The acquisition, scheduled to close by the end of September, would provide software to enhance HP's Web Services Management Framework and further the company's goal of helping customers tightly integrate IT with business objectives. Talking Blocks would act as a management fabric across all components of HP's Adaptive Enterprise strategy, accelerating their time to market, says Al Smith, chief technology officer for HP's Web Services Management Organization. HP didn't disclose the value of the all-cash acquisition, nor did the company say how many employees would move from Talking Blocks to HP.
More specifically, Talking Blocks would augment HP's OpenView management software, which gives IT administrators "immediate knowledge of what's going on, before there's a problem," says Nora Denzel, senior VP of HP's Software Global Business Unit. "Talking Blocks now gives OpenView more visibility not only into the IT infrastructure but into the business as well."
Talking Blocks service-oriented architecture and Web-services management software could also be used to develop and manage Web services that interface with HP Utility Data Center to dynamically change an IT infrastructure based upon business needs. UDC is a combined hardware and software platform that forms the foundation of HP's Adaptive Enterprise utility computing strategy.
The proposed acquisition, which doesn't require shareholder approval, should be well received by HP customers. "HP's customers are using Web services for mission-critical systems," says James Philips, chief strategy officer for Actional Corp., a rival of Talking Blocks in the young Web services management market.
ZapThink, a Web services and XML-oriented research firm, estimated that services-oriented management will grow as a market from $30 million in 2002 to $9.2 billion in 2007. It's no surprise HP has set its sites on a market segment poised for such dramatic growth. HP "has been active on the Web Services Distributed Management technical committee of Oasis, an industry standards consortium, and has proposed a standard way of exchanging information [using Web services]," says Ed Horst, VP of marketing for AmberPoint Inc., another Talking Blocks competitor.
The acquisition also would turn up the heat in the utility-computing market. HP and IBM are on parallel paths when it comes to utility computing, with Sun Microsystems falling behind, says Judith Hurwitz, president of analyst firm Hurwitz & Associates. HP and IBM are looking to evolve enterprise computing into an automated utility, and both are doing this by acquiring key technologies.
HP and IBM are proposing automated, proactive management software as part of their utility computing strategies. "If something is going to happen next week because your application is growing 10% faster than you expected, you'd really like to know that beforehand so you can prevent an outage," Hurwitz says. "A process-manufacturing organization [for example] can't go down because it's run out of disk space."
Although the market for utility computing is still small, some analysts say it's poised for growth and that Web services will play an integral part in the development of IT utilities. Many companies, particularly those in the financial-services and process-manufacturing industries, are running composite applications that originate in different locations but must be managed as a whole. IT departments no longer have the luxury of being able to react to changing business demands, Hurwitz says. "They're being driven by customer requirements to become utilities."