Today’s announcement from Kana Software about their acquisition of Overtone, one of the early generation text analysis tools companies with a handful of very strong enterprise accounts and half-way decent software caught my attention. Overtone was by no means the first text analytics platform to get acquired and rolled into a larger stack. Indeed, nor will it be the last. I’ve felt very strongly over the past four or five years that text analytics as a component and not a solution onto itself, given the nature of data and the fact that structured data plays an integral role in operational analytics and the desire for holistic intelligence and insight is critical.
If we think back to the first acquisition of a significant pure play, we think back to 2006 when Business Objects, prior to their own acquisition by SAP picked up Inxight Software for a reported $70 million. The argument made at the time in support of the deal was that the Business Objects reporting infrastructure was a natural outlet for a unified analytics play and Inxight was one of the strongest players in the unstructured arena in its generation. It was the first solution to support multilingual data and incorporate a data integration capability supporting multiple enterprise data sources which would funnel into the ultimate analysis. While at the time the move was a strong and some would say obvious move for Business Objects, especially given the fact that Inxight had been shopping themselves for sometime given a lack of interest from their own financial backers for additional rounds of investment, it feels that in hindsight the integration failed because the tool, while strong as a stand-alone got lost in the shuffle. The Business Objects acquisition by SAP only deepend the old Inxight team into the post-deal valley of the lost souls and the tool long forgotten by many.
ClearForest, another early contender in the pure play space was acquired as well but under very different circiumstances. Reuters, prior to their own acquisition by Thomson Media bought the company and rather than bury it into a larger offering, remained committed to the idea of intelligent news and chose to both use the platform as part of their own internal “data factory” in producing their news media, also chose to open the tool which had previously commanded a six-figure price tag as a freely given away solution, at least in part. Open Calais was born from the ashes and has since created a signfiicant headroom for itself in the open source extraction-based metatagging tools in and amongst the media and content producing companies worldwide. The trojan horse effect in the giveaway was to further establish the Open Calais approach as an industry standard amongst a whole variety of industry content firms such that as Reuters produced its own media content its control over the high value meta content would be largely dominant. Interesting play, and of course we’ve seen a great deal of this play out, and more – indeed much more to come.
Fastforward to today with the Overtone/Kana deal. Kana, dominant in the multichannel CRM and call center space wanted a social play, it seems, and Overtone was an easy transaction. Overtone offered amongst other things social analytics and would stand to be both an inexpensive acquisition for the larger Kana as well as an easy integration into the overall stack, giving Kana some new sizzle which has long since left the steak, in their case. The deal also gives Overtone, a firm who seemed a little “tired” and past its own prime with a revolving door of executives and financial investors an exit and an ability to recover some of their own investments on the way out.
Who’s left in the space, with a dominant platform given all of the recent repositioning? Clarabridge, Attensity and a handful of others less prominent or technically complete.
Can Attensity be bought? While I’d say sure, I’d think twice about my answer before betting on it. Attensity as a pure play was bought, quietly a couple of years ago and rolled into a holding company operated by European investors and members of the old technology player Inxight, mentioned above. The pure play was combined with other tools that were bought similarly and combined into a larger, more comprehensive offering than the others, offering rich reporting, analytics, data collection and such. It is truly a complete stack onto itself, but the capitalization of the new business makes the enterprise value too pricey for a quick snatch aquisition, and frankly I’m not sure Attensity wants to be acquired. They’re doing quite well as is and continuing to innovate given their newly enlarged offering, management team and staff around the world. I’d say Attensity is well positioned to remain as is for the foreseeable future, but there remains the potential for a future deal with a company like Oracle or SAP.
Clarabridge on the other hand remains a pure play. The founding leadership team remains intact almost 7 years after launch and while they continue to grow their customer base and revenue have never sought to broaden their offering beyond textual analysis of customer comments and survey feedback. Their strategy and in turn their valuation would make them an attractive acquisition target and given their founder’s history of having built and sold their prior venture, the simiarly named Claraview, an exit and cash-out could be in the cards. Who’d buy Clarabridge is anyone’s guess, but rather than believe the enterprise data guys like SAP and Oracle, I’d propose a more focused solution company like Salesforce.com once they finish digesting Radian6. It’s a potentially interesting play for the CRM tools company rounding out their own ability to capture and synthesize customer data and build analytical reports around it. Indeed, that would be my guess.
The net-net here is simple. Text analytics is not going away. Instead text analytics will become part of a broader unified analytics approach and then in turn integrated into another more comprehensive offering. It’s just the natural progression of things.
If I were a CEO of a text analytics tools company I’d prepare my company for acquisition given the fact that the deal floodgates are open and not be the bride left at the altar for the long term. It gets awfully lonely there.
