Pattern Finder

Gartner Acquires Burton Group

It just went out over the wire that Gartner Group has acquired Burton Group. The FAQ on the Gartner web site is here; all analysts will be retained.

Open Text Is Putting Vignette Out of Its Misery by Buying It

I just got notification that Open Text is buying Vignette for approximately $310 million; it will become a wholly owned subsidiary.

Vignette is one of those classic high tech stories, full of drama. The story I was told by Vignette management was that in its early days, as the company was starting to get into web content management, it went around to a variety of enterprises to get a feel for what clients needed. In the course of this research, they talked to Halsey Minor at CNET, who showed them what CNET had done. Impressed, they bought the software and that was the beginning of Vignette.

In the dot.com era, Vignette was unstoppable. Headquartered in Austin, TX it grew by leaps and bounds and started to feel invincible. I remember spending a day at Vignette at the height of its growth and being shown the multiple fussball tables for developers, the many flavors of microwave popcorn, and the conference rooms full of Aeron chairs. At that point, I knew Vignette was heading for a fall, and told them so. Incredulous, they basically told me I had no grip on reality. Two years later, when the dot.com bust came along, it turned out I was right and they were wrong.

Vignette has never really recovered from those days. Competitors began offering somewhat similar web content management systems for a lot less money, and the portal business became a lot less trendy as well. So Vignette has survived, but it was only a matter of time before the company got bought. Now we know who the buyer is.

Microsoft/Yahoo!: Remember Microsoft/Intuit?

With the news that Microsoft walked away from buying Yahoo!, everybody and his brother is offering commentary, with some doing it more than once. The New York Times wrote four articles about it:

• Google, From Stirrer to Spoiler, Ends Microsoft's Yahoo Search
• Yahoo Chief Says Microsoft Was the Stubborn One
• Now in Play: AOL, Facebook, and Many Others
• Microhoo, We Hardly Knew Ye

The Wall Street Journal went to town as well:

• Giving Up on Yahoo, Microsoft Rethinks Its Internet Options
• Deal or No Deal, Ballmer Needs to Turn Weakness Into Strength
• Yahoo Holders Turn Up Heat After Microsoft Deal Talks Fail
• Past Shows Microsoft Is Only Jilted for Moment

Microsoft should walk away from deals more often. It hasn't gotten this level of coverage in non-industry media in years, while Google frequently bathes in the Technology section spotlight (e.g., my blog post of September 13, 2007).

The comments on the "Microsoft Walks On By - Yahoo!" post on the Mini-Microsoft blog make for interesting reading, since many are from Microsoft employees. While the majority express relief at the news, there's a wide variation in what to do next: from reorganizing MSN ("What's Steve's big plan to clean out the rot and turn MSN around?"), to fixing Microsoft's image problem (What kills me is how hated Microsoft really is."), to getting back to writing software ("Forget advertising, let's get back to SOFTWARE.").

In glancing through this diverse commentary, I haven't seen anyone mention the aborted Microsoft/Intuit merger a decade and a half ago. Microsoft Money was getting lambasted by Quicken, and so Microsoft said, "OK, if we can't beat 'em, we'll join 'em," agreeing to buy Intuit in October 1994 for $1.5 billion in Microsoft shares. However, the deal unraveled under anti-trust scrutiny and Microsoft paid Intuit a termination fee of $46.25 million to walk away.

I would not be surprised if we now see a replay of that episode here. With its ability to buy its way into a market blocked, Microsoft went back and fixed Money, to the point where in feature bakeoffs it's typically considered either slightly better or slightly worse than Quicken from year to year. If Microsoft did the same here--if it took even a chunk of the $44 billion it was going to use to buy Yahoo! and applied it to basic block and tackle improvements--it could improve from being a distant number three. However, to do so it cannot mimic Google--it must be significantly better than Google in some areas--to get people to try it. That's why Google became pre-eminent in the first place--it was so much better than the incumbent at the time (Alta Vista).

For example, because of its software and services strategy, Microsoft could mine what users do on their PCs (with appropriate permissions from the user, of course) and use that information to give context to web searches (e.g., realizing that user A is a banker, the system would return "automated teller machines" results to an "ATM" query and  "asynchronous transfer mode" results to a network engineer). This is a capability that would be difficult for either Google or Yahoo! to counter and would give better search results. So while Microsoft is currently down, it's not necessarily out.

Free Web Analytics: Google, Microsoft, and Now Yahoo! Offer It

On Wednesday, April 9, 2008, Yahoo! announced that it was buying IndexTools, a web analytics vendor. On the following Tuesday, Dennis Mortensen, the COO of IndexTools, announced on his blog that, "Yahoo! currently intends to provide the IndexTools Web Analytics service FREE of charge to clients and partners who accept the standard Yahoo! agreement."

In other words, at this point, three large vendors--Google, Microsoft, and Yahoo!--now offer web analytics packages for free. Furthermore, they are not watered down versions, but functional products that any small- and medium-size business (SMB) would die for:

• Google (Google Analytics): Executive dashboard, custom reporting, map-based reports, search engine marketing cost analysis, landing page optimization, user segmentation, scenario analysis, and detailed help.
• Microsoft (Microsoft adCenter Analytics [currently in beta]): Summary reports, custom reporting, campaign reporting, user segmentation, and scenario analysis. 
• Yahoo! (IndexTools): Executive dashboards, path analysis, custom and comparative reporting, workflow, search engine marketing cost analysis, campaign management, user segmentation, merchandise reporting, scenario analysis, and detailed help.

If you're an SMB and don't analyze how visitors behave on your website--how long they stay, where they come from, what pages do they bail from--then I'd encourage you to look at all three, pick the one you like, and use it.

If you work in a large enterprise, you probably use a different package, but investing twenty minutes in reading the Microsoft blog, the Yahoo! datasheet, and watching the Google video is a great way to get a mini-tutorial in web analytics. This is especially true if you've heard the web analytics term bandied about and either don't know much about it or are trying to figure out if you can do more with what you have.

If you're a Burton Group client, I'd encourage you to read two Collaboration and Content Strategies reports I've written on web analytics:

• The Current "Suite Spot" of Web Analytics (Market Landscape, 23 pages)
• Avoiding the Data Pitfalls of Web Analytics (Technology & Standards, 26 pages)

HP Buying Tower Software

Hewlett-Packard announced today that it was buying Tower Software, an Australian document and records management company.

Some interesting quotes in the press release:

1. "The deal will enable HP to expand its offerings in the fast-growing electronic discovery and compliance software market."
2. "The addition of Tower also is expected to enable HP Software to address the growing Microsoft SharePoint compliance and e-discovery opportunities."

Translated, that means that HP is buying it for both tactical and strategic reasons. Tactically, buying Tower Software will increase HP's revenue by allowing it to sell a more complete solution (Tower TRIM Context and the HP Integrated Archive Platform are already integrated). Strategically, buying Tower Software will connect HP to the SharePoint ecosystem, which is growing by leaps and bounds. Startups/small companies are selling solutions that fill gaps within SharePoint, and veteran providers (e.g., EMC/Documentum, Open Text, Tower Software) are integrating with SharePoint as a way to connect to information worker workflows.

This is yet another example of the silos of yesteryear (imaging systems that were separate from document management systems that were separate from records management systems, etc.) all toppling in a movement towards a more lifecycle approach.

Microsoft's Vision for FAST Search

I'm currently attending the FAST Search user conference (FASTforward 08), and yesterday Jared Spataro from Microsoft explained Microsoft's reasoning for buying FAST. (The shareholders have approved the deal, but it has not yet been completed.) He noted that the questions he gets always fall into three categories. Here are my notes from his speech:

• What’s in it for Microsoft: 18 months ago, Microsoft thought search was a set of features. Microsoft finally got religion during the SharePoint 2007 project. Consequently, a specialized team was formed to target search, and was made part of the SharePoint team. FAST came up to Microsoft right after FASTforward 2007 and demoed their capabilities. So Microsoft has been aware of FAST and its capabilities for over a year. Microsoft saw three differentiators with FAST--vision, people, technology—which is why it bought FAST rather than other vendors.
• What’s in it for FAST: Combine FAST’s depth (visionary innovations, passionate people, best-in-class technologies) and Microsoft's breadth (SharePoint momentum, complementary infrastructure technologies, sales and marketing engine) to gain faster adoption of FAST’s technologies.
• What’s in it for customers: FAST will continue to pursue both monetization (customer-facing, revenue-producing search applications) and enterprise (employee-facing, productivity-enhancing applications) segments. Customer-led innovation will continue. Customers can expect cross-platform support and innovation to continue.

I thought the most interesting part was the last bullet: Microsoft's comments that it does not plan to disrupt FAST's current segmentation strategy, that high-touch customer engagement will continue, and that it will support and extend search running on non-Windows platforms.

What I'd Love to See: Zimbra Replacing Outlook Web Access

While it's still too early to tell if Microsoft's proposed acquisition of Yahoo! will go through (Yahoo! is still casting around for a white knight, Microsoft may not up its bid, and there's still regulators to convince), it could lead to some intriguing products in the collaboration, communication, and content space.

Yahoo! recently bought Zimbra (www.zimbra.com), a company that has created a really cool collaboration package. To quote Zimbra, "Ajax based web collaboration is at the heart of ZCS 5.0. The powerful web client integrates email, contacts, shared calendar, VoIP, and online document authoring into a rich browser-based interface. Also, our unique open source Zimlet technology makes it easy for you to include custom 'mash-ups' in the ZCS web client."

From what we've heard at Burton Group, Zimbra is very happy to be at Yahoo!, and continues to do its own thing while the higher ups debate Yahoo!'s longterm strategy. However, the vultures are already circling. They're claiming that given its druthers, Microsoft will shoot Zimbra if the Yahoo! deal goes through. I've seen several articles/blog posts to that effect, and at least one Zimbra competitor is claiming that. A fellow analyst sent me an e-mail from a PR person for Gordano that starts, "With the recent Microsoft/Yahoo! News [sic], Zimbra's users are definitely worried about the fate of their messaging systems and are looking for alternatives in case Microsoft kills a competitor to Exchange." (Surprise, surprise, the PR person recommends that those customers move to products from Gordano.)

I'm hoping Microsoft isn't that stupid. Rather than shooting Zimbra, Microsoft should embrace it. Zimbra, by rethinking what workers should be able to do while living in their office suite, has injected new life into mundane things like e-mail and calendars, and could do the same for Microsoft. I would love to see Microsoft come in and say, "You know, these folks are way ahead of where we are, and we should leapfrog to that position before Google or someone else does." Outlook Web Access, while a lot better than what it was several years ago, is still a second class usability citizen compared to the Outlook rich client. Microsoft could swap out Outlook Web Access, put Zimbra in its place, and have a state-of-the-art interface that would make both Outlook and Gmail look weak by comparison. I use Outlook Web Access a lot; a Zimbra interface would be a huge productivity improvement for me.

If Microsoft went the Zimbra route with OWA, Microsoft would then have to overhaul Outlook to keep up with the new standard it set. In this Web 2.0 world, e-mail and calendars are going to be a vendor battleground. I think Microsoft would do itself a favor by embracing a top class weapon: Zimbra.

Microsoft Bidding for Yahoo!

Microsoft is bidding to acquire Yahoo! at $31 per share. The letter sent to Yahoo!'s Board of Directors in interesting in several ways from a collaboration/communication/content strategies point-of-view.

First, the letter notes, "...the combination allows us to consolidate capital spending." While mentioned within the context of online advertising, the consolidation of Yahoo!'s and Microsoft's datacenters would give Microsoft a huge backend for its ongoing push into software and services on the enterprise side.

Second, the letter says, "You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines." One of the recent jewels that Yahoo! acquired is Zimbra, and if the Zimbra folks stayed around and allied with Microsoft's research into useability, Microsoft would gain a very interesting asset. Of course, given the Java and open source parts of Zimbra, Microsoft could shoot it as well, so who knows.

On a business note, a pattern seems to be emerging here. In the case of FAST Search, Microsoft had its eye on the company for awhile, but waited until a FAST execution/strategy stumble depressed the stock before bidding. I would contend the same happened here. It's classic Business 101, but it highlights the fact that timing is part of the equation.

Microsoft Buys FAST; Last Year It Was BI, This Year It's Search

Microsoft announced today that it was buying Fast Search & Transfer, the Norwegian enterprise search firm, for approximately $1.2 billion. It looks like pretty much a done deal, in that FAST's Board of Directors is recommending the acquisition and the two largest shareholders are on board (per a ZDNet blog post).

FAST went into an operational meltdown last year (see Forbes article), with writedowns, layoffs, and the exiting of many longtime U.S.-based employees. This probably helped decrease the purchase price, and Microsoft seized the moment. While the operational wheels fell off, the FAST technology is strong at its core.

That FAST would be acquired is not surprising; Bjorn Olstad, the CTO, commented in a meeting I was at last year that the infrastructure players (IBM, Microsoft, Oracle) would increasingly encroach on FAST's space. In short, FAST was well aware of the challenges ahead, and sounded like it was amenable to being acquired. What surprised me was that Microsoft bought FAST; I always thought it would be Oracle, for a variety of reasons.

Last year, we saw the infrastructure players absorb business intelligence (Oracle bought Hyperion, SAP bought Business Objects, IBM bought Cognos); this year it will be search. At this point, Autonomy is the only large best-of-breed player left standing, and it will have a hard time going it alone.

This is a huge coup for Microsoft in the enterprise search space. After futzing around for years, Microsoft finally started to get serious with search in SharePoint 2007. It's not perfect--clients have started to tell me the boundary conditions they're running into--but it's a lot better than search was in SharePoint 2003. If you split the search market into three sectors: (1) cheap and OK, (2) relatively inexpensive and an 80% solution, and (3) expensive and sophisticated, Microsoft is targeting tier two with SharePoint Search. Microsoft Search Server 2008 Express is its answer to tier one (see my previous blog post here), and the FAST acquisition is its answer to tier three.

BI Is Now Infrastructure

With IBM's planned purchase of Cognos announced yesterday, business intelligence has become part of infrastructure. At this point, only SAS (privately held) of the large BI players remains independent. Oracle bought Hyperion, SAP bought Business Objects, Cognos bought Applix, and IBM has now bought Cognos.

This is interesting in that the infrastructure players are going after search as well, so no matter what form your data takes -- whether it's structured or unstructured -- companies such as IBM, Microsoft, and Oracle plan to search it and report on it with in-house solutions.

Adobe Gets Into Word Processing and More, Buys Virtual Ubiquity

Adobe announced today that is was buying Virtual Ubiquity, a firm out of Waltham, MA that has written a word processor (Buzzword) built in Flex and running in Flash. I saw a demo of it a number of months ago and it's pretty nice. However, I'm not sure the world needs another word processor--the impression that anyone who reads just the first paragraph would walk away with.

You have to read a bit farther into the announcement to figure out that it's a slightly different animal than say, Microsoft Word:

The application also will run on Adobe® AIR™, offering users a hybrid online/offline experience and the ability to work with both hosted and local documents. The powerful collaboration capabilities in Buzzword enable multiple authors to edit and comment on documents from anywhere, at anytime, while document creators can set permissions that virtually eliminate version control chaos. For more information on the acquisition and access to Buzzword beta software, please visit http://www.adobe.com/go/buzzwordfaq .

Hiding further down, in the sixth paragraph of the press release, is Adobe's announcement and description of a file-sharing service:

Adobe also made available today a free online document sharing service, codenamed “Share.” Users simply select the documents they want to share, send a message to recipients, and set whether the files will be publicly accessible or restricted. Built with Adobe Flex technology, the rich interface provides a smooth experience, integrating simple workflows to upload and share documents with high quality online previews to speed up finding the right document. Additionally, the beta will include a set of REST APIs to let developers create mash-ups with their applications, including storing and accessing files, as well as creating thumbnails and Flash-based previews of documents. People can learn more about the service and sign-up for access at http://www.adobe.com/go/labs_share.

In short, Adobe has announced it will offer a service that will compare favorably with the word processing functionality of Google Apps, Premier Edition. Of course, Adobe doesn't have the buzz of Google, and Adobe's announcement will probably get lost in all the headlines about Microsoft's announcement of Microsoft Online. The phrase, "A voice crying in the wilderness" comes to mind....

IBM Buys FileNet

IBM announced today that it was buying FileNet for approximately $1.6 billion in cash. FileNet, an imaging powerhouse in the 1990s, had lost its darling status a number of years ago and has been lumbering along by offering a mix of content management and business process management (BPM). Last year its sales grew 6.1%. IBM isn't buying a fast mover or secret technological sauce from FileNet; rather, it's buying a large installed base (4,000+ customers) that IBM can sell into.

The timing of this announcement was interesting -- to me at least -- as I received the notice from IBM Analyst Relations just after I'd finished a Burton Group TeleBriefing where I said that the superplatform vendors (IBM, Microsoft) would increasingly prevail in the ECM space, and best-of-breed vendors would become marginalized. I always love it when a vendor accelerates my prognostications.

The number of ECM independents has steadily dwindled over the years: e.g., Hummingbird bought RedDot, Open Text bought IXOS and is attempting to buy Hummingbird, EMC bought Captiva and Documentum, and Vignette bought Tower Technology. This trend will only accelerate: the ECM vendor you buy from today may not be the vendor servicing you three years down the line.