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After a Merger, Time to Digest




March 15, 2007 — 
In the world of application life-cycle management, larger players such as Borland Software, IBM Rational and Serena Software have scrambled to acquire best-of-breed companies with the objective of offering full ALM suites. Hewlett-Packard’s acquisition of Mercury Interactive has been in the spotlight recently, and although it’s known more for selling printer supplies than software, HP dropped the Mercury brand name on the assumption that its own brand still carried weight with enterprise customers.

What happens, exactly, when the door to the conference room slams shut and high-end business executives put their heads together to come up with the best method of integrating an acquired company? Many factors, including the need for proper synergy between products and technologies, the financial impact to the companies, and the amount of disruption to customers, merit consideration.

The best path toward success in ALM integration, according to analysts, is to have a strong understanding of the market. “The key to a strong integration is a holistic understanding of the market needs, requirements and the creation of a synergistic environment to effectively serve the needs of the customer,” said Voke research group founder Theresa Lanowitz.

Jason Bloomberg, senior analyst at ZapThink, offered another perspective. “The key to successful integration is to stop thinking in terms of integration altogether. Instead, think in terms of architecture. Integration should be a byproduct of service composition in the context of SOA. It should be something the business does with the capabilities and information at its disposal—not something IT has to do before the business can get any value out of the technology.”

In order to integrate the products being acquired with Mercury, HP based its plans around Mercury’s original “Center” product lines, creating nine Software Centers focusing on different customer bases. This new perspective showed “that there was very little overlap in the HP and Mercury products. In instances of overlap, we have a plan to converge on the best solution for the customer over the next 18 months, based on the size of the installed base, maturity of the product platform and technical competitiveness,” said Robin Purohit, vice president of products for HP.

Acquiring Mercury gave HP added capabilities in management software, including the ability to measure and monitor the performance of applications through test and development software and tools. Mercury’s application life-cycle management solutions will be integrated into HP’s OpenView portfolio, which consists of network and systems management products.

Lanowitz argued that existing HP customers should view the acquisition as a positive step.

“HP now has more to offer existing software customers in terms of application-specific technology, instead of just network-specific technology,” she said. “Existing HP customers are more than likely part of the IT operations organization. Given their organizational placement, roles and responsibilities, they will be impacted by integration of Mercury application management products and possibly the IT governance offerings.”

Lanowitz pointed out that HP has not revealed how it is going to grow its ALM product lines to enhance offerings for quality assurance customers, which she claimed is arguably its largest customer base. However, Jonathan Rende, vice president of products for HP Software, said that HP will be increasing investments to integrate existing quality assurance and performance validation businesses “upstream” to strategy solutions such as those used in project management, and “downstream” to operations solutions such as service and infrastructure management.

HP IN ‘UNIQUE POSITION’
“ALM vendors and solutions historically take a developer-centric approach to the life cycle,” Rende said. “HP Software now is in the unique position of redefining ALM to focus on quality through further investment in this core strength and then expand to other phases of the life cycle.”

Nevertheless, Lanowitz seemed to remain a bit skeptical of the HP-Mercury lashup. As a new fish in the ALM pond, HP might have a difficult time keeping up with some of the faster schools.

“The application life-cycle market is competitive,” she said. “The players are established, and the enterprise is looking for strategic partners to form their application life-cycle ecosystem. HP does not have the luxury of time to sort out the Mercury acquisition. Given that HP has little understanding of the application life-cycle market and enterprise software in general, it will be difficult for the spirit of Mercury to survive in the larger entity of HP.”


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