Posted by Brian Hill on January 26, 2009
Autonomy’s recent announcement that it plans to acquire Interwoven will strengthen its traction in the broader eDiscovery landscape. With the purchase, Autonomy picks up a range of assets, but a key component of the $775 million purchase focuses on new opportunities to mitigate legal and regulatory risk and capitalize on the surging eDiscovery market.
Along with other markets, M&A activities in this segment slowed in Q4 2008, but vendors continued to announce a steady stream of partnerships (e.g., Open Text - Recommind and CaseCentral - CommVault) and significant internally developed offerings. Selected acquisitions in this market include:
Autonomy’s acquisition supports a growing consolidation trend in the eDiscovery vendor community. Today no single vendor provides “end-to-end” or fully comprehensive enterprise eDiscovery support. Instead information and knowledge management (I&KM) professionals must grapple with a highly fragmented market with a large number of vendors who provide support for some subset of the steps outlined in the electronic discovery reference model (EDRM).
This fragmentation causes headaches, but during 2009 these burdens will decrease as vendors digest additional acquisitions, put more emphasis on partnerships, expand their portfolios, and address interoperability through standards and industry working groups. New vendor entrants to the eDiscovery market, however, will slow this consolidation. Overall, Forrester expects that M&A activity in this segment will increase during 2009 as vendors with deep pockets acquire firms with demonstrated eDiscovery strengths in offerings or human capital. As this consolidation continues, enterprises should cautiously monitor engagements with point providers.
My initial take on Autonomy’s acquisition will ultimately be positive for enterprises focused on eDiscovery. Here’s why:
- Autonomy obtains a stronger and broader portfolio for mitigating legal risk. It’s important to point out that effective alignment between the information management phase and other steps outlined in the EDRM remains out of reach for most enterprises To illustrate, in a recently completed survey we found that nearly two-thirds of respondents rated “synchronizing eDiscovery, records management, and archiving efforts” as “very challenging” or “challenging.” With a more comprehensive portfolio, Autonomy now will have the potential to help enterprises execute more effectively throughout the eDiscovery process.
- Autonomy gets a good pool of legal experts. Interwoven brings a wealth of human capital with backgrounds in the intersection of legal and IT – this will be key in accelerating sales in the white-hot eDiscovery market.
- Autonomy acquires a solid installed base opportunity helping to penetrate key verticals more effectively. Claiming over 1,300 law firm customers, Interwoven has historical traction in the legal market. This customer set will clearly help Autonomy continue its strong eDiscovery focus. Also, Forrester expects a significant increase in litigation in the financial services segment over the next 12 months. Autonomy anticipates that Interwoven’s Global Capital Markets group will help it capitalize on compliance opportunities in derivatives management inside major banks.
In the near- and mid-term, Autonomy will need to focus on product delivery and plans and enterprises should closely monitor execution. Here’s why:
- Autonomy and Interwoven have existing product overlap in two key areas for mitigating legal risk – records management and legal review platforms. I had an opportunity to ask these vendors last week about rationalization plans and it’s clear that this isn’t hammered out yet.
- Autonomy’s Intelligent Data Operating Layer (IDOL) plans could introduce big bumps. In the near term, Autonomy plans to put the IDOL engine underneath Interwoven applications. This approach has strong potential, but focus on product quality and execution will be critical. Customer feedback based on comparable efforts with Autonomy’s previously acquired ZANTAZ portfolio suggests work still remains. When faced with litigation and court demands, I&KM professionals understandably have very little patience with any perceptions of poor product quality or poor customer support.
- Combining dynamic Web content and retention management holds promise, but may be very difficult to develop successfully. Although Forrester’s inquiries demonstrate limited but building interest in retention policies for dynamic as well as static Web content, enterprises report that vendor solutions available today fall short. As one of the stated goals of the acquisition, Autonomy intends to deliver retention management solutions for dynamic Web content to meet the need for this early stage market. It may find that putting vast amounts of dynamic Web content (individual, variable views) under retention policies at a granular level to be a tough technological hurdle.
Autonomy will continue to be a major force in the eDiscovery market. Acquiring Interwoven will bolster its prospects for delivering effective solutions provided that Autonomy can successfully integrate product portfolio, overcome corporate cultural differences, and align sales channels. Current customers and enterprises considering prospective eDiscovery solutions stand to benefit but should ensure that they understand how the pieces fit together, document commitments, and continue to review Autonomy’s execution.
What do you think the acquisition means for the eDiscovery market? Please write me at email@example.com.