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Magazines > Information Today > July / August 2003
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Information Today
Vol. 20 No. 7 — July 2003
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 it—shop-and-swap, keep-away, marble trading, or some other game—there 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, (

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 benefits.

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, and Ford.

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 ( 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 partnerships.

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 plan.

[Note: In the June issue (, 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 (,1282,58971,00.html) reported on some of the presentations from the 12th International World Wide Web Conference in Budapest, Hungary ( 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 begin immediately."

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 ( 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 sale.

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."

For the latest industry news, check every Monday morning. An easier option is to sign up for our free weekly e-mail newsletter, NewsLink, which provides abstracts and links to the stories we post.

Paula J. Hane is Information Today, Inc.'s news bureau chief and editor of NewsBreaks. Her e-mail address is
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