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recent press release from Autonomy hailed an IDC report that gave them the leading market share for the search and discovery technology market. While congratulations are no doubt in order for Autonomy, which has thrived as other major competitors have struggled to gain momentum in general enterprise search markets, there's a wrinkle to this boast that should give one pause to wonder. Sue Feldman's indicating in the report that Autonomy has a 14.4 percent share of the search and discovery market in 2008, which is certainly nothing to downplay but also not a crushing dominance of this market. In other words, even the world's dominant enterprise-oriented search technology provider is little more than a niche player.
This is in part because there really isn't "a" search technology marketplace in any strict sense of the term. That may sound strange at first, but it's certainly true that search as a content location tool can only measure its success against very specific needs. Each enterprise, each publisher and media outlet, each marketplace has specific needs for content that determine whether a particular technology has been well tuned to its needs. We can use tech terms such as precision and recall to define in general terms how effective a search technology may be in returning useful information, but if a technology can't deliver editorial value very specific to an enterprise, it's just a general tool that is rapidly and easily commoditized rather than a powerful content tool.
The importance of catering to very tailored content delivery needs was underscored in my mind by a recent chat with Craig Carpenter, Vice President of Marketing for
Recommind, a company providing content categorization and discovery tools that are finding particular success in legal and corporate compliance markets. Recommind has focused its capabilities on supporting functions such as e-discovery processes that enable an organization to understand what documents relate to a particular legal matter in the early phases of assessing a case. Going through emails, word processing and other unstructured enterprise documents rapidly to determine which ones relate to key figures in a legal matter or or compliance issue is a good stress test for any search technology. With recent U.S. government rules encouraging the use of electronic tools to accelerate content discovery, Recommind is one of a few companies that are well positioned to both accelerate compliance with those expectations and to eliminate legal expenses associated with the discovery process.
Certainly companies like Autonomy may be competitive in such situations, but when companies such as Recommind are focused more deeply on the needs of specific market sectors, they become, in effect, like subscription enterprise information services, delivering highly relevant content rapidly and reliably. There are, in truth, fairly few ways to attack search from a technology standpoint, so the most profitable victories in enterprise search and discovery technologies tend to go to the companies that have technology that is highly tuned to the very specific needs of a given market or client. That doesn't necessarily make one technology better than another in attacking those problems, but oftentimes only better tuned and one step ahead of other technology providers. So the fact that a company like Recommind is down in the depths of tuning their technologies to legal discovery and corporate compliance can offer them better margins for solving more focused, high-value enterprise problems - often the same kinds of problems that many enterprise publishers are trying to solve.
I do think that companies like Recommind that have done the heavy lifting on difficult enterprise search problems in specific sectors or problem sets can turn out to be double threats in enterprise content markets. Not only do they get to solve higher-value problems that are easier to measure for ROI, they also get to redefine market opportunities into other adjacent markets that may be difficult for others to attack. For example, when you look at the technology issues behind legal discovery, corporate compliance and more general high-value enterprise problems such as records management and knowledge management, there's a lot of overlap with a whole different range of technology services providers. On the other side of the spectrum, being able to categorize and organize content for the legal sector very effectively also begins to nibble at the opportunities for subscription enterprise services such as Thomson West and LexisNexis, which are also focusing more on semantic content organization but not necessarily with the deep technology focus of niche players such as Recommind.
Of course, the opposite forces of two-sided competition from large rivals can push back at niche-oriented technology players, but in general today's markets seem to be favoring specific solutions that make specific pains go away quickly in enterprises, with more general solutions with bigger tickets and fuzzier ROI being strung out on longer sales cycles. I don't think that we'll be seeing many new players like Recommind entering enterprise markets any time soon, but I do think that those that were able to get launched and cash-positive in the past few years are going to be tough competitors in the two-prong fight for content and technology dominance in the enterprise. Individually they may not take up anything like a 14 percent share of search and discovery markets, but when you look at their ability to respond to the best revenue opportunities within those markets, you can pretty much forget about the pie as a whole and start looking for the plums inside the pie that matter most.
Labels: autonomy, categorization, compliance, content technology, discovery, enterprise, legal, LexisNexis, recommind, search, thomson west
