HP Autonomy: A Modest Disagreement Escalates
May 15, 2023
Note: This essay is the work of a real and still-alive dinobaby. No smart software involved, just a dumb humanoid.
About 12 years ago, Hewlett Packard acquired Autonomy. The deal was, as I understand the deal, HP wanted to snap up Autonomy to make a move in the enterprise services business. Autonomy was one of the major providers of search and some related content processing services in 2010. Autonomy’s revenues were nosing toward $800 million, a level no other search and retrieval software company had previously achieved.
However, as Qatalyst Partners reported in an Autonomy profile, the share price was not exactly hitting home runs each quarter:
Source: Autonomy Trading and Financial Statistics, 2011 by Qatalyst Partners
After some HP executive turmoil, the deal was done. After a year or so, HP analysts determined that the Silicon Valley company paid too much for Autonomy. The result was high profile litigation. One Autonomy executive found himself losing and suffering the embarrassment of jail time.
“Autonomy Founder Mike Lynch Flown to US for HPE Fraud Trial” reports:
Autonomy founder Mike Lynch has been extradited to the US under criminal charges that he defrauded HP when he sold his software business to them for $11 billion in 2011. The 57-year-old is facing allegations that he inflated the books at Autonomy to generate a higher sale price for the business, the value of which HP subsequently wrote down by billions of dollars.
Although I did some consulting work for Autonomy, I have no unique information about the company, the HP allegations, or the legal process which will unspool in the US.
In a recent conversation with a person who had first hand knowledge of the deal, I learned that HP was disappointed with the Autonomy approach to business. I pushed back and pointed out three things to a person who was quite agitated that I did not share his outrage. My points, as I recall, were:
- A number of search-and-retrieval companies failed to generate revenue sufficient to meet their investors’ expectations. These included outfits like Convera (formerly Excalibur Technologies), Entopia, and numerous other firms. Some were sold and were operated as reasonably successful businesses; for example, Dassault Systèmes and Exalead. Others were folded into a larger business; for example, Microsoft’s purchase of Fast Search & Transfer and Oracle’s acquisition of Endeca. The period from 2008 to 2013 was particularly difficult for vendors of enterprise search and content processing systems. I documented these issues in The Enterprise Search Report and a couple of other books I wrote.
- Enterprise search vendors and some hybrid outfits which developed search-related products and services used bundling as a way to make sales. The idea was not new. IBM refined the approach. Buy a mainframe and get support free for a period of time. Then the customer could pay a license fee for the software and upgrades and pay for services. IBM charged me $850 to roll a specialist to look at my three out-of-warranty PC 704 servers. (That was the end of my reliance on IBM equipment and its marvelous ServeRAID technology.) Libraries, for example, could acquire hardware. The “soft” components had a different budget cycle. The solution? Split up the deal. I think Autonomy emulated this approach and added some unique features. Nevertheless, the market for search and content related services was and is a difficult one. Fast Search & Transfer had its own approach. That landed the company in hot water and the founder on the pages of newspapers across Scandinavia.
- Sales professionals could generate interest in search and content processing systems by describing the benefits of finding information buried in a company’s file cabinets, tucked into PowerPoint presentations, and sleeping peacefully in email. Like the current buzz about OpenAI and ChatGPT, expectations are loftier than the reality of some implementations. Enterprise search vendors like Autonomy had to deal with angry licensees who could not find information, heated objections to the cost of reindexing content to make it possible for employees to find the file saved yesterday (an expensive and difficult task even today), and howls of outrage because certain functions had to be coded to meet the specific content requirements of a particular licensee. Remember that a large company does not need one search and retrieval system. There are many, quite specific requirements. These range from engineering drawings in the R&D center to the super sensitive employee compensation data, from the legal department’s need to process discovery information to the mandated classified documents associated with a government contract.
These issues remain today. Autonomy is now back in the spot light. The British government, as I understand the situation, is not chasing Dr. Lynch for his methods. HP and the US legal system are.
The person with whom I spoke was not interested in my three points. He has a Harvard education and I am a geriatric. I will survive his anger toward Autonomy and his obvious affection for the estimable HP, its eavesdropping Board and its executive revolving door.
What few recall is that Autonomy was one of the first vendors of search to use smart software. The implementation was described as Neuro Linguistic Programming. Like today’s smart software, the functioning of the Autonomy core technology was a black box. I assume the litigation will expose this Autonomy black box. Is there a message for the ChatGPT-type outfits blossoming at a prodigious rate?
Yes, the enterprise search sector is about to undergo a rebirth. Organizations have information. Findability remains difficult. The fix? Merge ChatGPT type methods with an organization’s content. What do you get? A party which faded away in 2010 is coming back. The Beatles and Elvis vibe will be live, on stage, act fast.
Stephen E Arnold, May 15, 2023
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