A number of you have commented that I have been oddly quiet on the subject of Omniture planning to acquire Visual Sciences and then the news that four senior-most managers at WebTrends were let go. It’s not that I don’t have an opinion — I can assure you that I do — but I wanted to take a little time to clarify my thoughts on these subjects before blogging about it.
On the Omniture/Visual Sciences deal, I sincerely do congratulate Josh James and the entire team at Omniture on building a company capable of completely taking out their biggest competitor. Over the years I have found myself having a somewhat topsy-turvy relationship with Mr. James and his organization: First I had to compete with them while at WebSideStory, winning some deals and losing others. Then I worked directly with them while at JupiterResearch, spending time both in their offices and also on their behalf through online seminars and client events. Finally I spent a little over a year competing with them again, this time at Visual Sciences, again winning some deals and losing others.
Regardless of where I worked, it was impossible to not develop a healthy respect for Omniture and their success. It pained me to watch deals like HP, AOL, CBS Sportsline, USAtoday, Overstock.com and others go their way, despite hard work from a talented group of individuals, and I absolutely hated going up against their particular version of salesmanship. But as an analyst it was encouraging to see Josh and John Pestana build a company that understood the underlying technology but also how that technology could make their customers more successful.
Their customers responded to this, and still do. It is not uncommon to meet Omniture customers who have “drank the kool aid” and for whom their customer status is very much a badge of honor. Hopefully Mr. James et al. will deliver the same Omniture experience for the 1,500-odd companies they’re purchasing from Visual Sciences/WebSideStory, because that is where I see the inherent risk in this deal.
All week last week people with a lot of money under their management asked me “what is the upside and what is the risk in this acquisition?” I’m not a financial analyst (disclosure: I don’t have any holdings in OMTR or VSCN) so all I could comment on was what I hoped the combined company would do and not do. And while nobody from Omniture has asked me — not that it would be particularly appropriate anyway — here are a few thoughts on what the new company needs to do to make this acquisition successful:
- Suck it up and start the migration from HBX to SiteCatalyst immediately. I haven’t read all of the various transcripts on this deal, but nobody I am talking to expects HBX to survive the balance of 2008 if the deal is approved (which I sincerely believe it will be.) Omniture should smooth the transition path by splitting data collection at the gateways now and simultaneously loading whatever HBX-collected data into the SiteCatalyst data collectors, thusly giving HBX customers the easiest possible transition from one technology to the other. And while if I were on HBX I would be aggressively thinking about migrating to the SiteCatalyst code base, this transition is far from a slam-dunk at the customer-level. Splitting the data will give marketing something to show I.T. if they complain about needing to replace the JavaScript (again), and getting started on data collection now will potentially ease some of the pain associated with not being able to migrate years of HBX data that some customers might not want to lose (if that is the final assessment.)
- Admit that Visual Workstation is the right interface for serious analysts. Again, I have not read the transcripts, but comments I have read are unclear about whether Discover 2 or Visual Workstation will live past the acquisition point. And while I have spent much time looking at Discover 2, I can assure you that of the two, Visual Workstation is the technology to keep (disclosure: I recently entered into a licensing agreement with Visual Sciences to use Visual Workstation at Web Analytics Demystified.) No disrespect to Omniture’s fine product team, but Visual Workstation is unparalleled for sheer analyst-class power, and I’m fairly sure that without modification Visual Workstaion can leverage whatever format Omniture stores visitor-level data to get up and running quickly. This may cause problems from a pure SaaS-perspective, and I could be wrong, but I suspect that most analysts wouldn’t actually mind having to run the software locally in exchange for having the robust data manipulation capabilities that Workstation provides.
- As painful as it will be, resolve the internal stuff quickly. A huge potential pitfall in this deal is that it has tremendous potential to create confusion regarding who is managing what, when, where, and how all of these technologies are presented in sales and support situations. Not that this will be easy, any M&A transaction has the potential to be messy, but Josh and Jim MacIntyre won’t be doing anyone favors by sugarcoating what this deal is or being vague about who might be reassigned and who might be let go (keep in mind that these companies that were bitter enemies in the marketplace up until two weeks ago.) Any internal confusion about the transition will inevitably impact customers in the form of unclear deadlines, changing account managers, and other miscommunication that will only open the door for other vendors …
Which brings me to the other change in the web analytics market last week: WebTrends announcing that Greg Drew, Jason Palmer, Tore Steen, and Hamid Bahadori had all been asked to leave the company. I have to admit, I was more-or-less shocked by this announcement, specially given that I have been saying to folks since mid-July that I believe, at least from a software perspective, that WebTrends is finally getting back on track. I really do believe that WebTrends Score is one of the few true innovations we’ve seen in the web analytics marketplace recently, and learned WebTrends users far and wide have commented that they really like the stuff in the MarketingLab2 release.
I should also say that I personally really like Greg Drew and Jason Palmer. Now, I say that not having worked with or for them in any role other than that of an industry analyst, and anecdotally some of the recent flight from the company can be tied back to their leadership. But Greg has always struck me as one of the nicest guys in the entire industry and someone who was willing to do what it took to get the job done.
Regardless of Greg’s personal disposition, I again find myself nearly flabbergasted that the folks at Francisco Partners who are calling the shots would give up Greg and Jason’s experience in the field and knowledge about web analytics in general. I mean, it’s not like Eli Shapira is going to come back and run the company, or that it will be easy to find someone else to run the ship as experienced with web analytics as Josh James from Omniture, Joe Davis at Coremetrics, or Dennis Mortensen at IndexTools. Especially on the heels of the Omniture/Visual Sciences announcement, this whole thing sounds so fishy it’s almost unbelievable, but I have to believe that these four guys will be harder to replace than people think.
Case-in-point: when Jeff Lunsford showed up at WebSideStory sans web analytics experience, some of us were worried. But Jeff was a natural born-leader, and given time it was clear that Jeff had what it took to get the job done. Unfortunately, in retrospect, it is no longer clear exactly what that job was aside from making a small number of people a huge sum of money, and Jeff has moved on to even bigger deals. I liked working for Jeff tremendously, but I’m not 100 percent sure he left WebSideStory in better shape than he found it.
I’ll admit, I don’t have the experience that these guys have … I’ve been running a company of two people for seven months. But just as I felt like WebTrends was well positioned (along with Coremetrics) to be a strong solution with a great customer base, a good set of features, that was incidentally “not Omniture”, I now find myself questioning how strong the organization will really be when run by folks largely new to web analytics. No disrespect to Tim, John, Leo or Bruce, but web analytics is hard, the competition is big and about to get bigger, and sophisticated web analytics buyers will easily differentiate between passion and experience.
Trust me, I want to be wrong about this. I would like nothing more than to have someone clarify what happened at WebTrends and detail how the company is going to accelerate growth against Omniture given their recent momentum. I think despite Omniture’s strength and Google Analytics widespread deployment that the “web analytics wars” are far from over. Like others, I worry that a two horse race isn’t very exciting to watch, and despite believing that “it’s not the technology, it’s how you use it” that it’s nice to see innovation from time to time. For this to happen, I believe we need a strong WebTrends, a strong Coremetrics, and at least a small handful of smaller innovators out there in the world (Nedstat, IndexTools, Clicktracks, etc.) nipping at everyone else’s heels.
What do you think? Am I crazy? Am I just missing the most obvious thing? Am I too close to the situation, having worked with or for all of the companies involved in the past few weeks insanity? Or do you share some of the same concerns I do? Either way, I’d love to hear what you have to say.
