Monday, July 23, 2007

HP Buys OpsWare: An Innovator's Dilemma?

Rumors circulating the valley today proved true: HP offered $1.6 billion to acquire OpsWare, a data center automation firm. HP has been quite savvy in acquiring a number of top players (Mercury Interactive, Peregrine Systems) in the automation space, bolstering its standing in the enterprise software area. But I pose the following question: Will HP be successful in making this marriage work?

Here's why: The combination of Mercury (performance management tools, IT governance and more), Peregrine (IT financial management, and more) and Opsware (IT automated provisioning & process automation) make for a powerful set of disruptive technologies -- that disrupt how data centers are "traditionally" monitored and managed. Those entrenched "traditional" products include IBM Tivoli, CA Unicenter, and HP's own OpenView.

Now, following the Innovator's Dilemma theory, posited by Clay Christensen, large companies will be adverse to adopting newer technologies that would naturally erode/cannibalize their existing technologies, ways of doing business, and cash flows.

Yet, here we have an example where OpsWare (at least would have) come gunning at OpenView with a completely new & disruptive approach to managing and monitoring data centers. But now, OpsWare will be part of HP. So, Will HP have the balls to manage OpsWare to its natural disruptive technological end (and probably make a boatload of money), or, will they find that it erodes the OpenView market and becomes a threat to their existing OpenView base?

Part of me says these guys are smart. I would have combined the same types of companies to create a new IT management platform for the future. (Oh - and prediction: watch this space to see who picks up the next set of disruptive companies like Netuitive and Splunk). However, the other part of me says that HP's data center automation message as-of late has been singularly "Blades". This is simplistic, and surely driven by marketing-program-du-jure.

There's on other chink in the execution of this deal: these acquisitions do nothing to advance HP's own hardware business -- and arguably, push hardware down a level towards further commoditization. What effect will this have on HP hardware revenues?

My theory continues to hold that the next real player in the data center management space has to come from an independent, an non-equipment vendor. That leaves BMC, EMC, or CA. These guys are the only ones truly incented to create a revolutionary management platform that's truly platform independent -- and therefore valuable.

1 comment:

FS said...

Since the acquisition of Mercury Interactive, HP has already begun to make fundamental changes to their software strategy including HP OpenView. Considering the fact that IBM, CA, BMC, and EMC have converged on this marketplace, HP needed to purchase a true server and network management company. Not to mention the fact that Opsware has a long awaited storage management product in the works.

The real question is whether HP can successfully integrate Mercury, Peregrine, and Opsware into a true unified enterprise and datacenter management product to disrupt the likes of IBM and BMC. The press releases and visions look impressive, but the reality is that integrating three or more separate products into a single product without disrupting their respective install base will be a monumental feat. One that is sure to define Hurd’s legacy at the helm of HP.

Also, it is going to be interesting to see the flurry of consolidation that may take place within this market as companies strive to fill the gaps within their product offerings. The giants of the software world are now awake and see the value of true automation to their bottom lines.