Proprietary Enterprise Search: False Hopes and Brutal Costs
December 21, 2015
At lunch the other day, the goslings and I engaged in what I thought was a routine discussion: The sad state of the enterprise search market.
I pointed out that the “Enterprise Search Daily” set up by Edwin Stauthamer was almost exclusively a compilation of Big Data articles. Enterprise search, although the title of the daily, was not the focal point of the content.
Enterprise search is a cost black hole. R&D, support, customization, and bug fixes gorge on money and engineers. Instead of adding value to an enterprise system, search becomes the reason the CFO has a migraine and why sales professionals struggle to close deals.
I said, “Enterprise search has disappeared.”
One of the goslings asked, “What’s happened to the proprietary search systems acquired by some big companies?”
We were off an running.
The goslings mentioned that Dassault Systèmes bought Exalead and the brand has disappeared from the US market. IBM bought Vivisimo, and the purchase was explained as a Big Data buy, but the company and its technology have disappeared into the Great Blue Hole, which is today’s IBM. Hummingbird bought Fulcrum, and then OpenText bought Hummingbird. Open Text owns Information Dimension’s BASIS, BRS Search, and its own home brew search system. Oracle snapped up Endeca, InQuira, and RightNow in a barrage of search binge shopping. Lexmark—formerly a unit of Big Blue—bought ISYS Search Software and Brainware. Then there was the famous purchase of Fast Search & Transfer by Microsoft and the subsequent police investigation and the charges filed against a former executive for fancy dancing with the revenue numbers. And who can forget the $11 billion purchase of Autonomy by IBM. There have been other deals, and the goslings enjoyed commenting on this.
I called a halt to the lunch time stand up comedy routine. The executives of these companies were trying to do what they thought was best for their [a] financial future and [b] for their stakeholders. Some of these stakeholders had suffered through revenue droughts and were looking for a way out of the sea of red ink enterprise search vendors generate with aplomb.
The point I raised was, “Does the purchase of a proprietary enterprise search system?” make a substantive contribution to the financial health of the purchasing company.
Based on what we know from our tracking the open source information about enterprise search, the answer is, “No.” HP split into two companies, and there is little indication that the $11 billion paid for Autonomy will help the enterprise chunk of the old HP generate substantial organic revenue growth. Dassault is in the same boat because one justification for the Exalead purchase was that the incumbent system did not work and was costing Dassault lots of money. Lexmark is in a deep revenue hole, and its problems are not likely to be remediated from the revenue lift of two niche search vendors. IBM is IBM and struggling to generate billions from its Lucene, home brew, and acquired search technology. So far? Not much progress. And Oracle? The company’s core database business is under pressure, and there is little evidence that the company’s search technologies are generating enough money to offset the declines in Oracle’s core business.
None of the goslings argued, so the conversation shifted to why proprietary enterprise search is a revenue dog. Autonomy hit $700 million via acquisitions and aggressive sales tactics. At the time of its purchase by HP, the company had hit a revenue ceiling from search at about $400 million. Endeca hit a revenue ceiling at about $150 million. The other search vendors were even smaller. Vivisimo, for example, was in shouting distance of $20 million after years of effort.
Here’s a summary of the principal reasons the goslings identified as they wolfed down their lunch special at the local Mexican restaurant:
- Buyers of search don’t understand the costs of improving, customizing, supporting, and optimizing a search and retrieval system. Brutal costs and feedback about the disappointing results make search into a niche or utility add on.
- Customers don’t want a search system which creates employee dissatisfaction. Regardless of the search system deployed, the users are mostly dissatisfied with the results the system provides.
- In house information technology professionals are now aware that a search system deployment can be an albatross or, even worse, cause for dismissal. Cost overruns and users grousing about not being able to locate needed information are like sunlight to vampires.
For 2016, companies are likely to look for open source or low cost solutions for a specific retrieval problem. The glory days of positioning search as the alpha and omega of enterprise software are long gone.
The result? The companies paying big bucks for “successful” enterprise search vendors now understand. Enterprise search is not going to generate big bucks. I did not tell the goslings that my view was for eternity. A black swan might come waddling down the information highway and become a big proprietary enterprise search system revenue machine.
But for now, the executives at the companies paying big bucks for search are likely to have a lump of coal in their lunch pail. There is always 2016, and the search vendors are trying to sell themselves to potential buyers, explaining that search and retrieval focused on text is really a Big Data solution, and looking for buzzwords able to generate revenue.
I am not in the hope business. Obviously some folks are. More power to them.
And the goslings? These creatures of search and content processing wanted to bail and get back to their Facebook and Instagram. My hunch is that some senior managers and investors backing the proprietary search systems wish they could enjoy such pleasant pursuits.
The most successful search and retrieval system sells ads for the real money.
Stephen E Arnold, December 21, 2015
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