HP Streamlines Its Business, Augments Software Offerings

Hewlett-Packard took a couple more steps along the road toward reinventing itself last week, striving to become an easier company to do business with and augmenting the capabilities of its OpenView management platform by acquiring Peregrine Systems Inc. in a $450 million deal.

To make HP great again will take "more than competitive costs," Hurd said last week. Photo by Jason Lee/EPA/Landov

In a speech at the Oracle OpenWorld conference last week, HP chief executive and president Mark Hurd, who has been spearheading a transformation of the company since replacing former CEO Carly Fiorina in March, admitted the company had become too complex and difficult to work with. Hurd said HP will be aligned behind three efforts: creating technology, selling and marketing products and services, and servicing products. "To make HP a great company once again, we need more than competitive costs and operational efficiency," he said. "We're in the process of assessing and refining our growth strategy, and the same concepts that were behind our operational changes will be at work here: simplicity, focus, alignment, and execution."

Hurd's goals and the Peregrine acquisition, as well as a smaller acquisition of AppIQ Inc. also unveiled last week, seemed incongruous to some. HP's and Peregrine's software overlap in areas, and nearly half a billion dollars is a significant price for a company two years removed from bankruptcy with a current annual revenue run rate of less than $200 million.

Not so, says Todd DeLaughter, VP and general manager of HP's management-software business. The Peregrine acquisition will help HP fill a "critical gap" in its portfolio of asset-management software, allowing it to create management platforms that "give the keys of IT software back to the CIO," he says.

HP, of late, has slipped behind key competitors in IT management tools, such as IBM Tivoli and Computer Associates. In the midst of reducing its employee base by about 10,000 workers, HP will add all 700 product-development, sales, and marketing employees at Peregrine to its ranks, DeLaughter says. The first phase of product integration will take place after HP closes the acquisition in three to six months, with more comprehensive integration a year to 18 months away.

Some view the acquisitions as a "me-too" reaction to acquisition fever in the industry, and HP competitors see a long road ahead to creating a complementary mix between HP and Peregrine. "HP has to reconcile a set of strategies it has been trying to promote for the past six months with a set of strategies from Peregrine. That will keep them behind the power curve," says Jim Grant, VP and general manager of BMC Software Inc.'s service-management business unit.

With the addition of AppIQ, a provider of storage-area network management and storage-resource management software, HP believes it can develop single products that address both storage and server requirements within an IT infrastructure.

HP has been expanding the scope of its OpenView software and services. Earlier this month, it unveiled plans to simplify virtualization of its servers and related products, and last week it revealed an industry initiative aimed at tightly coupling OpenView's Business Process Insight software with business-intelligence software from four industry partners: Business Objects, Cognos, Hyperion Solutions, and SAS Institute. Those vendors are expected to introduce products by the end of the year that use Business Process Insight to provide real-time and historical views into business processes.

HP also added an IT Service Management Express Pack to its Consolidated Service Desk, combining OpenView software with best practices. Also new is a multitier consulting service that ranges from management workshops to in-depth assessment with multiple face-to-face interviews and detailed data-gathering exercises.