OpenText replaces CEO, weighs asset sales in strategic shift

Canadian enterprise software maker OpenText has removed long-time CEO Mark Barrenechea and plans to review its portfolio for potential asset sales, signaling a possible shift in strategic direction.

The company has relied heavily on acquisitions to expand, but has struggled to generate significant organic growth from its core platforms.

The development raises questions about potential changes to product strategy and the long-term support available to enterprise customers.

In a statement, OpenText said that it “believes there is an opportunity to enhance shareholder value by growing revenue in our core Information Management for AI business and redeploying capital from the non-core assets.” 

OpenText has appointed James McGourlay, its executive vice president of international sales, as interim CEO.

The shift in strategy comes after last week’s fiscal year-end results, which reported a 10% year-over-year revenue drop. OpenText said 7% of that decline was due to the sale of its app modernization and connectivity unit.

OpenText is carrying out a three-year cost-cutting program launched last year under Barrenechea, who began the effort by laying off 1,200 staff, aiming to save $150 million annually.

In a blog post last year, Barrenechea had said that the company is “designing and building the future of business to support three big industry trends: NextGen Autonomous Cloud, End-to-End Security, and AI for Humans.”    

Strategic considerations for customers

For CIOs and IT leaders, OpenText’s leadership change is a chance to re-evaluate the company’s strategy and it’s fit with enterprise priorities. A planned review of non-core assets and a sharper focus on AI and cloud could reshape product portfolios, roadmaps and support commitments.

“As OpenText continues to integrate past acquisitions and focus on cloud and AI innovation, organizations may consider reinforcing governance around product lifecycle visibility to stay informed of any shifts in roadmap or portfolio emphasis,” said Oishi Mazumder, senior analyst at Everest Group. “It may also be prudent to assess existing dependencies and begin contingency planning for products that could be affected by future strategic adjustments.”

According to Rik Turner, chief analyst for cybersecurity at Omdia, OpenText effectively operates in two markets, enterprise and SMB, with portfolios often built through different acquisitions.

“Maintaining two such different portfolios with separate codebases across multiple product categories and different sales teams etc. must be immensely challenging, not to mention expensive,” Turner said. “They [reportedly] had nearly 23,000 employees in mid-2024, so any wobble in their top and/or bottom lines has huge implications internally, as well as for their huge numbers of customers.”

Turner added that when a company announces a leadership change and plans to sell assets immediately after reporting poor results, it is inevitably unsettling for existing customers.

Balancing growth and focus

Analysts suggest that the company’s AI- and cloud-focused strategy could help stabilize growth but faces competition from the likes of Microsoft, IBM, and Box, which have deeper native integration, larger developer ecosystems, and faster innovation cycles.

OpenText may need to simplify its product set, maintain customer trust, and speed up execution to close the gap.

“If OpenText proceeds with divesting non-core assets, the areas most likely to be affected include legacy development environments, software testing and quality assurance platforms, and IT operations management tools, particularly those inherited through past acquisitions that may no longer align with its current strategic focus,” Mazumdar said.

Such divestitures could create uncertainty over product lifespans, slow innovation, or alter support models if priorities shift under new ownership, Mazumdar said. “This can impact integration stability, compliance, upgrade planning, and overall operational resilience.”

Turner said the company may also face a choice over where to compete. “I think a decision must be coming as to whether OpenText wants to play in the enterprise business against the big beasts there or continue in the SMB market, which is far more of a channel play,” Turner said. “I don’t know which way it will leap, but I can’t see it continuing to straddle both worlds.”