re, Wells Fargo, Bank of America, the OCDE, European Central Bank, as well. So financial services and insurance, another important industry. Mining, minerals and energy, another important market for us that we've historically been strong. So entertainment media, financial services, insurance, manufacturing are still some of our baseline industries. But as we look into '13 and '14, certainly, public sector, defense, intelligence, healthcare are some of the new verticals that are important to us.

Unknown Analyst

Yes. So on Slide 13 here, you guys listed all your growth drivers in EIM market. Arguably, there's actually too many drivers or I don't know if you feel the same way, but if you kind were to pick and can choose which ones are the priorities, what do you perceive as the low hanging fruit here?

Mark J. Barrenechea

Page 13? So EIM new markets distribution, that particular slide? Want your take? My take? All right. Well, first is selling to the install base for sure, all right? I think here, we have Greg's slide as well, which I sort of -- which is a good companion to this. I'd say number one, the install base. Being able to cross-sell and upsell, that if someone's an ECM customer, go sell BPM. Or if they only have a 1/3 of ECM, let's see if we can extend to module 3, 4 and 5. So first focus, I'd say, is the install base of being able to upsell and cross-sell. Second is expanded distribution into the emerging markets and the sales force expansion that comes hand-in-hand with that, getting more coverage, whether being an emerging EMEA, Asia Pacific, Latin America, key verticals, public sector in the U.S., I would say, it would be number two. Expanding and leveraging the SAP relationship as well. Those would be my top 3.

Gregory W. Corgan

I'm with you on that. It's clearly the install base and leveraging partners within that install base as well. We're scattered in how our partner organization operates. And if we get that working well, we can expand the whole pie in terms of where our license opportunities are. So SAP is one of those, but working that partner list or those levels of distribution is another one, that, in my view, drives a whole lot more opportunity and that's why we spend a lot of time on them.

Mark J. Barrenechea

Yes, so Richard, as we look into calendar '13 and fiscal '14, as Greg gets the opportunity to further build out our partner network and as we deliver the product cycle that's coming up, those will be additive, all right? So number one, selling to the install base, our geographic and capacity expansion, continuing to leverage and drive deeper with SAP, obviously, in Cloud Services as well, which we brought into the mix. And as I look into the second half of the year and entering fiscal '14, really adding our indirect channel for that and a new product cycle.

Unknown Analyst

Just wondering if you can talk about the change in the sales compensation under the new functional business model, and maybe some of the early feedback you've gotten from your sales team on there so far? And I've got 1 follow-up question.

Mark J. Barrenechea

Sure. I mean I described it very simply, that our geographic leaders used to be paid on a combination of metrics, whether that be PS metrics, maintenance metrics, geographic margin and license growth. Our geographic leaders today or geoleaders today are paid on license, and that's the big change in the compensation plan. As Greg highlighted, there were some localized plans, we weren't on a consistent global plan. We also, in fiscal '13, moved the organization to one plan on a global basis. So that's -- those are the highlights that I'll provide. And your follow-up?

Unknown Analyst

And I guess in light of some of the European macro headwinds, do you see that as being sort of a major impediment to your near-term ability, anyways, to hit your growth targets, your license growth targets of at/or better than market rates? And maybe on that same note, I know it's only been a month, but can you talk about how the transition of the head of EMEA role has gone so far?

Mark J. Barrenechea

I'll take one part and you can talk about Mr. Harrison, if you will. No change in our outlook or update into Europe, right? We all read the same papers and know the inning and score. So no news for us. We built our fiscal '13 plan assuming oh, the -- there's no improvement, if you will, within the EU. And also that the EU is there at the end of fiscal '13, so we built our plan on the baseline of information that is there. If the EU were to dissolve and to be re-denomination, who knows what would happen at that point. But we have built our fiscal '13 plans on the assumption that it's more of the same rolling over the next 12 months. Do you want to speak about it Mr. Harrison?

Gregory W. Corgan

Yes. Ted Harrison runs Europe. He ran a big part of Europe previously in the U.K. So well-experienced in a large organization. I'm very happy with how he's adapted to bringing on a bigger piece of the organization. Certainly, when you have a young guy and he's a young guy, and he's going to be a star. When you have a young guy like Ted, you've got a learning curve and he's going through that, particularly as it relates to some of the emerging markets and some of the expansion we're trying to get to, but he's a quick learner. He picks it up fast and I couldn't be more pleased with where he's going.

Unknown Analyst

More in line with the concerns of the prior questioner. You've mentioned that public sector is going to be an area of focus. There are many software vendors who are very concerned about the overall state of demand in the public sector, certainly concerned about state and local, given the fiscal constraints. So what are you going to do specifically? You've said that, that's going to be a focus. What are you going to do specifically to break out from the general malaise that other people in this business expressed about the overall state of demand in public sector?

Mark J. Barrenechea

It's a fair question. So public sector in FY '12 was roughly 10%, 12% of our business. So it's not a large percent of our business today. I think if you look at Cisco's public-sector exposure, it's 25%, 30%. We're 10%, 12% exposure, which means we have opportunity. We have opportunity to focus there. And in -- particularly in areas of civilian agencies and defense organizations, let's say within NATO, are growth opportunities for us. And of course, state and local, but I would put less of an emphasis on state and local. And then U.S. state and local, there are 6 or 8 states. There's a big movement to move to Cloud and being able to consolidate from a handful -- consolidate from many vendors on on-premises solution to more standard solutions in Cloud. So given that it's a relatively low percent of our business, our focus on DoD, civilian agencies and our new cloud offerings, that gives us the confidence to make it a focus for us in fiscal '13 and beyond. Greg, anything you want to add?

Gregory W. Corgan

No. The only other thing I've discovered so far is that state and local in particular, they, as a group, are behind the adoption curve in our space. And I think significantly behind the adoption curve. So while that will be a struggle because of the fiscal issues, it's an opportunity area that is rich in future opportunities, I think.

Unknown Analyst

Just 2 questions, if I may. First of all, Greg, I wanted to ask you about the chart on Page 19, Chart 38, and you don't really need to go there, but the distribution model table has SAP as a strategic alliance, and then down the bottom are Microsoft and Oracle. I just wanted to ask, would you clarify a lot of us in the room have asked quarter-to-quarter about the progression of Microsoft and Oracle towards being the level of SAP. Is there -- are you -- is there more of a focus now relatively speaking on the systems integrators, relative to Microsoft and Oracle?

Gregory W. Corgan

No, I wouldn't say that at all. Is systems integrators relative to Microsoft and Oracle?

Unknown Analyst

Yes. I mean, just the way the chart is put together, it seems to diminish, I guess, or maybe is the word, the Microsoft and Oracle versus SAP.

Gregory W. Corgan

Well, the Microsoft and Oracle, to me, I'll let Mark talk to this as well because he's involved, that is more of a technology alliance where we're sharing and adapting and working on technology stacks and platforms so that we have offerings that coincide with what they bring to market. In terms of going to market together, not much of that is going on, and certainly not to the degree that we're doing it with SAP. Our program with SAP is extensive. With Microsoft and Oracle, it's really a technology alliance and not one -- we don't get together and share opportunities with Microsoft and Oracle. We do that with SAP. Here's the pipeline, here's what we're involved, all that. It's a very active participation, and that's the difference in terms of how that is aligned. And you can add...

Mark J. Barrenechea

Yes, let me add to that. So as part of Q4 earnings, we put out this slide, Page 19, Slide 38, to better segment, better segment of how we think about the market from our direct sales force all the way through strategic alliances, SIs, VARs, distributors, distributors and OEMs and technology alliances. And we've sort of rank ordered them on the slide in order of importance, actually. And when we look at the technology alliances -- well, let me start with strategic alliances. As Greg has outlined, and in my experience looking in the industry as well, I can't find a better example of the strategic alliance better than what we have with SAP. We have top-down alignment, we have a joint field planning, we have joint customer planning, there's a lot more we can do of course. We have compensation plans across the 2 companies, and most importantly, it shows in the results of both businesses. It's an example of a beautiful relationship. We'd like another 1 or 2 of that level of scale and impact to the business. When we look at Microsoft, they're a technology partner. And yes, we are providing some clarification here over previous quarters or previous years. There a technology partner, and a very solid technology partner. We use their tools, we use their database, we use their platform to build many of our products on. When it comes to SharePoint, we look at SharePoint as a competitive offering for low-end ECM, and our strategy is to surround it, surround it with capabilities to bring it to enterprise quality, whether that be records management, governance, compliance, social capabilities, business process management, capture, information exchange, discovery capabilities, semantic analytics, surround it, treat it like a repository. So that's why we put them down in technology alliances is because they're a technology alliance. They compete in the ECM category, and our strategy is to surround them. On Oracle, I believe Muhi and team have cracked the code to be able to bring -- and we're relatively young in our Oracle product line. We've been at the SAP product line 6 or 7 years. On the Oracle product line, we've been at for roughly 2 years. And Muhi outlined a set of capabilities that he's planning to deliver at the end of fiscal -- the second half of fiscal '13. That I think are going to -- really going to impact customers in a very positive way that will bring us a product that customers will want to buy. And if we have a product that Oracle customers really want to buy, we'll get the attention of the Oracle salesforce. So we just got to watch the space and see how we do on our product deliverables, see how we do in building that distribution relationship with Oracle. I'd note, we put 2 other customers there, 2 other partners on the slide that you probably hadn't seen from us before last quarter, Cadence and Cisco. So where we've historically talked about SAP, Microsoft and Oracle, we also put out here Cadence and Cisco. We've inherited a wonderful relationship with Cisco via EasyLink as a partner, and we've been doing more and more work with Cadence on engineering document management as well. So hopefully, that's a bit more of a fulsome view into our partnerships.

Unknown Analyst

That's excellent. One other quick one is, just if you could clarify, I mean, over the years, you guys have certainly done a lot of acquisitions, some of which have included fairly mature assets. Is it correct to think of the portfolio group under Gary Weiss is where these assets now live?

Gregory W. Corgan

No, not all of them. No, no, not at all. A lot of them -- look at Metastorm and Global 360, the BPM acquisitions, clearly, part of the mainstream sales force and what they do -- the Hummingbird piece, part of what the mainstream sales force does. Gary's portfolio group really is about our RightFax business, our connectivity business, our eDOCS business and then there's 3 or 4 little small businesses, and then the EasyLink piece. But for the most part, the acquisitions, and correct me if I'm wrong because I'm only 60 days here, but the acquisitions we've done in the past are part of what the mainstream sales force has delivered.

Unknown Analyst

My question is for Mark and maybe Greg. You mentioned, Logica is one of your system integrator partners. I'm sure you're aware they were acquired by CGI. CGI, would probably describe that company as a kind of loose federation of sometimes poorly run regional operations. So I'm curious if you've seen any disruption or change in your business in Europe through Logica. And then secondly, CGI has a pretty big federal business through their Stanley acquisition. They do some good [indiscernible] as well. What do you see in terms of opportunities there to grow that part of the business?

Mark J. Barrenechea

I'll take it first and then hand it to Greg. I see nothing but opportunity, right? With CGI being a Canadian business, we being a Canadian business, we know each other extremely well and there's a clear opportunity in North America, both in Canada and here in the United States. Second, we have not seen disruption. In fact, we've seen, I would say, a reinvigoration of Logica's business, specifically in Western Europe where we have the strongest partnerships with them, France, Germany, Benelux, Sweden, U.K. I'd actually say I've seen a reinvigoration of the Logica teams. So I think we have a greater opportunity to do more strategic planning to jump from 1 continent to 2 continents and be just down the road from each other to have greater conversations. So I see this as a nice multiplier for us.

Gregory W. Corgan

Yes. I was going to say, the Western Europe is what strikes me. We seem to have more activity and more excitement is not quite the word, but energy around what's going on Western Europe with Logica. Yes.

Unknown Analyst

Two questions. The functional sales model, are sales quotas being set differently to incentivize cross-selling and up selling. Can you comment on that?

Gregory W. Corgan

Well, here's how we incent cross-selling. You do have 1 revenue quota and 1 license quota, and within that quota, you can sell anything. We augment AEs, customer account AEs that are responsible for a customer. We augment that group with a team of specialists. So we'll have BPM specialists, we'll have CEM specialists. We'll have specialists around the SAP product set, which we can deploy in conjunction with an AE to help them sell a specific set of products. So their quota is all about total revenue, and the mission is to find enough opportunities across our product set and then deploy specialists where you need the specialized help. And therefore, that's how you get credit for the whole shooting match. That answer the question?

Unknown Analyst

Okay. And then second question is on delivering those -- the ECM services through the Cloud. Is this really additive or is it going to cannibalize some of your traditional license opportunities?

Mark J. Barrenechea

It's additive. We don't sell it as a SaaS model. We'll sell a customer a license and a managed hosting fee to run in our cloud. It's not -- we're not offering it is as a SaaS product, you can't sign up and subscribe and pay as you go. If you want to run ECM in a Cloud, you buy a license and you buy managed hosting fee, as well as maintenance. So we'll not cannibalize the revenue.

Unknown Analyst

A big part of your mandate, clearly, and what you discussed today is improving the organic license growth and you've talked about bringing that up to the market rate of growth. You've also continuously, since you joined Mark, talk about this kind of 10% number for EIM. So is that the kind of organic growth rate we should be looking for from license growth?

Mark J. Barrenechea

Yes. So we haven't set that expectation for fiscal '13. What I've said is we'll know our changes are working well and the company is performing well when we're growing at or above the market rate. We're certainly going to make strides for that in fiscal '13. We're going to grow organically in '13. We haven't set the rate for '13. We'll make strides to getting to that organic rate in '13, and I would certainly have an expectation by '14 that we would be there.

Unknown Analyst

But that's the number that you're kind of thinking about?

Mark J. Barrenechea

It's the goal, absolutely. We've got to grow at or above the market rate for license and it's very simple. Because that means we're taking share. Right? So that's the goal that we've outlined across our 5,500 employees. Our mantra, our driving point, our focal point is to grow at or above the market rate.

Unknown Analyst

Okay. And just for Paul, maybe. Because acquisitions are going to continue to be probably a pretty prominent feature of the group's strategy, how are you expecting us to be able to appreciate these improvements and changes over time as you continue to do acquisitions and it remains difficult to extract what is the organic growth?

Paul J. McFeeters

Fair question, of course. I'll use that question as another little bit of platform and say, look what acquisitions have been over time for us in terms of margins and earnings and growth and things like that. But I appreciate the question. It has, if you will, cannibalize some of the growth. So we've talked about it in the past. We've said, here is the trailing revenues, license revenues, some of the acquired companies. Here's our expectation of reduction over the next 12 months. Mark and I have discussed about if we're creating more granularity below that and without committing to that. Certainly, as Mark just said, we want to stand up and be measured on our organic growth. So you can expect, I would say, a little more clarity around that going forward.

Unknown Analyst

I just had a quick question around -- you're seeing kind of like SharePoint kind of focusing on better integration and Cloud services and you see like box, for example, and other Cloud-based vendors. How do you see them fitting into the picture and how are they position and how do you kind of view them and it would be good to get your thoughts around that?

Mark J. Barrenechea

Sure. Well, I'll -- we don't see box, Dropbox or competing with us today, though there are attributes of Dropbox and that customers like. They like the ease of deployment. How many folks have the Google training manual? Yes, none of us, right? Because there's no training required to use Google. There's no training required to use Dropbox. These are attributes that our customers are looking for: ease of deployment, ease of go live, and no training required. These are attributes that we're bringing in with Tempo, and Social Communities 8.2, please, we need a new name for those product, the Social Communities 8.2, where 8.2 just came to market, the latest version of Tempo just came to market. They're both moving into our Cloud Services by the end of the calendar year and they'll both be integrated together. So if you think of the attributes of Jive or you think of the attributes of Dropbox or, we'll have those attributes in our Cloud by the end of this calendar year. They'll be enterprise ready, they'll be global, they'll have records management, they'll have security, they'll have audit, they'll have compliance layers underneath of that, managed in our Cloud. 20 years of history of being able to scale to 20,000, 30,000, 40,000 customers for an entity in our software. So we like the attributes that Jive and Dropbox brings to the market. We don't see them competing against us today, though our customers like the attributes and we're moving our enterprise quality products into our Cloud under a license model, and they'll be available by the end of the calendar year. And we need a new name for the product.

Unknown Analyst

Does some of your products overlap from some of the acquisitions in the past? Before the move to EIM and to the Cloud, do you see the need to consolidate some of the existing products? And then also related to that, when should we think of the heavy lifting being done for the move to EIM in terms of products?

Mark J. Barrenechea

Yes. So I think the first part of your question in terms of overlap, there is some overlaps, there's no doubt. I'm thankful it's relatively small, actually. When we look at the portfolio, do we have a rationalization issue like the progress? Do we have a rationalization issue like the BMC or computer socials? The short answer is no, we don't. We certainly have some products, but there's very small, de minimis part of our portfolio. So we have very little rationalization to do, but we have some. And when we do have overlap, 3 or 4 versions of a document management repository, our strategy is we have our growth product, we have products that we're incubating, and we have a set of products that are value based. And that value base is we will reduce the innovation, we'll increase the satisfaction and increase the margins in that value base of the portfolio. InfoFUSION will also help because where customers are looking for a portal, looking for single sign-on, looking to be able to move information, maybe between Alchemy and our destination product of content server, InfoFUSION will support all our repositories. So as a user, I can log on to the 2 or 3 versions of our repositories and FileNet and Documentum and others and be able to have a very simple migration, from legacy into the future repository, if you will. So part of the InfoFUSION strategy is also to integrate across all repository. So in summary, yes, we do have some overlap. It's a small part of our portfolio where parts of those overlap will not be the destination product. We think of them as value, keep customers happy, increase margin, and InfoFUSION will provide an integration layer to give it even more life for the future.

Unknown Analyst

I think that one of your key competitive differentiators is the fact that you guys have a full EIM suite. And so my impression is, talking to some of your partners and customers, that today, most customers are buying -- keep the product with point solutions, are looking for EPM solutions or web content solution. And so from your perspective, how far along are we in the move towards EIM standardization certification [ph]. When do you reach that inflection point where customers really start to buy it as more of a suite and what level of discussion are you having in that regard today?

Gregory W. Corgan

I'll give you an answer from my standpoint, and I'll let Mark and whoever wants to, to get back to you. It's a really good question and it reminds me when they gave me the e-commerce job at IBM long time ago, and we built all our slides, talking about e-commerce and connecting suppliers to customers and all those sort of stuff. And I got my third customer and I started talking about the vision of where it was. You see now, that's great, Greg. I don't have a website yet. Sell me a website. And so that's what we started doing. We started selling the tools, and it all connected to the eventual e-commerce business. And I'd say, 5 years later, they'd wake up, and they'll get rich [ph]. I'm an e-business all of a sudden. I think that's where we are in EIM, exactly where we are in EIM. The vision makes sense to these customers, absolute sense to these customers. They're saying to us, where do I start, what product set do I start with, what makes the most sense to be my baseline as I move to EIM and become EIM over time and how long is that time? And if you ask me to say what stage we're at, 1.5 out of 5 maybe, I don't know.

Mark J. Barrenechea

Yes, I'd amplify this. I mean, ERP, for some customers, was a 20-year journey, long journey. For others, maybe a 10-year journey. But it's a multi-year, multi-decade journey, to go from accounts payable, accounts receivable, lock box management, general ledger, cash management, treasury, jump over to HR or to management, pricing, supply chains, CLM, PLM, ad nauseam, 10-, 20-year journey. We need to outline a path for our customers, of walking the next journey with us, that 2-year, 3-year, 5-year, 10-year journey to manage all this unstructured information and the growing amount of unstructured data. So EIM is our vision, it's our path, with our starting blocks underneath that. So is it 1 -- between 1 and 2 on a score of 5 of where we are? Probably accurate. So we need to lead and show our customers the foot path to get to that single source of truth for unstructured information. Along the way, the products will get more integrated. It really is about integration. And we can speak a bit more fully here, but step one is InfoFUSION. That's really why it's very important we wanted to talk about InfoFUSION today. It's not like with ERP, that before all this data got -- or the structured data got integrated, there were Middleware layers to reconcile data. So InfoFUSION is that level for us. So step one for us -- or step 2 for us is to say InfoFUSION will talk across all repositories. FileNet, Documentum, SharePoint, others, there you get single sign-on, get permissions, be able to get put documents, be able to federated search across that. The next release of the products, you'll see ECM and BPM more tightly integrated. You'll see more closely integrated data models along the way. So step one is to lay out the direction, show foot paths for our customers as they walk this multi-year journey for us like they walk ERP and release after release of our product, get more and more integrated. We've already have integrations between ECM and BPM and CEM, next step is InfoFUSION, next step is an integrated data model. I don't know if there's more you want add.

Muhi S. Majzoub

One other thing I'd like to add is the 2 examples of delivering EIM to customers are one, Mark touched on data and the other is the UI integration that will come with the product as well. On the data side, to give you an example is, web content management and content server, integrating the data model where the information is now in a single place or making it available through InfoFUSION in multiple data stores is one way, one example. But the second is the user interface integration that you will start seeing us deliver in a product, and an example of that is Social Communities and Tempo, and the ability for an individual to move from the social application while they're doing a chat session and share a document that has been extracted out of Tempo. Those are the 2 type of -- you will start seeing us delivering in multiple of the pillars of EIM.

Unknown Analyst

My question is around the sales reorganizations that you've had recently. I'm just wondering, what percentage complete is that, including the ramp-up of the new salespeople. And when do you think it's going to be fully ramped up?

Mark J. Barrenechea

I'll start on the first part since you have heard this from me. Our sales reorganization was complete in April, and we delivered a solid quarter after that reorganization, and Greg coming on board is a capstone to that reorganization. I'll let you take the second part on hiring if you'd like.

Gregory W. Corgan

Yes. We're making really good progress on the hiring. It's not where I want and honestly, it's not as quick as I want because I'm impatient about it. But if you go through where we are, you would be satisfied with where we are to date, and I think the end game is in sight.

Unknown Analyst

You spent all morning convincing us the tremendous opportunity that's just getting started in EIM. And you've also talked about the maturity of ERP and how it's been a transition going on for 20 years. What I'm stuck on is that when you put those 2 together over the next 5 years, the slow guys, the mature guys are growing 7%, your business is growing 10% and the -- we're just getting started and there's a whole opportunity and there's an avalanche of unstructured data. And I can't put those 2 together, either I'm missing something or what you're talking about is a tremendous untapped potential, really doesn't seem to be all that untapped, or that there isn't this much interest over the next 5 years in getting it?

Gregory W. Corgan

Well, that's a good question. It is a good question. I think there's tremendous opportunity, I really do. I think that our customer set has so many priorities that they are relatively slow adopters. And I think they'll get there with speed, but I think it's going to take time. And I think over time, and I don't know how many years that would be, I think that 10% becomes significantly greater. But if you ask me to put a number on it, I don't think I could. But what I do find, and I'd just reiterate, is that, in the world of ERP, which I was part of, in the world of e-business which I was part of, and in this world, the large customer set battles with priorities on a daily basis. And their adoption rate, in my view, is a slow albeit steady one, but not something spectacular. And I think, over time, you'll see that get better. And that's the way I view it. I think it's a lot like that. And I'm sorry I'm not more precise on it, but that's kind of land on it.

Mark J. Barrenechea

I think it's fair. I think enterprise customers tend to be slow adopters. EIM is 90 days old, right? We've sort of formulated our strategy, our messaging, kind of our roadmap aligned. Today is the end of a phase 1 journey, where we started internally on a new strategy, new way to articulate the business, prioritization, communicated to our employees, communicated to analysts how the worldwide sales kick off, updated our materials, got our website up-to-date, and we wanted to discuss the strategy with you today. This is the end of a 90-day process. And being able to go from below-market rates to market rate growth over 2-year period, I think would be a definition of success for OpenText. Match that with enterprise customers tend to be medium to slow adopters, I wouldn't call them leaders, there's always leaders in enterprise customers. We're just going out now and being able to tell the story to our customers with a better roadmap. So as I look into fiscal '13, we're going to grow organically. You will see our license number grow organically in fiscal '13. As we get to fiscal '14, the proof of our success would be growing at or above the market rate, which is 10%. So watch those numbers from us because we want to show it on our results.

Unknown Analyst

A question for Greg. What's been the issue on the hiring side with regards to it being slow? I think you're picky at the candidates are looking at or it's just tough to find guys with industry-specific expertise?

Gregory W. Corgan

Yes, sure. I wouldn't say it's slow, it's just not as fast as I want it to be. Those are 2 different things in terms of where my patience is. Well -- and the other -- I'll tell you the other thing, is I've got a directive out there. I really want to look at 3 kinds of folks. I want some superstars, I want some leaders, and I don't want to look at the middle-of-the-road guys that aren't going to be the leaders that can't run a British Petroleum or HSBC, I want some superstars, not all, but that's what I want. I also am satisfied with the middle tier of folks that are going to help us out and are solid performers. And then I'm looking to infuse our team with some younger folks, younger folks that I can team with more experienced reps so I can develop teaming opportunities and I can develop career opportunities for some of the younger folks. So that mix is not as easy to fulfill on a short term as just going out there and hiring the guys that are in the software business. And so I'm being a little more particular that way from filling these folks, and that's part of what we're getting through.

Unknown Analyst

And then I guess for Mark. You could help him out by sort of doing -- in your M&A strategy, looking at industry-specific acquisition. I mean, if you're going to buy a healthcare firm that would come with superstars that can sell into that market. Are you look at more industry-specific M&A or will you continue doing platform deals?

Mark J. Barrenechea

Look, probably less industry-specific. If I look at our -- maturing through the years, we're not spending a lot of time today or in fiscal '13 speaking about industries, going deeper into industries. We've learned a lot over the last 20 years or 25 years in the world of ERP of how to kind of methodically move through industries. Your first step is to get a solid horizontal platform in place and then being able to put good collateral and education around that horizontal platform by industry. What does ECM for financial services mean, what does ECM for healthcare, consumer package goods, discrete manufacturing, process manufacturing, et cetera, horizontal platform first, surrounded by collateral. Second stage is having your PS organization, be able to deliver by industry, being able to tailor, customize or add the surrounding pieces by industry. We do that very well. We're very proud of our PS organization, as Greg talked about, I just give you a factoid. If you add all the profit from CA, all the profit from BMC, take the BMC profit and CA profit from the professional services organization, double their revenues, they'd still be short of our profit generation from our PS organization in fiscal '12. We run the best-in-class captive PS organization with 20 points of margin. And it is right where it needs to be, right? Right where it needs to be. The next stage of maturity is can we take something out of the PS organization, and product-ize it, the next stage would actually be able to build or buy specific industry modules. Horizontal platform, collateralize it, have a PS organization that can fill the gaps and then have specific industry modules. I want to methodically work through this phase 1, 2, 3 and 4. So when you map that to an M&A strategy, vertical solutions would not be high on the consideration list right now. But as Greg is looking to build out indirect distribution through '13 to make that a driver for '14, I'd expect as we get closer to '14, you'll hear us speak more and more about industries as well.

Unknown Analyst

Going back to the distribution model and your opportunities with system integrators, you mentioned that you have a very good practice with Deloitte and that Accenture might be your biggest opportunity to improve. Can you just comment a little bit more on that and how you intend to do that and what type -- how much more of that opportunity that opens up for you?

Gregory W. Corgan

Yes. Actually going after Accenture, I'll be totally upfront with you is going to be a decision we'll make as we get down the road. I don't know what your experience has been dealing with any of these guys, but they're not one organization, right? They have lines of business, they have functional industries and they have geographies. And you may be great with one partner in Washington and you're nowhere with the guy in Florida. We've managed to do a good job with the Deloitte crowd and making that work, and I just don't have the bandwidth, nor do my folks, to force fit ourselves into a systems integration organization that isn't going to play with us. So I'm going to pick and choose the ones where we have some commonality, we're willing to work together and we can make productive use of both of our times. And we're going to try at Accenture, to do better, we're already there, we're going to try and do better. But I'm going to focus on the ones that I can count on, that I can get up and going as soon as possible. That makes sense?

Unknown Analyst

Just maybe a little more color on the InfoFUSION. We just wonder if you can give us a sense of how this differs from your traditional federated search capabilities and library services where you've already been to able to drill into a lot of competitor data structures. And then also, is this product you're going to be charging for or is this something that if I've got content server that I just add this on?

Muhi S. Majzoub

So InfoFUSION, the difference of what it will offer you when we deliver release 1 is the connectors will give you the capability of the application itself. We'll give you the capability of creating workspaces that can be virtually shared through user base with responsibility to other people in the organization, where you could save these searches and then share them across the organization, virtually, without moving any of the content. Only if you choose to, the connectors will then also give you the capability of migrating the content, for example, out of SharePoint into content server or out of Documentum into content server. The second, on the prices, the product, this is the first day today we announced the product, the prices is currently work in progress and I will defer that to when the public announcement of the GA product is made, then we can communicate the price.

Unknown Analyst

Just a follow-up on the InfoFUSION question. When you go into competitive bids and you look at potentially displacing the competitor, either be it EMC, IBM, even SharePoint, does this product enable you to do that in a much less painful way for the client, and then less service-oriented vendor as well?

Gregory W. Corgan

Absolutely. And when we look at competitively replacing Documentum or FileNet, we'll have the ability with InfoFUSION to say turn off your maintenance of those other repositories and through time and usage, migrate the content. Another aspect of InfoFUSION Muhi hasn't touched on yet is bulk migration of data, bulk migration of data from other repositories. So InfoFUSION will have connectors to Documentum, connectors to FileNet, connectors to Interwoven, connectors to Stellan [ph], connectors to SharePoint, connectors a file system, D drives and others. So we'll not only be the real-time nature of a user being able to log into multiple repositories, there'll be bulk migration tools that IT can use to bulk migrate data.

Unknown Analyst

And just a follow-up. The next generations, can we expect you to [indiscernible] on the BPM side of it?

Mark J. Barrenechea

Sorry, can you repeat that?

Unknown Analyst

The next generations of this Middleware, can we expect you to integrate BPM at the same level from a competitive standpoint?

Muhi S. Majzoub

These are currently under research and I would rather defer to our future meetings where we'd communicate exactly our plan for the release to InfoFUSION.

Mark J. Barrenechea

It would be a natural next step. InfoFUSION is important.

Unknown Analyst

From what we've heard today, I'm guessing you guys are employing guessing strategies of using the past and previous jobs. I'm just sort of kind of curious to see, notwithstanding a good quarter recently, typically, how long does it really take to get your stride or get that critical mass, is it a 6-month period, 12 months, you're sort of talking about 10% growth in the fiscal '14? Just so we can kind of gauge where the numbers are going to sort of pan out.

Unknown Executive

Well, I feel I'm hitting my stride. Greg, how are you feeling?

Gregory W. Corgan

I'm not Usain Bolt yet, but we're probably in third place.

Unknown Analyst

Microsoft has been a key technology partner for you guys for a while. Now you guys live in a coop-etition world so SharePoint is coming out next year, 2013. Maybe if you could just give us an update on the nature of the relationship. Has anything changed? And what's the plan going forward on the partnership?

Mark J. Barrenechea

They're a technology partner, as we said earlier. We've looked at SharePoint 2013. We've looked at it inside and out. We look at that as an incremental release. It's an incremental advancement. The only new capabilities we feel we need to add is to be API compliant to SharePoint 2013. They've changed some of their API interfaces. I don't think it changes the competitive dynamic. I think in fact, it may actually help the competitive dynamic for OpenText because some CIOs have been waiting to see what SharePoint 2013 delivers and it's just incremental. So to the extent folks have been waiting to see what 2013 brings, the wait is over in terms of that functionality. So our partnership with Microsoft is on a technology stack. SharePoint is a competitor. SharePoint is a competitor. Our strategy is to surround it with capabilities, to bring it to more of an enterprise class and to bring it to a state of EIM in 2013. 10 years ago, when I was studying OpenText prior to joining, I was looking at reports saying SharePoint is going to kill OpenText, it's going to harm OpenText. I read a report 10 years ago. I went back to that same report, as I think there was one 8 years ago, one 6 years ago, one 4 years ago, one 2 years ago, I read one recently, they're all wrong. Wrong. And SharePoint 2013 is nothing more than an incremental release. We're going to surround it. So our partnership with Microsoft is on the technology stack side. We're going to surround it with capabilities, SharePoint 2013.

Greg Secord

Any questions?

Mark J. Barrenechea

I think our 6-year CAGR show how well we're doing at SharePoint.

Unknown Analyst

Just a follow-up on one of the comments you made earlier about not being -- in the Cloud strategy, not being SaaS model. Are there any potential product lines we will see move into the SaaS pricing model?

Mark J. Barrenechea

No. We're bringing licenses into the Cloud model, and we're not focused on SaaS today.

Greg Secord

Okay. I think that's it for questions, so we get to wrap up, Mark.

Mark J. Barrenechea

Thank you for your time and attention this morning. We're going to break and head out to lunch. I hope you've seen that we've outlined our EIM strategy today, showed you the paths to growth for revenue, license and earnings, and you've had a chance to spend a little more time with the expanded leadership team. Hope you will join us for lunch. Thank you for the morning.

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