It has been quite a journey for the document management company iManage. Cofounded in 1995 by Neil Araujo and Rafiq Mohammadi, it was acquired in 2003 by Interwoven for $171 million. In 2009, Autonomy acquired Interwoven for $775 million, and then in 2011 Hewlett Packard purchased Autonomy for $11.1 billion, getting iManage in the deal.
But the Autonomy acquisition turned into a fiasco for HP due to alleged accounting improprieties by Autonomy, resulting in both litigation and a write-down of nearly $8.8 billion of the purchase price.
Amid this turmoil, the iManage leadership was able to buy out the company and its business from HP. Cofounders Araujo and Mohammadi returned to top leadership roles as CEO and chief scientist, respectively, and set to work on reinvigorating the core on-premises product and relaunching its cloud product, which it did in 2016 as iManage Cloud.
Since then, it has made several key acquisitions, including of UK artificial intelligence company RAVN Systems in 2017 and last year of legal transaction management company Closing Folders.
Still management owned, the Chicago-based company is a market leader for document management, with more than 750 employees and 2,500 law firms using its platform, according to its website, including many of the world’s largest firms.
Last week, just ahead of the start of ILTACON, Araujo sat down with me via Zoom for a conversation about where the company is today and its roadmap for the future. What follows is a transcript of our conversation, which I have edited for clarity, concision and continuity.
AMBROGI: Maybe you can start by giving an overview of where you are today. What are the highlights?
ARAUJO: Sure. I’ll break that up into two parts. One is the commercial update and the second is what are we doing from an executed vision and an execution standpoint.
In terms of a commercial update, as we started this conversation, what we thought would be a few weeks working from home is 18 months and growing. The irony of it, though, is that iManage is about 70% bigger from revenue standpoint.
AMBROGI: From a revenue standpoint?
ARAUJO: Yes, from a revenue standpoint, we’ve added that much, just over the last 18 months. And it’s primarily based on the strength of our cloud business. Our business has grown 200% in a little over a year, so it’s probably greater if you consider the last 18 months.
AMBROGI: Does that include customers of the on-prem version moving over to the cloud?
ARAUJO: Yes. When we report cloud revenue, it is net new customers as well as customers that may be on-prem that have moved to the cloud. We’ve seen an acceleration there that is probably driven by COVID, driven by remote working, and by this understanding that remote working is not a temporary phenomenon, but probably go to stay in some form – not in exactly the same way as it is right now, but in some form.
So that’s been the big story from a revenue standpoint and a commercial standpoint, but the more exciting bit for me, Bob, as someone that has been in this industry and at iManage since day one, is what impact we’re having in the market. We’ve done some of our largest and most complex deployments over the last year.
These are the likes of Baker McKenzie moving to our cloud globally, Clifford Chance, Shearman & Sterling, Borden Ladner Gervais in Canada, Allen & Overy. And we recently announced, though it’s not deployed, Linklaters, so we close the circle, so to speak, on the Magic Circle. It’s been a very rewarding year, from that standpoint.
AMBROGI: Does that mean you have all the Magic Circle at this point?
ARAUJO: Yes, we have all the Magic Circle at this point. So it’s been a rewarding year and I have to be super thankful to our ecosystem and our employees for their resilience during the period we’ve gone through.
Our decision not to do ILTA was really based on those principles. We know we will miss the social interaction, and we know that there’s some downside, but, at the end of the day, I think the health and welfare of our customers and employees comes above everything else, and it was a very simple decision from that standpoint, given Delta, given, the trends that we saw for positivity in Clark County, we just felt we had to do the right thing.
AMBROGI: I think it was a responsible thing to do, and I think it probably has led some others to reconsider their attendance.
ARAUJO: Yeah. Even though we have not gone to the event, we have changed nothing with our sponsorship, because we know that the organization requires our support at this time, more than ever, and our decision was really based on the health and welfare of the people that come there and go there.
ARAUJO: Getting back to what we’ve been up to at iManage, executing on some of these big projects has been priority number one because the majority of our implementations now are in the cloud, and these are some of the largest, most complex, cloud deployments you can talk about.
AMBROGI: Are you satisfied with the iManage Cloud? I mean, is iManage Cloud where you want it to be, or where do you still want it to get to in terms of your development?
ARAUJO: In this industry, if you’re completely satisfied, you stop, right? You’re never completely satisfied. But I couldn’t be happier with where we are relative to the rest of the market. Our entire application stack – that is, the user experience as well as the administrative and the cloud infrastructure that supports it – is brand new over the last five years. There is not a shred of line that I wrote 20 years back that’s around anymore. What that means is, in terms of security, performance, maintainability, resiliency, it is, I believe, far superior to anything that’s available in the market and anything that can be achieved on prem. So, from that perspective, I’m really, really happy.
Where we are taking it next is bringing in some of the more advanced capabilities that we have matured over the last several years, particularly in the area of knowledge and AI, and making those more easily available in our cloud architecture. What that allows a firm to do is say, “Okay, now I moved to the cloud, and now what?” And the “now what” is that now you can leverage your content, your years of history, that is trapped in your documents, and now you can leverage it in a much more powerful way. That’s the area that we are focused on over the next six, 12, 18 months.
AMBROGI: That’s the “making knowledge work” principle that the company talks about?
ARAUJO: Right. That’s one of the principle things that we worked on – going back to the market, doing the most rigorous market research we’ve done in our history. The purpose of that research was to understand something very simple: Why is it that customers invest in tech like ours? Because sometimes the outcome that customers are seeking is lost because they’re focused on the task. The task is document management, email management, records management, but the reason they invest in it is because they want to make knowledge work.
Finding that vocabulary, in a way that would resonate and would bring together everything that iManage has done and is doing over the last several years, which is that we’re not just a repository anymore, right. We have big investments in governance and in workflow, we have big investments in AI and knowledge, and making knowledge work brings all of this together because it’s the purpose of why we exist, the purpose of why customers buy technology and invest in technology like ours in the first place.
It was very big. It involved literally hundreds of conversations, over a thousand customers, and at the end of it, it was three magic words, making knowledge work. It’s informed not just our messaging and our story, it’s informed our strategy, what is it that we prioritize. And it’s informed our outlook, as we think about our organization. Once you understand the outcome that a customer is looking for, you don’t celebrate internally, you don’t celebrate until the customer has achieved that outcome, and that’s a good thing for the customer, and that’s a good thing for iManage. Does that make sense?
AMBROGI: It makes perfect sense. So, how does that inform your roadmap going forward from here? With that broader vision of making knowledge work, how do you continue down that road?
ARAUJO: There are four areas, I’d say. The first is what we call user experience and workflow. For the kinds of things that we do, we touch end user workflow significantly. If end users don’t adopt the system, there’s no point. So we’ve made a significant investment in user experience, and it’s really paid off, particularly during COVID, when you don’t have access to the same classroom training. These deployments that I talked about, in one of them, we moved over about 10,000 users over a weekend. That would have been impossible in the previous days of the technology that I wrote, because the phones would have been off the hook asking, How do I do this? How do I do that? I believe the reason we were able to do 10,000 users is the teams, both the customer team and our team that worked with them – and our partners were awesome. But the work that we put into user experience really paid off and you could have users come in on a Monday morning and go to a new system and figure it out, because we had done the design work upfront and the thinking and the taking out of the kinks upfront. So, a big focus on user experience.
I also said workflow. Workflow for us is looking at very specific areas where law firms can optimize productivity and efficiency. Last year, we announced the acquisition of Closing Folders. That’s gone really well, I couldn’t be happier with the team, couldn’t be happier with how that particular application is being adopted by customers almost organically. Closing Folders automates the legal transaction management process. If you are a transactional lawyer, particularly if you’re a transactional associate, it does magic in terms of building signature packets and distributing them and assembling them back together and building a closing binder. It’s a process that clients hate to pay for and associates hate to do, because it’s boring work, but it’s important. So you’ll see us do more in that workflows area.
Another workflow that’s in beta right now, that we will be releasing probably towards the end of the year, early next year, is called iManage Tracker, and that was developed organically, that’s not an acquisition. What Tracker does is it automates the most fundamental of legal workflows, which is the checklist. It’s the starting point for, “What do I do to tackle this particular matter?” Most people use Post-it notes. If you’re really sophisticated, you use Excel or tables in Word. We built an application around it that’s integrated into the document management experience.
So as you’re completing documents, you can check off your checklist, and everyone on the team knows exactly who’s got the ball on which document, where we are, and what the deadlines are. We think it takes a lot of stress off the people that are managing the matter and off the team that needs to know as it’s working on a complex matter. The Tracker applies not just with transactional lawyers, but we’ve seen strong resonance across different buyer groups.
I’d say workflow and user experience are probably bucket number one. Bucket number two for us is what we call the ownership experience, which is how do we make owning what iManage does cheaper, faster, better. It’s primarily the work that we are doing in our cloud, but also the work that we do in administrative tooling, so that the system is easier to manage. In our cloud, for example, all of our customers are on the latest version. And our cloud today does not require downtime to do an upgrade. You can be working and there’s an upgrade going on, and you refresh your browser and you’ve got the latest version. What that means is, we can deliver security patches, we can deliver new functionality, and since you don’t have a scheduled downtime, you’re more likely to be on the latest version. That’s an example – a real, tangible example – of how we’re advancing the ball with respect to ownership experience, making the ownership experience better.
The third pillar for us is security and governance, for obvious reasons. And that’s where we’ve invested in this in a more focused way over the last four to five years, with what we call a Zero Trust model, which is the security framework that we use in our cloud. It is the best way to deal with certain attack factors, particularly attacks that go against the data directly on the backend. And then we’ve invested significantly in what we call need-to-know security, which allows you to segment your data and manage that segmentation more easily so that, if one user’s credentials are compromised, you’ve not sold the farm, so to speak, because the data is segmented.
The third area of security and governance, which is very exciting, is the work we’ve been doing with Microsoft and Azure. It’s around leveraging some of the huge investments Microsoft has made in security, but that have been hard to leverage. For example, Azure Conditional Access, which allows you to manage more effectively who can access your data in the cloud, and which IP addresses, which machines. And then Microsoft Information Protection, which protects your documents even when they leave your networking and firewall. So when, if I email you a document, if you don’t have access to it, you will not be able to see it. That tech has been around, but very hard to really access, and we are looking at bringing that to market, in a way that’s much more consumable by small firms and large firms.
Then the final focus is on how do I mine my data for insights. I’m negotiating a clause and I’m pretty sure my firm has done this 100 times in the last one year. What position did the opposing firm take in the last 10 times that we negotiated. The answers are in our system, just very hard to get to, and the work that they’re doing with knowledge will allow us to answer those questions more and more effectively.
AMBROGI: With so much going on involving AI-driven contract systems out there right now, do you see yourself making any further acquisitions to help you build out more of that AI functionality around analyzing what’s in documents and mining that data?
ARAUJO: The bits that I talked about are technologies that we’ve been developing, building on IP that we acquired from RAVN. We are applying it at much larger scale than has been done in the industry before. When you apply this tech at DMS scale, it requires architectures that are different. There is great work that’s been going on in the AI field by some really good companies out there. We never put acquisitions off the table, but it wouldn’t be for this use case that I described. There are probably other use cases that might be interesting for us.
AMBROGI: I believe you’re still a management-owned company. Are you thinking of looking for outside investment at any point, or are you thinking about even putting the company out and going public?
ARAUJO: We value the structure that we have right now because it’s aligned what’s best for all of our stakeholders – our customers, our shareholders, and our employees. We are profitable. We’ve got positive cashflow. Our big constraint is not cash, our big constraint is talent, and how do you get people with the right cultural fit and the right intellectual fit and that are passionate about this particular market. You can expect us to be active on the M&A front – that is acquiring – as we go into 2022, along those pillars that I talked about. But at this time, we have miles to go before we sleep, to quote Robert Frost.
AMBROGI: I know that our time is up. Is there anything else that you wanted to talk about that we haven’t hit on yet?
ARAUJO: The one thing that we get questions a lot from customers in the briefings that we’ve done with them is what they can expect from the Microsoft relationship. As you know, we announced a significantly deeper relationship with Microsoft. It’s certainly been very good for us, and I think it’s good for the customers, and involves a few things. One is it’s our embrace of Azure globally. What that does is it allows us to focus far more on the application layer rather than on the infrastructure, from a SaaS perspective. So I think you will see an acceleration in the roadmap as a result of that over time, because we’ve got more engineers focused on the applications rather than the infrastructure.
The second area where that cooperation, I think, is going to play dividends is the deeper integration with Teams and with Office 365. It’s a very seamless integration with Teams, and Teams has gotten very popular, particularly as remote working has taken hold in law firms.
The third area is in security – enabling firms to leverage investments that Microsoft has made in security, whether it is for customer-managed encryption keys, Microsoft information protection, so that you can encrypt documents when they leave the DMS, or things like Azure conditional access, which gives you a better control over who can access your information in the cloud.
We tend to be two of the largest vendors for most of our customers, so us working together is only good news for our customers.
AMBROGI: Thank you. I appreciate your taking the time this morning.