Verity rolls out ‘disruptive’ strategy

In a volatile climate for enterprise-search companies, market pioneer Verity has come out fighting with an ambitious strategy that CEO Anthony Bettencourt hopes will prove “disruptive”. Verity, he says, needs to be a “change agent” in order to get one step ahead of competitors such as Convera, FAST and Autonomy at a time when those companies, he claims, are “still scrambling to figure out what they’re going to do”.

The business pressures behind that scramble have never been greater. Some of the largest companies in the IT industry are beefing up their investments in search, threatening to turn the specialist technology into a commodity item in the eyes of

IT buyers. Among them is consumer search-engine specialist Google, which has branched out aggressively into enterprise and desktop search in recent years, buoyed by the solid brand recognition it enjoys and the widespread interest its 2004 initial public offering attracted.

Other companies that have set their sights on the enterprise-search market are well-established IT industry giants. Among them, for example, is IBM with its Masala project, a new version of the DB2 Information Integrator software that will enable employees to retrieve information from databases, applications and the web. And technology buyers can also expect Oracle and Sun Microsystems to announce new search-related product capability in 2005, followed by Microsoft, with desktop and SQL Server/operating system hybrid-search capabilities planned for the long-awaited Longhorn release, now due in around 2007.

At the same time, enterprise-search tools alone are not bringing in the revenues that Verity and its competitors need to achieve in order to maintain long-term, healthy growth. Organic growth of enterprise-search tools, says Bettencourt, is “minimal” at around 2.5 per cent annually. “We’ve taken a long, hard look at our core market. Our research led us to conclude that the market for specialist search tools is too small and that we needed to find ways to grow faster but also to grow value for our customers,” he explains.

That thinking has guided the company through a number of recent acquisitions intended to extend Verity’s reach beyond search. By doing so, says Bettencourt, Verity will “build a vibrant ecosystem around enterprise search, giving it multiple dimensions”.

Those purchases have included content capture and e-forms company Cardiff Software in February 2004 and business-process-management (BPM) specialist Dralasoft in December that year. “The Dralasoft BPM engine was embedded in the Cardiff LiquidOffice package that we had already acquired and we figured it would be best if we owned the intellectual technology to it,” Bettencourt explains.

The combination of search, content capture and BPM technologies, he claims, will give companies better visibility into the constituents that make up their intellectual capital: people, processes and information. “In order for employees to find and take action on a single document among all the information that a company stores, they need secure visibility across all of it. That means you must make it all behave like a single set of content that can be managed, viewed and accessed with a common set of tools, within the context of a specific business process,” he says.

Alongside its mission to diversify, Verity is also seeking to extend the reach of its core search capabilities. In June 2005, it acquired 80/20 Software, an Australian specialist in desktop-search tools. Around the same time, it announced that it would extend free trials of its Ultraseek search engine (acquired from Inktomi in 2002 as an SME alternative to its enterprise-class K2 search engine) from one month to a year for companies that wish to search up to 25,000 documents. Companies that need to search greater numbers of documents can purchase a four-year usage license at $75,000.

That strategy is not without its risks, admits Bettencourt. “There is certainly a danger that by aggressively pricing Ultraseek in this way we may cannibalise sales of our K2 product,” he says. However, K2 customers license the product to carry out complex parametric searches and rely on the product’s highly sophisticated taxonomy and classification capabilities to support that. Ultraseek, by contrast, offers more basic search capabilities but can be installed in 15 minutes where no customisation is required and in less than a day where it proves necessary.

“We feel that the real market for enterprise search is among the SMEs and that the overall market is far, far larger than we have previously given it credit for being,” says Bettencourt. “And if we do cannibalise K2 sales, it’s better that we do it to ourselves than our competitors do it to us.”

In fact, he claims, giving Ultraseek away for free is so far proving a “great lead generation vehicle” for K2. The hope among Verity executives is that those companies that deploy Ultraseek for free will discover, as they deploy it, that some of their applications demand more high-end search tools that fulfil more exacting requirements for scalability and security. If they do, Bettencourt points out, they will be following the lead of drinks giant PepsiCo (among other customers), which uses K2 to enable authorised employees to search for secure content, but Ultraseek to search for the rest.

In order to reinforce its new direction, Verity is realigning its sales team along vertical market lines, assigning each of its sales executives to work exclusively in one of five key areas: public sector; financial services; telecommunications and manufacturing; the process industry, including petroleum, pharmaceuticals and utilities; and retail and consumer packaged goods. It is also seeking to forge new relationships with leading systems integrators around the world.

For Spencer Young, recently appointed UK general manager of Verity and now presiding over ambitious targets for the company in the region, the challenges ahead are substantial – but so is the market opportunity. “We’ve been a big fish in a small pond for years and that limits growth,” he says. “We need to change the way the search market looks and feels and I believe we’re now exceptionally well placed to do that.”

More information can be found at: www.verity.com