Before I begin the process of effectively piling on to what is obviously a very unfortunate situation, I want to say a few things about HP in general. Despite all the negative things I have seen in the press over the last few years regarding HP, AccessData’s experience with the company has been nothing but extraordinary. We have partnered with HP on many deals and the organization has been extremely helpful and has engaged us at all levels. HP has an impressive suite of solutions, is highly flexible and very professional. In short, it’s a world class organization and one of our very best partners. That said, few would disagree that HP’s Autonomy acquisition was poorly assessed and miscalculated. The mistake is only now apparent, but the news of the fraud and the clear problems finally explain what we have seen in the e-discovery unit since the acquisition. Specifically, since the acquisition, Autonomy’s solutions have completely disappeared from the market. We never see them in deals, customers that acquired the solutions are replacing them, and we even won a deal early this year from a former Autonomy customer that is considering litigation because of the failure of Autonomy solutions.
So how is it that a solution that many analysts consistently called one of the best in the market and rated as the most comprehensive in vision year after year, has fallen so far so fast? It can’t possibly be true that Autonomy’s e-discovery platform was working perfectly before HP purchased it, but afterward simply stopped performing. I also dismiss out of hand the idea that HP, through an incredible amount of incompetence, has somehow mismanaged Autonomy to death in one year. I don’t know if it’s being managed correctly or not, but I do know that mismanagement has a gradual effect and not an immediate one. No, I believe the solution never worked all that well in the beginning and many industry observers simply didn’t sufficiently research it or didn’t completely understand the scope of it. Now before people misinterpret what I am saying as a condemnation of analysts and Autonomy clients, let me be clear – we didn’t understand it either! In fact, many years ago AccessData OEMed (I personally signed the contract) parts of Autonomy’s solution and spent a ton of money on it. We also spent years trying to get it to work with our products before eventually giving up.
The point is that if the analysts got it wrong, and AccessData, a technologically powerful (and very dogged) company dedicated to this market, couldn’t make it work, then the ‘solution’ must have been built more on hype and marketing than reality. When Autonomy was a standalone company there seemed to be an inherent inertia to their presence in the market. But with beautiful marketing, really aggressive sales and a very large company behind them, they pushed their way into many e-discovery deals. They seemed to have the right pedigree to be in the space, seemed to have all the pieces; they even seemed to have solid references. If you didn’t dig too deep, they definitely hit every key point. In addition to that perfect corporate sheen they were very aggressive competitors. If you punched Autonomy, they punched back hard and fast. They sold over the other players in the market, going directly to CEOs and General Counsel while the smaller e-discovery companies were left to try to sell up the chain or to target smaller companies looking for a deal. The simple fact is that prior to the acquisition it was very hard to beat out Autonomy in a large deal if they were already working with the prospective client. Personally, I was very impressed with the formidability of the company and (if the allegations end up being true) I was just as deceived as HP was.
That same aggressive approach is not, as best I can tell, in the DNA of HP. HP sells through expansive channels that rely to a large degree on the merits of the product and service, and to a meaningful degree, in-bound demand. Many of HP’s products are plug-and-play and while they have a huge Services organization, it doesn’t really do the product customization/massaging that appears necessary to keep Autonomy’s products running and its customers happy. I don’t know if that mismatch resulted in a few blowups with key customers, if the product truly never even worked, or if something else happened, but it appears that the HP sales organization has pulled back on pushing Autonomy as an e-discovery solution.
So where does that leave the e-discovery market and customers who have purchased Autonomy’s e-discovery products? Are there any lessons to be learned? Well the good news for the market is that there really isn’t any prevalent or meaningful effect. As an e-discovery market leader we certainly appreciate the consolidation, and having one less competitor can lead to more opportunity. For customers that purchased some portion of the complicated Autonomy portfolio, I suspect over time they will move away from the solution. We have already solved the Autonomy headache for several clients and are enthusiastic to do the same for others as the process accelerates over the next year or two. Only time will tell. As for lessons learned, in e-discovery the one rule you need to know is “buyer beware.” Historically it has been very effective to put together an elaborate slide deck with animated screenshots. It is only a little bit more difficult to put together an exciting user interface that works in the context of a software demonstration. It is an entirely different task to engineer and deliver what is required for true enterprise class e-discovery that meets and exceeds the needs of a company faced with real life litigation. At this point it’s unclear if Autonomy ever did that, but the signs seem to point to no. Until the real Autonomy steps forward, the e-discovery industry, and more importantly its clients, will be forced to wait and wonder.