In pursuit of a more holistic portfolio of business intelligence products, Business Objects SA today announced that it would acquire privately held Inxight Software, Inc. for an undisclosed sum.
Since being spun out from Xerox Palo Alto Research Center in 1997, Inxight has risen to the top tier in a small field of text analytics suppliers and is profitable, with annual revenue of approximately $25 million. On a conference call today to discuss the deal, Business Objects officials said they had signed a definitive agreement with Inxight and expect to close the deal by July.
The acquisition will bring to Business Objects Inxight's flagship SmartDiscovery-brand software for text analytics, federated search, and information visualization, all focused on the unstructured data that makes up 80% or more of a company's information stream, according to some estimates. Among other sources, this data derives from e-mail and chat threads, service notes, and phone call logs — free-flowing, textual information that does not line up in organized categories, such as those found in a spreadsheet document.
The text analytics technology at the heart of Inxight's offerings delves into a customer's unstructured data and identifies trends and connections that would otherwise remain buried across multiple information sources. The visualization software then produces a family tree displaying the lines of connection among items such as customer, product, and company names. Federated search, according to Ian Hersey, Inxight's founder and senior vice president of corporate development and strategy, "allows you to connect to any queryable repository" — he cited examples of patent databases and subscription content services — "so that you can make a query once ... and it will bring all the results back from those, [and] merge them into one results set."
In the emerging business intelligence model that Business Objects envisions, unstructured data is essentially the yin to structured data's yang. On the call today, Marge Breya, the company's head of global marketing, noted that business intelligence vendors have long concentrated on technology that makes sense of structured data — operational and transactional information, for instance, as well as process and event data.
"What we've been missing, though, is a ... notion around the softer side of analytics, the human side," Breya explained. This softer side includes customer touch points, such as call centers, which, under the traditional model of analyzing structured information, often get lost in the shuffle. An analytics program can, for instance, mine the phone logs of a call center and determine that a product is frequently mentioned in association with certain performance failures.
John Hagerty, vice president and research fellow at AMR Research, believes the Inxight acquisition puts Business Objects ahead of the curve with respect to its competition.
"Companies like IBM and SAS have actually had text analytics for quite a while, but Business Objects' traditional competition — which would be the likes of Cognos, or Hyperion, or Microstrategy — those [vendors] have not yet embraced the unstructured text analytics," Hagerty told Managing Automation.
Today's acquisition announcement is the culmination of a partnership between Business Objects and Inxight that began late last year. That alliance centered on a project called Communication Risk Assessment, which looked for red flags in the publicly available e-mail database that surfaced during Enron's recent corruption trials.
"It turns out there was just a whole lot of business-inappropriate material" in the Enron communications trail that could have been flagged by an analytics program, Hersey noted.
Inxight has built its business through a combination of direct sales to end users and software licensing agreements with OEMs that embed the Inxight technology in their own products. The company has 450 customers and more than 300 OEM partners, including Oracle, SAS Institute, SAP, IBM, and Microsoft.
Breya painted Inxight's OEM sales model as a sustainable one, but Inxight's future as a subsidiary of Business Objects may not sit well with the latter's competitors, including Oracle and SAS, according to Hagerty. In fact, the acquisition may act as a spur in the side of Business Objects' rivals to make their own moves to bring such technology in-house. The market is limited, however; Inxight competes mainly with ClearForest Corp., Attensity, and Teragram Corp.
"My gut feeling is that ... they'll maintain those [OEM] relationships for the time being," Hagerty said, "but at some point in time, those other providers — SAS and Oracle, in particular — may decide that it's not in their best interest to have a partner who's also a big competitor." It is not, however, out of the question, considering the popularity these days of "co-opetition," he noted.
During the conference call, Breya said Business Objects would continue with its OEM relationships.
For its text analytics capabilities, Oracle relies on Inxight technology to help power Oracle Secure Enterprise Search. The application and database heavyweight added more capabilities for its unstructured offerings last November when it purchased Stellant, Inc. for $440 million. Stellant specializes in content management applications that bring unstructured data into a structured format.
SAS uses Inxight's technology to enable its Text Miner application. The tool has become a favorite in the service departments of some manufacturers. Its ability to provide greater visibility into warranty claims, for instance, has helped some companies spot product failures more quickly and better manage the costs incurred by repair shops.
The warranty-management angle could underlie Breya's revelation that Business Objects will look to adapt Inxight's technology to further extend it into the manufacturing market.
Overall, Business Objects' embrace of what it calls "full-spectrum BI" is a propitious one, according to Hagerty. "They're really stretching their boundaries around what they have stood for in the past, and they're taking a very forward-looking view in regards to what intelligence really is," he said.