HP buys CIO access with Mercury deal

Why did Hewlett-Packard plunk down $4.5 billion for Mercury Interactive? Two words: Adaptive. Enterprise.

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That long-standing HP initiative purports to link IT assets directly to business value. Until now, HP could only make this connection at the network and systems level with OpenView. With Mercury’s software, it adds hooks into application monitoring and portfolio management, which are key technologies for enterprises that want to tie technology resource allocation to business outcomes.

Thomas Hogan, HP’s senior vice president of software, told InfoWorld that Mercury’s software portfolio and project management wares fill a critical gap in HP’s product line. “It gives us access at a strategic level to the CIO. Instead of being viewed as a killer server company and a killer printer company, now we’re engaged at the CIO level to talk about running his organization as a business and optimizing business outcomes,” Hogan says.

Mercury CMO Christopher Lochhead says the Adaptive Enterprise and Mercury’s BTO (Business Technology Optimization) initiatives are different sides of the same coin. HP handles management and monitoring of systems and network assets. Mercury engages in parallel efforts with software. “We already have customers who have integrated the OpenView and Mercury dashboards,” he notes.

Fair enough, says Forrester analyst Carey Schwaber. But that vision doesn’t encompass Mercury’s strength in pre-deployment application QA testing. With the acquisition, she sees a risk that pre-deployment testing will fall through the cracks. “It will definitely require a mind shift on HP’s part to start thinking more about testing,” Schwaber says.

Mercury’s Lochhead counters that, although it’s too early to discuss the details of merged product lines and services, application testing is integral to the companies’ shared vision because business stakeholders already use the test phase to check whether they have received the functionality they demanded.

The big question is whether HP is capable of succeeding with software at any layer higher than that of OpenView. Last week, HP CEO Mark Hurd told analysts that software can be one of HP’s “crown jewels.” After a long line of HP software fiascos, including the failure to capitalize on its eSpeak Web services innovations, the squandering of Bluestone middleware and its excellent app server technology, it’s anyone’s guess how big that chance might be.

It all comes down to execution. If HP can integrate Mercury’s portfolio, it’s a huge win that will breathe life into the Adaptive Enterprise pitch. If the company can’t digest Mercury, well, with a $4.5 billion on the table, HP can’t afford to lose this time.