Aftek goes after the enterprise search market

A year after Aftek Infosys acquired a 49 percent stake in Arexera, the company is tapping a promising market in the B2B and B2C search space, says SRIKANTH RP

RANJIT DHURU says that acquiring Arexera significantly reduced the time Aftek needed to enter the European market

GLOBAL analysts have always insisted that Indian software services companies should acquire global product companies if they want to sustain double-digit growth rates. Few Indian companies have taken this advice seriously. So when Mumbai-based Aftek Infosys acquired a stake in Arexera Information Technologies, a (German) product player in the Knowledge Management (KM) space, it was a rare move by an Indian software services company to establish a foothold abroad.

Aftek’s success in the European market (one of the prime reasons the company took a stake in Arexera) is a pointer to the direction Indian software companies should take. While Aftek currently has a 49 percent stake in the company, it retains the right to acquire 100 percent equity within the next three years.

A year after the deal, Aftek has made substantial inroads in the German market. In addition to having products in the KM, data compression and content management space, Arexera boasts of clients such as BMW, Axel Springer (Germany’s largest publishing group) and T-Online. Aftek’s success can be seen from the fact that Arexera’s client base has grown from six customers to over a hundred. Additionally, Aftek has also benefited from its association with Arexera’s big clients. For example, BMW, which was a client of Arexera, has now put Aftek Infosys on its global list of 30 preferred software services providers.

Two technologies that can make Aftek a global player are Arexera’s intellectual property (IP) in unstructured data management (UDM) and enterprise search. UDM refers to any data that does not have a well-defined model for information access. For example, such data can be in text as well as in audio or video formats. IDC estimates the market for UDM to be close to $5.4 billion and growing at 30 percent, whereas OVUM estimates an $8.8 billion market growing at 33 percent. Another interesting statistic from IDC is that the top five hundred companies spend a whopping $31 billion to search unstructured information.

Says Ranjit Dhuru, chief executive officer, Aftek Infosys, “Our focus is on enterprise business management, and KM is a critical element there. Arexera’s acquisition has given us power in this area. The acquisition has significantly reduced the time we needed to enter the European market. Additionally, Aftek also gets an opportunity to make inroads in the advertising search space, especially in Germany.”

Search engine IP

The Arexera product portfolio is currently made up of six independent products, each having a different function. For example, X-Crawler has the capability to collect documents and meta-information (date of creation, storage location, size) from different data sources on the Internet or an intranet. As the crawler can handle around 300 file formats with the capability of converting the original data to XML, it is versatile and can be used to good effect in an enterprise.

Another interesting product is the X-Keyword Extractor that uses statistical, heuristic and linguistic techniques to determine a document’s characteristic keywords. Here, a document is viewed not in isolation but within the context of the entire set of documents. This ensures that terms which may seem significant when looking at a single document but are not significant in the totality of the document set are not added to a list of keywords.

While Aftek was content to focus only on the UDM space after the deal, two developments changed its outlook. Yahoo acquired Overture, a leader in providing solutions for generating advertisements related to keywords a user defines in a search. Additionally, Google is planning its IPO. Looking at the new-found interest in search engine technologies, Aftek decided to also focus on the search engine IP it acquired from Arexera. These included IP for search engines such as Infoseek, the most widely used search engine in Europe.

New subsidiary

To channel the company’s efforts in this direction, Aftek decided to start a new subsidiary called Seekport. Aftek (via Arexera) holds a 60 percent stake in the company; the rest is owned by VCs. The company already has a big client in e-spotting, one of the biggest players in the search engine-adwords space. Additionally, Seekport is also entering the B2C space with a search engine that sports the same name. As Seekport has the biggest German language index along with the option of subject-oriented search, Dhuru is confident that it will help the company establish a lead in a market where Google is not yet the dominant search engine. Many German newspapers are already using Seekport as the search engine front-ending their Internet archives. The company plans to use Germany as a springboard into the rest of Europe.

As search (both enterprise and B2C) is attracting immense interest from corporates and venture capitalists, Aftek Infosys could have a goldmine on its hands.

srikanth@expresscomputeronline.com