While the giants of enterprise software – Oracle, SAP and Microsoft, among others – have been busy lining up thousands of staff for redundancy and reporting weakening performances, one of the UK’s high-profile companies, Autonomy, has been moving in the opposite direction.
Not only is the enterprise search firm thriving in the current climate, with its 2008 revenue growth hitting 47%, in January it moved into expansion mode with the bold acquisition of web and enterprise content management software company Interwoven for $775 million.
Autonomy reached this enviable position by capturing the high-end of the enterprise search market with ‘meaning-based’ search technology that uses both learning and inference to ‘understand’ what the user is after.
The result is a boon for corporate lawyers involved in areas such as legal discovery who can establish early on the defensibility of a case and reduce the costs of what was previously a highly involved, expensive and time-consuming process.
The original technology emerged in 1996 from research that Autonomy founder and CEO Dr Mike Lynch conducted at Cambridge University into probability – in particular the statistical inference theorem developed by Rev Thomas Bayes in the 18th century. The resultant technology is so sophisticated, claims Lynch, that Autonomy exists “in a market of one” – a statement that will no doubt draw the ire of competitors such as Exalead and Microsoft-owned FAST.
Still, while the company’s 2008 results certainly confirm Autonomy as the search sector’s gorilla, it is the company’s acquisition of Interwoven that is really drawing the attention of analysts and customers. As well as taking Autonomy into content management, Lynch sees synergies between the two technologies that will deliver a much more intelligent handling of content. He cites the potential cross-pollination with Interwoven’s web analytics component, Optimost.
“Optimost knows you clicked on page element 117, Autonomy knows that element concerns life insurance premiums,” Lynch explains.
“I think it raises the bar [for content management],” he says. “We’re moving away from the idea that an enterprise content management system (ECM) doesn’t understand what it is ‘ECMing’. The old model of putting information into one repository is broken because of regulatory changes; we need more powerful search systems to comply with legislation. Basic keyword search – what a lot of people think of as search – has been commoditised and is basically free. It also uses all sorts of tricks that tend to miss things, and that can be difficult to explain in court.”
Autonomy’s acquisition of Interwoven could well accelerate consolidation in both the enterprise search and the ECM/WCM sectors. While the demand for it has grown alongside volumes of data, enterprise search has evolved into a niche ‘bolt-on’ industry largely because, historically, content management solutions have implemented search poorly. Thus, it should come as no surprise that content management and search vendors are finally eyeing each other up for tactical advantage – indeed Open Text announced a partnership with Recommind in December to sell the latter’s e-discovery early case assessment tool.
The impact of the Interwoven acquisition was evident in the reactions from its competitors. It was clearly a sore point with the Recommind’s vice president Craig Carpenter, who issued a rather catty statement: “Questions abound about the reaction from Interwoven’s existing customers to this news; it’s quite likely that many, if not all, will be left in limbo. Interwoven’s existing customer base may already have begun seriously reassessing their options.”
He also highlighted the challenges of the acquisition process, adding that the retention of key personal was “not an Autonomy forte”.
Meanwhile Mark Bridger, president of international operations at Interwoven’s rival FatWire, claimed that Autonomy’s focus on the legal and compliance side of Interwoven’s offerings “would cause uncertainty around the future of Interwoven’s web business”.
Lynch, however, promises that existing Interwoven customers will benefit from new features “very quickly”.
“One example is tagging that was done manually can now be automated. [Interwoven customers] will also be immediately able to store and search audio and video by meaning. Employees used to see a document, decide if it was important and put it into a repository. From a legal point of view that is no longer viable,” he concludes.
The impact of the acquisition will surely be felt by both sectors over the coming year. Autonomy has proved through its results that advanced search technology is a robust value proposition, even in a downturn, and that is something the major ECM platform vendors are unlikely to ignore.