Information Today
Volume 19, Issue 3 — March 2002
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IT Feature •
divine Acquires Northern Light
The company adds key search technology and content to its extended enterprise solutions
by Paula J. Hane

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 http://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.

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