Autonomy and OpenText: Which Strategy Has Stronger Legs?
February 22, 2010
Two companies in the search and content processing space pepper me with announcements of their acquisitions. I learned today, first via my Overflight service, and then from a gentle reader who sent me a link to the TechCrunch story “Open Text Buys Up Content Analysis Startup Nstein Technologies For $34 Million” that OpenText has acquired another content processing company. OpenText has a pickup truck bed filled with search and content management properties. These range from the long-in-the-tooth BRS Search to the even more aged BASIS system. RedDot and Vignette have given OpenText quite a few content management customers. Not surprisingly, when organic growth is tough to achieve, acquisiitons make good sense.
Keep in mind that Nstein itself is a roll up. The company has a clump of technologies that it has used to build its business. I think of Nstein as a mini-LingTemcoVaught but without the financial lift that Jim Ling was able to infuse into his collection of properties.
What about Autonomy?
Autonomy has also been an aggressive buyer of companies. The firm’s most recent purchases have included Zantaz and Interwoven. Unlike OpenText, Autonomy makes an effort to explain and convert customers to the IDOL (integrated data operating layer) platform. Autonomy has been quick to exploit its acquisitions’ strengths. For example, Zantaz helped propel Autonomy into hosted services. And the Interwoven product became the foundation for Autonomy’s social functionality.
Which is the strategy with the stronger legs? My view is that Autonomy has made more strategic acquisitions and better tactical use of its acquisitions’ technical capabilities.
Will Nstein propel OpenText into the hot areas that Autonomy has tapped? Right off the top of my head, I don’t think so. Here’s why:
- OpenText has a lot of products that perform essentially similar or duplicative functions; for example, why does an OpenText engineer have to support two quite interesting code bases to deliver content management? Why not have one platform?
- The acquisitions that OpenText has made often bring some legacy issues. For example, Vignette has powered some high profile site, and Vignette has also proven to be for some customers expensive and difficult to operate. Even RedDot customers have had to wait for updates that address some performance problems. I can’t say that every Zantaz customer was a happy camper, but on the whole Autonomy has done a better job of picking companies with what strike me as fewer legacy issues.
- Autonomy’s buys have opened new markets. An example is Autonomy’s push into video indexing and its increasing presence in areas such as email archiving, fraud detection, and social media marketing services.
A couple of observations about Nstein. First, I would not call the company a start up. The company opened its doors as a search and content processing company. Then it morphed into a vertical vendor supporting traditional publishers. I was supposed to get a briefing in London in December 2009 but the Nstein people did not keep the appointment. I assume the details of this deal made it impossible to tell me that I did not have to cool my heels for one hour while the Nstein booth staff tried to find their boss. The Newssift service, as I have noted, has not been a home run for Nstein and the other vendors involved in this project. Endeca and Lexalytics contributed to the service, which when I last checked had been taken down. The Financial Times, like other traditional publishers, has found finding the winning formula for online success elusive. Finally, Nstein, according my Overflight search file, opened for business in 2000. That’s not a start up to me.
The goslings here in Harrods Creek hope the acquisition works wonders for OpenText. My hunch is that a number of companies will be gunning for OpenText’s customers. My other hunch is that the investors in Nstein are happy campers despite Canada’s loss to the US hockey team last night. Autonomy has stronger legs in my opinion.
Stephen E Arnold, February 22, 2010
No one paid me to write this. Since I mention Vignette, I will disclose non payment to the GSA, an outfit with some knowledge of Canadian vendors to the US government.
Comments
3 Responses to “Autonomy and OpenText: Which Strategy Has Stronger Legs?”
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Stephen,
One big difference is that Autonomy buys revenue streams that are a material percent (e.g, 30%+) of their existing size. OTEX’s acquisition of Nstein is about buying technology and a few customers; the inorganic growth benefits to Open Text are literally a rounding error — they’re adding $4M/quarter to a revenue stream that’s $250M.
See more of my thoughts here: http://bit.ly/ck6EGj
Cheers/Dave
Hello Stephen & Dave,
in my opinion you cannot compare those 2 vendors because Autonomy is more of an Enterprise Search app, but OT has solutions for all aspects of ECM, WCM, RM, BPM, Social Media and the list goes on.
I understand that you see it from a different angle, but from a business point of view and what need,requirement they can satisfy I could not easily find fair to compare Autonomy to OT products.
And I am really interested in your furter comments :o))
Maria,
Not to hijack Stephen’s blog here, but starting in the same place and headed to the same place are different things. Yes, Autonomy’s roots are in enterprise search, but they’ve been on a acquisition spree that is driving virtually all of their growth, and in that spree they’ve acquired more search, e-discovery, and most recently Interwoven, a CMS.
While I thought Open Text’s roots were in ECM, if you believe Wikipedia, they’re actually in search. So they’re more similar than I thought. Anyways, early on they focused on document management and now, like most other content players, are focused on ECM. They too have done a bunch of acquisitions from Hummingbird to Artesia to Captara to Vignette.
The unfair comparison here, if any, is to include Nstein in the list of material acquisitions due to it’s very small size and strategic impact.
So yes, they’re different companies. Yes, they have different product suites, strengths and weaknesses, but they are — roughly — doing the same thing which is to try and be a content one-stop shop and using a lot of M&A to do it.
Best,
Dave