| In January, Chicago-based divine, Inc. (http://www.divine.com),
a provider of integrated solutions to the enterprise market, announced
that it had acquired NorthernLight's enterprise search technology, e-commerce
transaction engine, and premium content services in an all-stock transaction.
Terms of the deal were not disclosed. Not coincidentally, the news came
just 2 weeks after Northern Light announced it was "refining its business
focus" and discontinuing free Web searching at northernlight.com (see p.
1 of the February issue or https://www.infotoday.com/newsbreaks/nb020114-1.htm).
And a day after the acquisition announcement, divine and Yahoo!, Inc. announced
an agreement to jointly offer the divine/Northern Light premium content
to Yahoo! searchers.
In a conference call with press and industry analysts on January 22,
divine CEO Andrew "Flip" Filipowski stressed the many advantages and synergies
to be gained from the Northern Light acquisition. He said that Northern
Light "filled in a strategic gap in our product line." He stated: "This
combination of divine's existing content management and content aggregation
solutions and Northern Light's vast collection of premium content offerings
enables divine to offer information-rich solutions for portals, intranets,
Web sites, and extranets, helping our customers gain a competitive edge."
Filipowski also pointed to the superiority of the Northern Light enterprise
search technology and its taxonomy and automated categorization. He revealed
that divine had tried to acquire NewsEdge some months back and was now
relieved that the deal had failed (Thomson Corp. subsequently purchased
NewsEdge) since the company now feels that Northern Light provides a better
fit within divine's product line. According to Filipowski, when divine
evaluated companies' taxonomy technologies, only Northern Light's platform
provided real off-the-shelf implementation that is also automated and easy
for enterprises to modify and extend. In fact, he said his company has
already begun replacing Verity and Autonomy implementations within the
divine product line with Northern Light's technology.
divine offers "extended enterprise solutions" in three areas: professional
services (such as customer relationship management,business systems, and
technology infrastructure), software services (collaboration, content management,
and library acquisition and collection management), and managed services
(managed hosting). divine focuses on Global 5000 and high-growth middle-market
firms, government agencies, and educational institutions, and currently
serves over 20,000 customers.
Northern Light Likes divine Intervention
The attraction for Northern Light to join the divine "family" is obvious:
access to all those enterprise customers. Northern Light only had about
150 enterprise accounts. Northern Light CEO David Seuss calls this a terrific
deal, since the hardest thing for a company to do is acquire a customer.
Northern Light only had a sales force of 15 employees; divine has 300.
Seuss said, "Not only do divine's existing technologies and solutions perfectly
complement Northern Light, but its powerful distribution channel can bring
the benefits of our integrated search and content technologies to a much
wider audience around the world." Seuss stressed that companies that are
in the business of just selling content will have trouble. He feels that
an integrated content-technology solution is what the enterprise market
needs.
Seuss, Northern Light chief technology officer Marc Krellenstein, and
senior vice president of content development Robert Nelson all join divine
in senior positions. Gregory Whitten, who was chief software architect
of computer languages and office applications during his 19-year career
at Microsoft Corp. and is a primary investor in Northern Light, will serve
as a technology advisor to divine. About 80 percent of Northern Light's
171 employees will join divine, moving to a divine office facility in Burlington,
Massachusetts.
Given the recent adjustments that Northern Light made to its business
model—getting out of the consumer market and the free-Web-search drain
on resources—the acquisition came as no surprise. In fact, it had been
rumored for some time. However, it was a surprise that divine was the purchaser—observers
had been wondering about what divine was up to with its flurry of diverse
acquisitions. (See sidebar below.) The acquisition
looks to be a win-win situation for both companies and for enterprise customers.
It also strengthens divine's move into providing content with its earlier
purchases of RoweCom and SageMaker.
"Merging content with the technologies that find and manage it is a
logical next step in the development of content-related applications,"
said Susan Feldman, IDC's vice president of content management and retrieval
software research. "In the past year, divine has acquired content management
vendors such as Eprise and Open Market, and information aggregators such
as RoweCom and SageMaker. Search was the missing piece. By closely integrating
search
andcontent management with a collection of high-quality information sources,
divine offers enterprises a single point of entry into both their internal
information sources and the external ones that are strategically necessary
to their survival. Integrated solutions enable an enterprise to develop
an integrated information strategy based on the particular needs and processes
of their organization. Work flow, categorization, tagging, publishing,
search, and information analysis can now become one seamless process that
builds a strong foundation for knowledge work. divine now has a strong
offering that will make other content-related software vendors and content
aggregators sit up and take notice."
Feldman added that companies like Factiva, LexisNexis, and Dialog offer
well-established collections of high-quality content and provide software
to integrate the external content into the enterprise intranet. "However,
the depth of functionality now available from divine is generally not available
from these vendors. They will be scrambling to decide whether to partner
with or compete with divine."
The Yahoo! Deal
The deal announced with Yahoo! makes the divine/Northern Light Special
Collection available for purchase by consumers on the Yahoo! sites. The
Yahoo! Premium Document Search (http://premium.search.yahoo.com)
provides access to the more than 7,100 sources in the divine/Northern Light
Special Collection. The Current Newsthat is available in real time for
free on northernlight.com is not added to the archive on Yahoo! until 1
day later.
Consumers can view free summaries of documents based on their search
results prior to purchase, with a money-back guarantee. Documents can be
bought individually, with prices depending on the document and usually
ranging between $1 and $4, or through a subscription for access to up to
50 documents for $4.95 per month. Not all 7,100 sources are available through
subscription, however; Yahoo! provides a list of the "qualifying" sources.
Yahoo! Premium Document Search is available now on all Yahoo! Search (http://search.yahoo.com)
results pages. In addition, the service will be integrated within the Yahoo!
network and available through Yahoo! Finance (http://finance.yahoo.com)
and Yahoo! News (http://news.yahoo.com).
According to Seuss, just 1 day after the official debut on Yahoo!, Northern
Light's volume was already up 30-times higher than with just the northernlight.com
site. Needless to say, he was elated. Seuss indicated that a subscription
option will also be added to the northernlight.com site.
divine Expectations
While some might question how divine can continue to acquire and assimilate
companies (some with competing technologies, so it's not a small task)
and hope to achieve any profitability within the current depressedbusiness
climate, Filipowski stressed that he was optimistic about its success.
Companies are still acquiring collaboration and content management tools,
even during bad times—actually, especially during bad times.
He said that divine is showing "leadership and gumption" in taking aggressive
moves to build the company during scary economic times, instead of just
hiding and waiting for good times to return. He admitted that it will be
a challenging year but that divine is now well-positioned to build value.
The company expects $800 to $900 millionin revenue this year—and $1 billion
by 2003—and hopes to reach profitability across all areas of its business
by the middle of the year.
Feldman commented, "divine, if it integrates the pieces it has acquired
this year, presents a strong bid as a complete integrated enterprise information
package—content plus content management plus search and collaborative tools."
Maybe it really does have some "divine solutions"?
|
So, Just What Is This divine Company?
An interview with Flip Filipowski
divine has been almost continuously in the news in the past year and
a half, with one acquisition after another. Probably best known to folks
in the library and information industries is RoweCom, a company that divine
purchased last summer. It also purchased SageMaker (a manufacturer of enterprise
portal software), as well as Open Market and Eprise (both content management
software companies). Northern Light is something like the 37th or 38th
company purchased since Filipowski founded divine on June 30, 1999. (It's
even hard for divine to keep track.) By July 2000, the company went public
on the Nasdaq. Filipowski had built an earlier software business, Platinum
Technology, using a similar strategy of acquisitions, and sold that company
in 1999 to Computer Associates for a huge sum, $3.6 billion—generally considered
to be the software deal of the year.
David Seuss said he looks forward to Northern Light's prospects under
the ever-expanding divine family. "Flip did it with Platinum Technologies,"
he said. "He will use the same strategy and integrate our products technically.
Flip is a big thinker but also down to earth."
In a telephone interview, Filipowski sounded bold, confident, and quite
self-assured as he discussed the company's focus on providing solutions
for the extended enterprise. He envisions a company's information technology
as concentric circles. "It's like a tree trunk—at the core is the accounting
system and then each ring represents further deployment of business systems.
When we sold Platinum Technologies in 1999, we felt that the next big opportunity
would be beyond the enterprise. Rather than serving internal users, we
felt that most of the business systems that would be created in the subsequent
decade would probably have users where 99 percent of them would be in the
value chain community—suppliers, customers, etc. We felt that opportunity
would be equivalent if not greater than sales force automation, or customer
resource management, or personal computing, or any of the preceding concentric
circles of opportunity."
divine then set out "to become the most dominant company in the extended
enterprise space, and that continues to be our objective." The company
started to "build the components organically." However, when market conditions
changed, divine did too. "By the end of 2000 we knew we'd have to move
away from growth and into acquisitions. And companies that were formerly
available for a billion dollars became available for $12 million, so we
acquired additional components of our strategy."
Filipowski says that current conditions have definitely helped the company.
"Sometimes it's better to be lucky than to be smart. We had access to companies
like Northern Light that we would never have been able to get in an effervescent,
healthy marketplace. And almost everything has conspired to make what we're
doing apparently more popular than if the economic climate wasn't what
it is." With the impact of economic conditions and the terrorist attacks
of September 11, technologies that offer companies ways to communicate,
collaborate, cut costs, and engage their customers more closely have become
hot. He added: "We've been presented with exactly the right climate for
the kind of products that we have. We're blessed."
When asked about the seemingly daunting task of assimilating companies
and integrating technologies, he proudly pointed to the track record of
divine's management team. "Most of it is because we're just damn good at
it, after having screwed up as often as we did early in our careers. We
learned from those experiences and now have it down as a process. We're
not hesitant to do the things required, as you might be with your first,
or third, or 10th [acquisition]." And will there be more acquisitions?
"Of course," says Filipowski. "That process never, ever ends."
As for the integration of Northern Light into divine, Filipowski said:
"Northern Light becomes the glue in virtually all our solutions that require
sophisticated access and retrieval from voluminous, complicated, and rich
content. In extended enterprise systems the challenge is not the availability
of content, it's the ability to put content in context. It's the ability
to find it among the overwhelming amount that's available." The acquisition
of Northern Light provides the final piece of divine's strategy to offer
a complete, integrated enterprise information package.
According to Seuss, a group within divine has already started working
on product compatibility. "For the short term, APIs will ensure that products
work together, and for the long term, the company will devise unified technology
strategies and product architectures."
Filipowski ended by stating: "What we have at divine today composes
a fairly complete and compelling story for our customers. Tell your readers
that we'll take the best care of [Northern Light] and also make sure that
their technology survives as a solution, not just a technology."
—PJH
|
Paula J. Hane is contributing editor of Information Today,
editor of NewsBreaks, a former reference librarian, and a long-time online
searcher. Her e-mail address is phane@infotoday.com. |
