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Microsoft learns enterprise search can be pricey

Microsoft learns enterprise search can be pricey

With its planned $1.2 billion acquisition of Fast Search & Transfer, Microsoft is bulking up in one of business tech's next big growth markets: software that lets business users troll Google -like through unstructured information that's locked away in corporate data stores. Today, enterprise search is a high-end field with a handful of standalone specialists, including Fast. Microsoft sees enough mainstream potential, however, that it's paying a 42% premium for Fast, which is expected to post a $130 million loss in 2007. Why the urgency? Enterprise search "is for workers tomorrow what Internet search is for consumers today--an indispensable tool that helps them quickly find the information they need," says Jeff Raikes, president of Microsoft's business division. It could be a gold mine for the first big vendor to get it right. Few companies use robust enterprise search today, held back by concerns about security, cost, and complexity. But their employees' expectations keep rising, in part because consumer Web search is so good. "You can find football scores online in five seconds, but finding something inside a company can take five hours," Raikes says. IBM also is building a portfolio of enterprise search tools and services, under the OmniFind brand. The company last year beefed up OmniFind Enterprise Edition, adding a version that offers a single interface through which users can sift and analyze documents stored across IBM's Lotus Domino servers. IBM also partners with Yahoo to offer a free, downloadable version of OmniFind that businesses can implement to improve intranet searches. Google recently introduced version 5.0 of its Google Search Appliance, a combination of hardware and software that applies its formidable Web search technology to business environments. But it will take more than that, and the Google brand, to win this market. The business environment is more formidable than the Web, where documents are stored in only a handful of formats, such as HTML and XML, that are deliberately exposed to browsing. Company networks contain mountains of structured and unstructured data archived in numerous formats, some of them decades old and stored in secure servers. An expensive problem A company with 1,000 information workers can expect to lose $5 million a year in salary on time spent searching for documents, says IDC. That cost drives interest in a small group of niche enterprise search vendors, including Norway's Fast, the United Kingdom's Autonomy, and U.S.-based Endeca Technologies. Autonomy is the market-share leader, with $228 million in sales through nine months of 2007. Fast forecasts more than $200 million in 2008 sales. Its board supports the takeover, which Microsoft expects will close in the second quarter. Look for Microsoft to marry Fast's enterprise technology with its own and include that with its Search Server products and its SharePoint collaboration software suite. Last year, Microsoft broke off the search technology in SharePoint into its own Microsoft Search Server product line, which consists of a free version called Search Server Express and a more feature-rich paid version, Search Server 2008. With Search Server at the lower end of the market and Fast at the high end, Microsoft would have a combination that Google and IBM can't match, and make Autonomy and Endeca even more attractive acquisition targets.

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