OpenView and acquired apps complement one another.
Hewlett-Packards $4.5 billion deal to acquire Mercury Interactive is the right fit for service-oriented architecture, analysts said.
HP, based in Palo Alto, Calif., announced the deal on July 25. HP officials said the move will allow HP to combine its OpenView systems, network and service management software with Mercurys capabilities in application management, application delivery, and IT and SOA governance. Once the acquisition closes in the fourth quarter, the combined companies will create a $2 billion software business for HP.
Together, the OpenView and Mercury product lines will give HP "end-to-end management of the entire IT life cycle," said Mark Hurd, HP president and CEO, on a conference call. "We can build an ERP [enterprise resource planning]-like capability for the management software market."
Indeed, with most enterprise management players emphasizing IT service management, the move could serve to set HP apart in the service-level management/business-service management arena, according to Rick Sturm, president of Enterprise Management Associates, a Boulder, Colo., research and consulting company. "This puts them head and shoulders above everyone else in [that] space," Sturm said. Combining the two companies gives HP a 26 percent market share for IT service management, he said, making the company 55 percent larger, revenuewise, than its next-closest competitor in that spaceBMC Software.
Hurds goal of building ERP-strength management software, coupled with building a formidable HP software business, was enough to persuade him to pay a 33 percent premium for a company that is mired in a stock-option backdating scandal, has delayed its financial reports and is being investigated by the Securities and Exchange Commission.
Hurd said HP did its due diligence and didnt see any liabilities on the horizon.
Meanwhile, Ann Livermore, executive vice president of HPs Technology Solutions Group, said the ability to improve HPs SOA capabilities made the buy worthwhile. "One of the things we love is the SOA management aspect and the application management we get with Mercury," Livermore said. "It was something we needed."
Industry observers said the HP-Mercury marriage is a clear sign that SOA governance is now a major part of the management stack.
Ronald Schmelzer, an analyst with ZapThink, in Baltimore, said the HP acquisition of Mercury makes it "clear that governance and the registry are becoming a key part of companies enterprise architectures, so much so that it makes sense to incorporate those capabilities as part of the overall enterprise systems management and infrastructure."
In particular, SOA is driving many companies to adopt common strategies for governance and management in a world of increasing heterogeneity, Schmelzer said. "The purchase of Mercury goes a long way [toward] meeting these specific requirements because they recently purchased Systinet, and they have significant capabilities for SOA governance, registry and repository, and policy management," he said.
Borland Software, which both competes with and partners with Mercury and also partners with HP, said the deal validates the need for control over processes. "HPs acquisition of Mercury is a strong validation that companies needand will continue to invest insolutions that help them manage their IT investments and ensure those investments are of the highest quality, [that is, testing]," said Rick Jackson, chief marketing officer and senior vice president of products, at the Cupertino, Calif., company.
Whereas Mercury brings that high-quality testing to the deal, HP brings big-business clout when it comes to getting its foot in the door and taking on big implementations, said former Mercury customer David Pinkus in Phoenix. "Since Mercury started with testing software, [theyve] struggled with getting in at an enterprise CIO level for a lot of sales. I think HP is at that level, so thatll facilitate a ton of new ... business for them," said Pinkus.