Autonomy acquires Interwoven - A first take

  • 22-Jan-2009

Today Autonomy announced that they intend to buy Interwoven.

 

It was a surprise move for sure. Not that we were surprised that Interwoven was acquired, far from it, we expected that. But we did not expect them to be acquired by Autonomy. Autonomy has grown by acquisition and is one of the few firms that recently announced good revenues and a bullish outlook for 2009.

Best known for their enterprise search technology, Autonomy has been building over the past couple of years a more substantial presence as a GRC (Governance Risk Compliance) vendor. So adding the Interwoven WorkSite product, which is  dominant in the legal sector, is a logical move. Less logical are the other Interwoven assets that include Digital Asset Management and Web Content Management - areas that Interwoven is best known for. If Autonomy hoped to build an integrated ECM solution with all these moving parts then that is going to be a mighty task that will take many years to complete.

From an investors' standpoint this will be seen as good news, as Interwoven was set to do well in this tough economy, and as such there will be a strong expectation that Autonomy will continue to beat the market and its rivals financially in 2009/10.

From a technology buyer's perspective though the news is far more mixed. For though Autonomy has grown its presence as a GRC vendor, it remains a firm that is tightly controlled by one man, Autonomy's founder Mike Lynch. It is (as we have accused others of being) something of a holding company, and though Autonomy certainly doesn't lack ambition, it has to date lacked execution. For whereas Oracle, IBM, and EMC ruthlessly and efficiently absorb acquisitions into the whole, Autonomy has not done so well. They have lost many of the best people at the acquired firms, and conversations both with Autonomy employees and their customers reveals anger, a lack of goodwill, and frustration at the way acquisitions have been administered.

Further, the likes of Oracle, IBM, and EMC do when necessary commit huge amounts of resource to technically integrating acquired assets. Autonomy on the other hand tends to claim that newly acquired assets are "integrated via the IDOL platform," a story that might wash with some, but leaves the technically savvy wary and unconvinced. All that being said, Autonomy has had this abrasive approach to business for a long time now and it is unlikely to change. From the perspective of Autonomy, they have an enviable presence in highly regulated and controlled environments such as Government and Intelligence, and they meet and often surpass investor expectations.

As analysts who work solely for buyers, we have a different perspective. There is considerable overlap between WorkSite and Meridio that needs to be addressed, and there are huge cultural differences between Interwoven and Autonomy that will take much longer to work through. This in addition to the true and deep integration of other acquired technologies that still needs to be addressed. So from a buyer perspective you need to use a great deal of caution when considering Autonomy as a "suite" vendor for the foreseeable future. You need to ask questions about support, development, product roadmaps - and be sure to get solid documented responses.

The market continues to consolidate, yet at the same time new opportunities arise and new firms enter in.  Autonomy has a particular path: it wants to follow that of GRC, and we applaud firms that focus and try to do one thing well. The firm has bought a number of very good products, and made some very smart moves over the years, but they have reached a point now where they either become/remain a holding company with a marketing-level integration story, or they commit to the hard work of building out an holistic business, one that is more than the sum of its parts. We'll be watching...