Analysts applaud HP acquisition

Hewlett-Packard Co. is set to beef up its software offerings with its planned acquisition of Mercury Interactive Corp. Analysts say the US$4.5-billion deal will push HP’s OpenView management suite to significantly higher levels, giving users greater insight and control of the applications that run on their networks.

By adding Mercury’s Business Technology Optimization product line to OpenView, HP will offer new tools that address service-oriented architectures, application dependency mapping, agentless monitoring and IT service management.

An established player in lower-layer network management, OpenView will be rounded out with a fuller set of advanced features that monitor the application layers of IT, says Dan Twing, vice-president of research and consulting for Boulder, Col.-based Enterprise Management Associates Inc.

The analyst notes that while OpenView may be considered a useful product, HP has hardly been regarded in the same league as software makers like CA or IBM. But that’s a perception that’s about to change, says Twing. “Mercury really strengthens HP’s portfolio around SOA, application development and service management,” he says.

Mercury commands a strong position and strategy around service-oriented architecture, since the company’s acquisition of Systinet Corp. in January, and this in turn gives HP a solid foothold in the fast-growing SOA market, says Twing. Systinet’s products include a SOA registry, policy manager, contract manager and interoperability framework.

HP Canada’s John Moore says Mercury will complement HP in the areas of IT governance, application testing and delivery, and optimizing, automating and monitoring the application processes.

He adds that the landscape of enterprise IT management is changing from what used to be a lot of niche suppliers, and the Mercury acquisition will give customers a broader selection from one supplier.

“More companies are asking to be able to purchase their management [tools] from one supplier so they can be integrated,” says Moore, regional director of software sales for HP (Canada) Co. in Mississauga, Ont.

He says HP plans to invest heavily in this space. “Mercury is the biggest acquisition under new CEO Mark Hurd and he’s saying this is a very strategic area for HP. It’s a strong signal of HP’s commitment to its software business unit as the OpenView family continues to grow.”

A big part of HP’s acquisition strategy is to look at the company’s people, says Moore, and Mercury will bring a high-performing team to the HP workforce. “In a complex, fast-moving environment, we need people who are agile.”

One area where HP is expected to completely dominate the market is around establishing and monitoring service level agreements, says Twing.

According to a recent study by EMA, HP and Mercury were both among the top five in the IT service management market. “With this acquisition, HP has just put [itself] way out front,” he says.

“Between HP’s original business and [its] acquisitions of Mercury and Peregrine (with its service desk software), HP has assembled the biggest book of business in that space.”

According to Twing, HP will also get the market leader in agentless monitoring. He says most of the monitoring capabilities in OpenView are centred around agent-based technology, where a specific piece of software runs with each device on the network and reports back on that device.

Mercury’s monitoring software inspects traffic and interprets application performance more passively.

Twing says using a mix is good. “With agent-based technology, you can drill deeper and you can know more, but there’s overhead in installing that software on every device on the network, getting it all set up, configured and tuned properly.

“Some devices (like print servers) aren’t that critical, you just want to know they’re there and that they’re performing… [so] agentless technology is a more cost-effective way to go.“

Mercury also has a number of tools available in its LoadRunner product that are good for application testing and development, and that’s an area HP wasn’t strong in at all, adds Twing.

Given the large size of the OpenView portfolio, an application testing module is not only desirable but necessary, says Ross Armstrong, a senior analyst with London, Ont.-based Info-Tech Research Group Inc.

According to Armstrong, the acquisition makes a lot of sense for HP, considering the company’s big push to get more OpenView modules into more large enterprises.

“HP wants to radiate throughout its installed base among the Fortune 1,000 companies, hence the rapid growth of the OpenView product set,” he says. “From that perspective, the Mercury acquisition is a good strategic move.”

Armstrong notes that server consolidation and virtualization are leading the abstraction of software from hardware, so having the right management tools to relieve complexity, streamline operations and monitor application performance is rapidly becoming a fundamental requirement. “I think Mercury can really bring a lot to the OpenView portfolio in this regard.”

HP is also quickly gaining a reputation as a software buyer, says Armstrong, pointing to purchases of Peregrine for asset management, Novadigm for configuration management, Select Access for identity management and Consera for workflow management. “Mercury is just another in a long line of purchases.”

But HP is also missing out on a large segment of the market that needs management tools more than other companies because they’re adopting new technologies, says Armstrong.

A number of surveys by Info-Tech have revealed “a huge uptake” in the adoption of virtualization technology, with small and medium-sized enterprises leading the way, he says. “The Mercury acquisition brings the greatest value to existing OpenView customers, but probably not so much for prospective customers. There is currently no OpenView offering for the mid-sized enterprise (unlike IBM’s Tivoli Express), which I see as a missed opportunity.”

Armstrong says the Mercury acquisition likely won’t interest the mid-market because SMEs are “painfully aware” that OpenView is out of their price range. “They will look elsewhere for their virtualization management tools.”

HP’s Moore asserts that OpenView is a much broader market player than only the large enterprise. He says OpenView is used by school boards, hospitals, and wine manufacturers in Niagara. “We definitely do play in the mid-market.”

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