IBM is to acquire FileNet in a move that will radically reshape the enterprise content management (ECM) sector, but could prompt concerns amongst some FileNet customers.

The $1.6bn cash deal, which is expected to close before the end of the year, will take IBM head to head with EMC and its Documentum line and may draw responses from Oracle and Microsoft, both of which have large ambitions in ECM.

IBM already had a major stake in ECM through various portal and data integration programmes but the FileNet purchase gives it ownership of a veteran of the sector.

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

However, Sue Clarke of analyst firm Butler Group warned there was considerable overlap between the two companies' ECM portfolios and predicted FileNet customers would be concerned about the future roadmap for their products until IBM clarifies its plans.

"IBM has pretty good ECM solutions, so my first reaction is why [buy FileNet]?" she said. "I'm not sure what there is [in FileNet's portfolio] IBM would want to integrate… there might be some niche areas [it wants to integrate]… but the only thing I can think is that it is trying to take out a competitor."

Jon Prial, vice-president of content management at IBM, insisted FileNet customers had no cause for concern as IBM intended to "fully support and innovate both product lines".

Prial added that IBM regarded the two portfolios as "complementary" and that few integration problems were envisaged. "We bring strong compliance-based ECM tools in areas such as email archiving, while they [FileNet] have strength around content-centric business process management and workflow," Prial said. " We'll be able to bring email process management and archiving together and sell into one customer set."

The deal will help IBM strengthen its position in a rapidly expanding market, according to a new report issued on Tuesday from analyst IDC.

"The content management market grew nearly 10 percent in 2005, considerably outperforming the software industry as a whole," said Melissa Webster, program director for content technologies and digital media research at IDC.

"Although growth slowed somewhat for some of the leading vendors as they worked to consolidate their many acquisitions, we continued to see strong demand for content management solutions," Webster added. "Many of the pure-play vendors that are addressing content management, capture and image management, web content management, records management, and digital asset management posted extremely strong growth in 2005."

The acquisition agreement trumps Open Text’s capture of Hummingbird, agreed last week for $489m. However, Clarke warned that deal might not prove large enough to protect Open Text from becoming a potential acquisition target. "The Open Text deal is a case of it trying to make itself larger, but I'm not sure it'll be enough," she said. "Consolidation is accelerating and we're going to end up with only a few ECM vendors."