HP Software develops a sixth sense

When Hewlett-Packard’s Tom Hogan took to the stage at its Software Universe event in Vienna in December 2006, he was very keen to push one key fact: following the company’s $4.5 billion acquisition of Mercury Interactive, HP was now the sixth largest software maker on the planet.

That is a bold claim for a company with few well-known software brands outside of its systems management portfolio. And, although not without foundation, the statement needs some clarification.

HP pulls in roughly $2 billion in annual revenues from the newly combined activities of its own OpenView software unit and Mercury. But to put itself in the software super league, alongside the likes of Microsoft, IBM, Oracle, SAP or CA, the company rolls into the calculation an almost equivalent sum derived from server operating systems, print drivers and the other embedded code it ships with its hardware.

That qualification aside, the boast signals that the Mercury acquisition is just the opening act in the plan to satisfy HP’s software ambitions.

"We're not done [with building the software business]/ HP is dead serious about establishing the leasership position."

Tom Hogan, Hewlett-Packard

The combination of the OpenView line, which provides tools for monitoring and managing the performance of serv-ers and networks, with the Mercury product set of applications and systems management tools will now be known as HP Software and led by Hogan.

The aim is to help “customers align business and IT, manage IT services and automate end-to-end change,” says Hogan – something he terms “Business Technology Optimisation”. That is the mantra it will use to compete more effectively against leading systems management software rivals such as IBM, CA and BMC.

However, the integration process will be another test for HP’s senior management. The aggressive, fast-growing Mercury has a senior salesforce that has historically maintained a high level of customer contact with its major clients compared to HP’s current software team, notes Peter O’Neill, an analyst at IT advisory group Forrester Research.

Certainly the HP Software team has an element of the new about it. Hogan, the division’s head, only joined HP in January 2006, having previously been CEO of content management vendor, Vignette. Elsewhere, there is plenty of evidence that this acquisition is being treated as more of a merger. At the European level, HP’s previous general manager for software, Andy Isherwood, has been replaced by Mercury’s president for Europe, the Middle East and Africa, David Quantrell.

It is also far from clear how much progress HP has made so far in integrating the product sets. Executives were coy about detailing a full roadmap at the Vienna event, and were keen to stress that there was relatively little overlap between the HP and Mercury product lines. However, Ian Curtis, HP Software’s UK director, who has worked on the integration strategy, says that the focus has been to first concentrate on integrating those tools that are capable of building “linkages between different management tasks”, before moving towards the goal of an integrated, end-to-end IT management console.

HP will need to articulate a compelling case for those plans among its customers if it is to meet its stated aim of making the software division a formidable competitor in its own right. It may also have to make further acquisitions, notes Forrester’s O’Neill. “The current status of being just another business unit within the servers, storage, and services group does not give the right message to the market.”

That is HP’s attitude too. “We're not done,” said Hogan at Software Universe. “HP is dead serious about establishing the leadership position in the markets in which we serve.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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