Friday, January 23, 2009

Autonomy buying Interowen illustrates a revolution in Enterprise search market

Autonomy gets blamed for many things, but Autonomy sure has a strong appetite and some ambition. I respect that. Congratulations for doing such a move at a time when so many others are sitting watching financial markets go down, laying off people... Autonomy is very brave, or maybe they just have to go down that road? I have always seen a great similarity between the dynamics of Autonomy and Oracle so I naturally found Alan Pelz-Sharpe's (Analyst at CMS) comments on the subject most interesting

When Alan compares Autonomy with Oracle, I think he's hitting something big. Oracle started as an enabling technology and chose (or had to choose because of its size or culture) to change its value proposition and to become an application vendor. A database, like a search engine, is an enabling technology, it makes many things and applications possible.

But Oracle chose to become more of an application vendor and less a technology vendor. Were they scared of Microsoft's database or of the emergence of open source, or envious of SAP's profits and customer loyalty? In other words, did they lack technological excellence or faith in their capacity to stay the best technology, or did they see that another market happened to be bigger and was generating higher margins? I guess the answer is not relevant; what is relevant is that they made that move, and let companies like Business Objects take the BI market (ironically enough to later become part of SAP). On the other end, the value always ends on the end-user desktop or i-phone or blackberry, and the application was the way from the database to reach the end-user.

I think there is a parallel between the evolutions of Autonomy and Oracle. Autonomy is turning away from search and moving towards search-enabled applications. Nobody will dare to say this could be because their product or technology is not good enough, let's all agree it is just because they see better margins elsewhere. But I think that even though Autonomy is a very well run company and is making wise financial decisions, they will miss an important market, because in the case of search, the way to get to the end-user happens to be search itself : Search is a technology that also happens to be the ultimate application...

Most of Sinequa's competitors, like Exalead for example, say that enterprise search will become a commodity, a market for Google, Microsoft or Open source, and just like the leader Autonomy, they move towards verticalized applications, BI-like search, Governance Risk Compliance solutions,... a blue ocean where a lot of money lies for those that will solve very specific information access and management needs.
This is great news for companies like Sinequa, because this time the huge market is the enabling technology: Enterprise Search itself. It is so because the value of collaboration, of sharing information, of providing better access to knowledge, happens to be the real goldmine for companies. And it is 100% delivered by enterprise search. It is anything but simple to deliver, just as, a decade ago, it was not easy to deliver a good enough exhaustive web search engine. But we never learn...

The economic crisis will probably slow down infrastructure players in their capacity to ramp up on their enterprise search solutions, and my bet is that they will always have a lot of trouble connecting their search to the outside world anyway. The economic crisis will accelerate the verticalization of Autonomy and alike. Meanwhile, organizations absolutely need to do more with less, to develop productivity and collective intelligence and only enterprise search solutions will make this happen.

That looks like an opportunity for companies like Sinequa. This is not a dream, dreams are for higher purposes like the one President Obama realized for many of us this last November, but this is an ambition I share with most of my colleagues at Sinequa and especially with Alexandre Bilger who runs the company with me. And you will see, "Yes we can"!

Monday, January 12, 2009

2009 starts well for Sinequa

The financial crisis became an economic crisis affecting all industries and companies. In this context, I am satisfied by the good results of Sinequa and conforted that we took the right management and business decisions.

Sinequa has been recognized for the second year in a row as one of the top three French software vendors with the highest annual growth rate (we were first in 2007 and are third in 2008 of the AFDEL EuroSoftware 100 ranking). After a reorganization of the company (recrutment of a VP of alliances, reorganization of a slightly oversized management team, externalization of some of the research team whose work seemed to far away from our core business and customer needs) and thanks to our tight budget control, we should be EBITDA positive for the fifth consecutive year. And we continue to experience strong growth. Very encouraging, our indirect sales are starting to represent more and more volume and the public sector (unaffected by the crisis) represents a stable 25% of revenue. For example, one administration generated 500 K€ of revenue last year and was brought by a partner, just as a recent new signature (an English financial institution).

Controlled by its management and strongly supported by its financial VC partner X-Ange (backed by the French Post), Sinequa just received additional financial backing by OSEO and a large French Bank. All together, the available cash we can count on represents a year of revenue, this is more than sufficient for a profitable company. Beyond this financial security, we have been offered financial funding to support strategic development initiatives ... we remain very conservative on this possibility though.

On the product side, our new offering easily manages a billion corporate documents. Features tailored to the professional environment and its ease of deployment, provide the high end industrial solution for enterprises, beyond a simple search engine, a solution for collective intelligence (I will comment on it in another post). Some of our customers also deploy the research modules in video, sound and images. I am very pleased that our vision (connectivity, security, scalability, relevancy and the enterprise 2.0) meets the needs of customers. This is our main goal, which drives us and our evolution, and I am not afraid to say it is our obsession, our 'raison d'etre'. And for new customers just to speak only of France, the deployments at Saint Gobain, Sagem Communication, in SFR or Atos Origin, Le Figaro or at Courrier International or L'Equipe TV ... appear to be highly satisfactory.

I was also pleased to note in the December 2008 article in Wired magazine devoted to Ray Ozzie, the replacement of Bill Gates at Microsoft, that he put in place at Microsoft a way of working that we practice at Sinequa (i.e. small teams, a large open space, white boards everywhere...). 2009 will certainly be an eventful year for the economy, for the software industry and for search engine vendors. One of 10 forecasts for 2009 from the analyst firm IDC is a "re-invention of access to information and analysis will accelerate in 2009 driven by the fiasco of the financial industry, the increase of data ...". IDC believes that major players like EMC, Google, HP, IBM, ... will buy companies like ... Sinequa (IDC cites several others, including our fellow French Exalead who matched our revenue figures with strong growth last year while continuing to post losses of around € 5 million annually). I think not, I think this year is not conducive to mergers and acquisitions of quality. I believe that those who are well positioned and managed with modesty like Sinequa will continue their development, while unprofitable start-ups generating a lot of noise but little financial results, will face a tough period during the economic crisis and it will be difficult for them to negotiate their rescue by leading industrialists who are too busy with their own passage through the economic crisis.

Link to download the IDC article:

Link to article in French:

Thursday, January 1, 2009

Why invest in videoconference infrastructure

Work together from anywhere!
A sound business decision
An investment and a mandatory evolution for companies

For intra-enterprise and sales or administrative interactions, today videoconferencing allows the organization of a meeting of two or more people with a level of quality comparable to a real-life meeting. There are two prerequisites for this: specialized equipment (cameras + software + screen) and a (very) high speed connection (between minimum 3Mbit and 20Mbit). All those who have experienced one can confirm, this is a virtual meeting that is comparable to a physical one.

This mode of interaction is clearly the future. More and more large companies are acquiring videoconferencing rooms and on average, videoconferencing can reduce travel expenses by 30% (source It's economical but also environmentally friendly as a large company can replace up to 20,000 annual trips by videoconference meetings, preventing the release of 2200 tonnes of CO2 in the air.

The investment required for an individual or a large meeting room has not stopped falling and will continue to decrease. Today we talk of spending a thousand or a few thousand Euros on quality equipment, then add the cost of a very high-speed connection that is now in the order of €100 per month (but this should decrease with the development of fiber optic coverage).

We are experiencing globally strong growth of people working from home. The reasoning is simple: why spend 2-4 hours per day in transportation to come to work in an open space where we will mainly sit behind a computer with a phone? Why pay rent to house employees who work primarily with people (internal or external) who are located elsewhere? In some countries, employees are increasingly moving from their workplace only for exceptional meetings, or to meet with customers. But their office is located at home. Therefore they can be home for important moments (caring for children, helping a sick spouse, ...) or simply enjoy a better quality of life with less stress of daily commuting. The company optimizes its costs and, above all becomes much more effective. This is sufficient if the employee has a home broadband connection, a computer and videoconferencing software.

Beyond the environmental issues and sustainable development (reduction of CO2 emissions, better use of space), beyond the economic issues (reducing transportation costs, lower office rents, minimization of non-productive time employees spend traveling to and from the office), this is also an essential change in the best practices of the company of the 21st century: in order for the company to have the flexibility necessary for its proper operation, it must offer its employees the ability to work together regardless of their location. In addition to the natural tools that provide the contact and context (social networks and enterprise search engine), the company must provide the proper videoconferencing infrastructure facilitating exchanges and rich collaboration.

Some would say that with e-mail and instant messaging, a mobile or VOIP phone, and webconferencing software has everything you need. I think they are wrong. What matters for virtual collaboration to be effective, is the quality of the exchange, including listening. The fact we play "together", being "in sync". To do this, human beings need an experience equivalent to a face-to-face meeting, brought by the videoconference call, unlike the conference call or the webconference.

My personal experience in watching my customers and partners, is that the companies that make this effort to transform their infrastructure benefit not only from the expected in terms of efficiency, but a gradual transformation and sustainable development of the state of the general work atmosphere. The company becomes more coherent, more consistent, more collaborative. Again, the parallel with the enterprise search engine is striking.