Mercury Interactive To Buy Appilog

Mercury Interactive Corp., an application-monitoring software supplier, is acquiring privately held Appilog Inc. for $49 million in cash in a deal expected to close by early July.

Mercury will take Appilog's IT system discovery and mapping software and incorporate it into its own product line. Appilog's ability to model a company's IT infrastructure, such as its servers, routers, and running applications, will be added to Mercury's monitoring tools to enable them to pinpoint where changes have occurred in the infrastructure, says Christopher Lochhead, chief marketing officer. Small changes to the infrastructure occur "on a daily basis," says David Murphy, VP of corporate development at Mercury, and often have unforeseen consequences. Examples are software patches made to an operating system or the reconfiguration of a router or firewall. Thousands of such changes occur daily in a large company and are a likely source of a performance problem in a running application, says Murphy. "We see broad applicability of Appilog in our product line," says Lochhead, but the first Mercury product to have it incorporated will be Business Availability Center--a management console system that applies a business metric, such as a service-level agreement, to performance statistics to make sure running applications are meeting user needs.

Mercury, which used to be known as an application testing and monitoring software firm, now describes itself as a business-technology optimization company. Optimizing systems so that they perform at high levels of production without interruption is a growing market. It is projected to grow 20% a year from $3.3 billion in 2004 to $6 billion in 2007, according to a Yankee Group survey released April 15.

Asked if the addition of Appilog discovery and mapping system will increase the price of Business Availability Center, Lochhead said it will, but that the acquisition needed to be completed before he would be in a position to say how much. It is sold on a subscription basis for $30,000 a year and up.

Other elements of Mercury's product line include Quality Center, Performance Center, and Resolution Center. Quality Center provides a way to test software quality before the software is put into production. Performance Center tests to make sure a piece of software can scale to the level of use for which it was designed. Resolution Center is a detection and alerting system that spots slowdowns and helps pinpoint their cause.

Resolution Center was upgraded in March to identify the nature of a problem and call on the expertise most likely to solve it. The center is intended to minimize the "all hands on deck" mentality where expertise in servers, networking and database is called upon when a database application is performing poorly, Yoav Banin, director of Resolution Center product marketing, said in an interview at the time. The resulting investment in man hours drives up the cost of the problem without necessarily bringing about its resolution any faster, he said.