What's New in Enterprise Search, Insider
Trading, and More
By Paula Hane
One industry observer recently
pointed out to me that the search engine companies seem to be playing musical
chairs. Susan Feldman, IDC's research vice president of content technologies
research, said that there has been a "merry dance" over the past 6 months.
Whatever you call itshop-and-swap, keep-away, marble trading, or some
other gamethere seems to be constant jockeying, strategic repositioning,
and considerable acquisition activity in the search engine arena.
Companies are setting up camp in either the Web search or enterprise search
businesses. Feldman claims there are now few vendors that straddle the divide.
She said, "Mapping two market strategies and creating two separate brand images
is tough, although Google capitalizes on its ubiquity in the Web search world
in order to further its brand for enterprise search."
FAST Buys AltaVista Enterprise Search
Fast Search & Transfer (FAST) is one company that has clearly chosen
its camp. It recently announced its purchase of the AltaVista enterprise search
business (including more than 200 customers) from Overture Services, Inc. for
an undisclosed cash amount. Overture, the pay-for-placement ad service, had
recently acquired both the AltaVista business (Web and enterprise search) and
the Web search assets of FAST, including its showcase site, AlltheWeb.com (http://www.infotoday.com/newsbreaks/nb030303-1.shtml).
In the announcement, FAST said that the acquisition would not affect its
product direction because there were no plans to integrate the
AltaVista enterprise search technology with FAST Data Search. While FAST continues
to support current AltaVista enterprise search customers, the company will
encourage them to migrate tothe FAST Data Search platform. FAST says that its
platform provides all the features of the AltaVista solution, plus enhanced
AltaVista's customers include Citigroup, Barnes & Noble, and the U.S.
Army and Navy. A FAST spokesperson said, "These customers align very well with
the key markets that FAST is focused on, which include financial services,
e-retailing, online recruitment, government, media/publishing, and pharmaceuticals/healthcare."
When FAST sold its Web search business to Overture, it intended to dominate
the enterprise search market. At that time, enterprise search was the quickest
growing and most profitable part of FAST's business, accounting for more than
75 percent of the company's revenue. So this acquisition of the AltaVista search
business is clearly aimed at strengthening FAST's worldwide market position.
Given such asset-swapping, FAST is definitely poised to claim a chair when
the music stops.
According to Feldman, FAST not only acquired new customers with its AltaVista
purchase, it also acquired AltaVista's maintenance revenue stream, which could
be considerable. She said that this makes FAST "a stronger rival for Verity,
Autonomy, and Convera as they contend for market share in the top tier of the
enterprise search market."
Overture is wise to cede the enterprise space to FAST and concentrate efforts
in its Web search and pay-for-placement service, which has plenty of competition
from Google and others. As if to emphasize the rivalry, Overture's AltaVista
recently announced a significant expansion of its multimedia index to morethan
550 million files, which the company claims makes it "the world's largest,with
125 million more files than the next highest competitor."
AskJeeves Sells Enterprise Search
Like Overture, AskJeeves, Inc. decided to concentrate on its Web search business
and has sold off its Jeeves Solutions enterprise software division to Kanisa,
Inc. (a company I hadn't heard of because it concentrates on customer service
applications). According to the announcement, "Jeeves Solutions' advanced search
technology and best-in-class analytics will enable Kanisa to offer a larger,
more robust suite of customer service solutions to corporate customers worldwide." Kanisa
acquired more than 35 Jeeves customers, including Nike, Cincinnati Bell, Novartis,
What are AskJeeves' chances in the Web search market? Outsell, Inc. analysts
said: "AskJeeves is a small player next to Google and Yahoo!, but its current
momentum and cash means it won't be swamped by their wake any time soon. Will
its success make it a target for acquisition by the big guys?"
Future Developments in Search
It looks like I'll be busy following acquisition news in the search engine
space.Remember, it's possible that Northern Light (NL) could make a comeback
in Web search. I recently reported on the purchase of NL by its former CEO,
David Seuss (http://www.infotoday.com/newsbreaks/nb030602-1.shtml).
Seuss would not make predictions about the NL Web search engine but indicated
that he has received a steady stream of calls from companies interested in
Seuss also said he plans to market the never-before-released Northern Light
Enterprise Search Engine, a 64-bit search solution with "unparalleled scalability." It
features NL's taxonomy and classification, which use patented clustering technology.
He's currently working with a former NL senior engineer on a business and marketing
[Note: In the June issue (http://www.infotoday.com/it/jun03/hane1.shtml),
I mistakenly wrote that Seuss was thefounder ofNorthern Light. Seuss was actually
NL's CEO and 18th employee, joining the company in 1996. NL was founded in
1995 by Kurt Mueller (CEO ofDataware) and its first two employees, Mark Sprague
and Marc Krellenstein.]
And for those of you wondering what the future holds for search engines,
an article in Wired (http://www.wired.com/news/technology/0,1282,58971,00.html) reported
on some of the presentations from the 12th International World Wide Web Conference
in Budapest, Hungary (http://www2003.org).
Computer scientists are working on new search techniques and interfaces that "could
significantly alter most surfers' results pages."
Faster Access to Insider Trading Filings
In April, the Securities and Exchange Commission (SEC) voted that reports
from insiders who are disclosing their securities holdings (known as Forms
3, 4, and 5) must be filed electronically (no more paper filings) with the
SEC. In addition, issuers with corporate Web sites are required to post these
reports on the site by the end of the business day after filing. An issuer
can satisfy this requirement by providing direct access or by hyperlinking
to a third-party Web site such as EDGAR.
The ruling affects the disclosure of stock purchases and sales by officers,
directors, or anyone with a 10-percent or more stake in a company. These electronic
postings provide much earlier public notification of insiders' transactions
and wider public availability of information about them. Previously, insiders
had up to 40 days to report transactions to the SEC. The new rules became effective
June 30. The faster, free access to this information is certainly good news
for the investor and research communities.
The new SEC ruling implements a requirement from the Sarbanes-Oxley Act of
2002, legislation signed in the wake of numerous corporate scandals. The act
mandates a number of provisions concerning corporate financial accounting,
record keeping, and executive accountability. To help companies deal with the
requirements, several content management and knowledge management software
vendors have geared up to offer compliance solutions. In addition, vendors
are urging enterprises to use this as an opportunity to reap wider business
benefits and efficiencies.
New KM Solutions
Open Text Corp. is launching a corporate-governance platform for Livelink,
its KM software. This solution offers a Web-based regulatory-compliance infrastructure
that companies can use to track, report, and managethe regulatory processes
associated with corporate governance. Open Text said the Sarbanes-Oxley Act
is "ushering in the most radical changes to corporate governance and accounting
in 70 years."
Charles Brett, senior program director at META Group, said: "Adaptability
is one of the key requirements for systems that support Sarbanes-Oxley compliance.
The full impact and interpretation of this legislation is still emerging and
may take some time before fully realized. But compliance preparations should
Autonomy Corp., one of Open Text's competitors in the enterprise software
space, has launched Aungate, a division that will offer an automated solution
for enterprise SEC compliance and litigation support.According to the announcement,
Aungate provides "a technology platform that integrates with enterprise communications
technologies to power real-time analysis of telephone calls, e-mails, and instant
messages." It might sound like Big Brother, but the company notes that these
communications account for more than 80 percent of daily traffic inside the
enterprise. Autonomy says that it's now a necessity to document and certify
the effectiveness of internal company controls.
There will undoubtedly be a lot more activity in this market. According to
a report by AMR Research, Inc., Fortune 1000 companies will spend up to $2.5
billion this year in Sarbanes-Oxley Act compliance-related work. Luckily, the
compliance requirement has been delayed until June 2004.
Library Alliance Fights BertelsmannSpringer Sale
In late May, Richard Poynder reported on the announced sale of BertelsmannSpringer
to European private equity firms Cinven and Candover (http://www.infotoday.com/newsbreaks/nb030527-1.shtml).
The transaction is subject to antitrust approval. Since Poynder's NewsBreak
appeared, the Information Access Alliance (IAA), a group of six library organizations,
is urging the U.S. Department of Justice to block the proposed purchase.
The groups comprising IAA are the American Association of Law Libraries,
ALA, the Association of College & Research Libraries, the Association of
Research Libraries (ARL), the Medical Library Association, and SPARC. Mary
Case, director of ARL's Office of Scholarly Communication and spokesperson
for IAA, said the alliance was created because of a shared concern about the
effects of mergers among publishers of science journals and legal serial publications.
Following a series of announced mergers, the six organizations began informal
discussions in spring 2002 and now have allied to vigorously oppose the BertelsmannSpringer
James G. Neal, vice president for information services and university librarian
at Columbia University, succinctly summed it up: "History shows that when journal
publishers merge, consumers suffer."
Cinven and Candover plan to merge BertelsmannSpringer with Kluwer Academic
Publishers (KAP), a company it acquired last year. BertelsmannSpringer and
KAP each publish about 700 STM journals.As Poynder noted: "The combined group,
which will be renamed Springer, will have revenues of around $1.03 billion,
making it the second largestacademic publisher, with an estimated 10 percent
of the market. This will be twice the size of competitors Wiley, Blackwell
Publishing, and Taylor & Francis, but still some way behind Elsevier Science,
thought to have around 25 percent of the market."
Over the past 20 years, libraries' journal fees have risen at three times
the rate of inflation. The analysis by Information Access Alliance suggests
that merger activity has been a significant factor. According to Case, IAA
sent a letter and white paper to the DOJ on May 23 that presented legal and
economic arguments against mergers. IAA claims that recent mergers have increased
prices, which leads to cancellations. This results in decreased sharing and
access to information.
The IAA also launched a coordinated grass-roots effort to educate policy
makers and help inform the DOJ about the harm of publishing mergers. Another
version of the IAA white paper will be made available to the public. Stay tuned
for news on the acquisition process.
Alternative Publishing Models
Meanwhile, the movement toward alternative publishing models is gaining momentum
as frustrated researchers seek more reasonable options for sharing and accessing
research findings. BioMed Central is an independent online publisher that provides
immediate free access to the peer-reviewed biological and medical research
it issues. Its business model is based on charging authors to publish and then
making their content available free to readers.
Under a recently announced landmark agreement, BioMed Central will waive
article-processing charges for all U.K. higher education staff members who
want to publish in any of more than 90 peer-reviewed journals. The Joint Information
Systems Committee (JISC), an organization that comprises U.K. further and higher
education funding bodies, has agreed to pay for a 15-month membership for all
U.K. universities. To date, 180 schools have joined JISC.
Jan Velterop of BioMed Central said: "JISC's support is of huge significance.
The U.K. is taking the fastest and the largest steps to become a completely
open access environment for the sharing of biology and medical research results.
Unrestricted access to the majority of U.K. biomedical research output is now
a very real possibility. This represents our largest deal to date and is a
sure sign that the tide has turned to embrace open access."
EBSCO Closes RoweCom Deal
EBSCO has completed its acquisitions of RoweCom U.S., Australia, and Canada,
as well as the European RoweCom business. The announcement stated: "EBSCO is
glad to report that the final tally of publisher support exceeded 70 percent.
This is very good news for participating customers, as it will mean the majority
of their expenditures for 2003 materials will be fulfilled by publishers." EBSCO
is sending electronic files to customers and publishers that detail the status
of all titles. It will be wonderful to have this sorry situation behind us.
Unfortunately, some finger-pointing is still going on. A June 12 article
by Leslie Walker in TheWashington Post, titled "The Company That Bought
the Bust," discussed the collapse of divine, the RoweCom situation, and the
purchase of the company's pieces at auction, including Northern Light and others.
Though Walker indicates that a number of factors appeared to cause divine's
failure, she spends considerable time discussing former CEO Andrew "Flip" Filipowski's
contention that RoweCom's unprofitability was the entire company's undoing.
Reportedly, the article ruffled some feathers in our industry, including some
publishers who claimed that it contained inaccurate statements.
Meanwhile, the entrepreneurial Filipowski has moved on and repurchased parts
of his old company, presumably for a pittance. He bought the Participant Server
product line (formerly Eprise) from FatWire and purchased six products from
Golden Gate Capital/Oak Investment Partners. He's now based out of Winston-Salem,
N.C., with his start-up company SilkRoad Technology, Inc.
The WashingtonPost article doesn't mention ongoing legal actions against
divine and its officers and directors: a federal grand jury investigation,
various lawsuits, and a recently filed class-action suit in U.S. District Court
on behalf of those who purchased divine's stock. It will be interesting to
see how things go for Filipowski. He's quoted by Walker as saying: "I still
believe in technology. I believe there will be significant value created there,
and I will try to do my fair share by continuing to play the role of entrepreneur."
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J. Hane is Information Today, Inc.'s news bureau chief and editor of NewsBreaks.
Her e-mail address is email@example.com.