What if Alan Greenspan wanted to quickly find an economic statistic buried somewhere deep within gigabytes of Web pages, Microsoft Word files and other documents stored on the Federal Reserve’s computer systems?
Actually, he’d probably have one of his minions dig it up. But for a typical manager at a large company looking for, say, one specific product brochure among a group of thousands, critical assistance might come from the search and retrieval software supplied by Verity.
A 16-year veteran of the search business, Verity, according to some customers, provides the best tools of the trade for zeroing in on exactly what you’re looking for in a collection of “unstructured data”: any set of information not organized in a database. The company has been the No. 1 provider of enterprise search software for the past four years, with a 17% share of the $619 million market in 2003, according to research firm IDC.
“If search is strategic to your business, Verity is the search engine to pick,” says Herman Baumann, executive director of strategic development for the American Hospital Association. The Chicago-based consortium of 5,000 hospitals and health-care networks uses Verity’s flagship K2 Enterprise software to let members and other visitors to its 50 Web sites search for health-related news and information in 76,000 reports, directories and other documents.
K2 scans documents on a network and creates a keyword index, which maps terms to the document’s location. When someone enters a search word, the software applies a customizable mix of calculations (such as frequency of keyword in a document) against that index to find the specific documents that match the query. Verity also provides software to help classify documents by subject or theme, which can improve a search engine’s results by providing additional clues to the nature of its contents.
Be prepared to fork over some bread, though: Verity says the average selling price of K2 is $150,000, and analysts say large corporate deployments with more than 1 million documents can run to $350,000 or more. For those who find that too rich, Verity also offers a simpler search engine called Ultraseek, priced starting at $6,000, which lacks many features of its bigger brother, such as K2’s ability to directly access document management systems such as Lotus Notes.
Is K2 worth the price tag? Baumann thinks so. He says the software is rugged and stable, and allows his team to adjust just about any parameter in the search engine. For instance, K2 can be configured to assign different weights to variables in a search query (like whether the term is in the headline) to come up with more meaningful results. The advantage, Baumann says, is that K2 allows those parameters to be tuned so that “you don’t have to write snippets of code to make it work the way you want.”
Not everyone has been satisfied with Verity’s search software. In 2003, the U.S. Army picked K2 to search across the 1.2 million documents available via Army Knowledge Online (AKO), a Web portal that provides news and information to 1.75 million military personnel and civilian employees. A year ago, however, the Army replaced Verity’s software with Autonomy’s Intelligent Data Operating Layer Server to provide the search infrastructure for AKO.
“We thought we’d get more relevant search results with Autonomy,” says Col. Timothy Fong, director of the Army’s office of information-technology services. “Not to say Verity couldn’t do it. We just thought Autonomy could do it better.” He says that’s partly because Autonomy’s software works on a different principle than traditional keyword-based search engines such as Verity’s (see sidebar). Verity declined to comment on the Army’s switch.
Other customers say Verity doesn’t add bells and whistles to its products without deliberation and testing—but they appreciate that. “Verity is never the first one to the table, but when they get there, the product works,” says Christine Connors, meta-data architect at defense contractor Raytheon.
Anthony Bettencourt, 44, Verity’s president and chief executive officer since March 2003, realizes Verity must keep spending on R&D to improve its search technology, particularly as the likes of Google, IBM, Oracle and Microsoft beef up investments in the field. But Bettencourt also believes Verity’s cautious approach helped it sustain six straight profitable years. “We’re not flashy by any means, but I think we’ve grown in a smart way,” he says.
He says Verity is ready to tangle with new rivals, though he claims the search software market is a niche that big vendors like IBM don’t care about winning. “In the search business, I don’t have an elephant gunning for me,” Bettencourt says. But since an elephant can crush a smaller competitor just by taking a step forward, Verity will have to pick up the pace to stay ahead.
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Verity operating results*
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* Fiscal year ends May 31; FYTD reflects first nine months
Source: Company reports
Other Financials**
Total assets $348.08M
Stockholders’ equity – $298.19M
Cash and equivalents‡ – $126.48M
Long-term debt – None
Shares outstanding – 38.37M
Market value, 3/24 – $373.16M
** As of Feb. 28, 2005, except where noted
‡ includes short-term investments
