Mercury - rising or falling?
News came over the wires last night of HP's agreement to acquire Mercury (Interactive Corp) - in a transaction worth roughly $4.5 billion, which equates to HP paying a 33% premium on Mercury's current stock price.
HP's CEO, Mark Hurd, has obviously been bullish about the acquisition's potential to create an IT management vendor powerhouse. CNet's news.com
reported Hurd as saying
"I am confident that this transaction means HP is building a software business that must be reckoned with"
and
"[the Mercury acquistion helps us in] building an ERP (enterprise resource planning)-like capability for the management software market."
On paper, it looks like a great match. There's very little product overlap, and the resulting product portfolio will certainly look pretty meaty - enabling the combined company to monitor and manage network and hardware infrastructure, application performance and availability, and even software project portfolios. Mercury's growing hosted services business will doubtless provide some interesting opportunities for growth within HP's services business, and of course the recently-acquired Systinet also brings some important SOA lifecycle management capabilities to the mix, which complement HP's investments in identity management and web services management. We predicted that HP might look to Mercury - see our
April report (page 7).
But.
Hurd's reference to "ERP for IT management" is about creating an application suite which helps customers wanting to run their IT operations like standalone businesses - managing resources and projects, maximising quality and improving processes, balancing supply against demand, analysing service delivery metrics, and so on. It's a theme that is increasingly visible in the strategies of all the major systems management vendors - notably IBM, BMC, and CA. It's also now part of HP's story - and it takes HP well outside its infrastructure management comfort zone. It's a concern because ERP has hardly been a huge success, and because we suspect that Hurd is getting caught up in his own rhetoric, which is focused too much on investors and not enough on customers.
This is a major, major software acquisition for HP and the company's track record in stepping outside its comfort zone is shaky. Recent small-scale acquisitions (Peregrine, Talking Blocks, TruLogica, Trustgenix, AppIQ, technology from Baltimore) seem to have worked out OK - but Mercury is a seven-course gourmet blowout in comparison to these light snacks (even the Peregrine acquisition was only 10% the size of this one). Mercury gets involved in an awful lot of business-focused work that HP just isn't used to doing, and this may be too much of a stretch.
Like we always seem to end up saying in these situations (
Adobe-Macromedia;
Sun-Seebeyond;
Attachmate-WRQ) we're going to hold off from cheering this one until HP can prove that key Mercury personnel - and, of course, customers and partners - stay on the ship. It would be darned easy for Mercury to become
Bluestone MkII.
One last thing: if the "IT resource planning" vendor theme continues - our bet is that
Compuware will be the next on someone's shopping list.
Xen and the art of Microsoft virtualisation
Yesterday was a big news day for
XenSource, the company founded by the originators of the open source Xen hypervisor, which is providing the commercial
XenEnterprise solution for the deployment, provisioning and management of virtualised environments based on Xen:
- Novell announced worldwide availability of SUSE Linux Enterprise 10 which embeds Xen
- IBM said it will be supporting Xen as part of its Virtualization Engine bundle of virtualisation-related products
- Microsoft and XenSource announced that they will be cooperating on interoperability between Xen-enabled Linux and the Windows hypervisor (scheduled for release after Windows Server Longhorn).
Whilst all three announcements clearly highlight the momentum behind the Xen hypervisor, it's the last one which particularly caught my eye. The press release emphasises that this collaboration aims to "
build bridges across the industry" and deliver "
Interoperability by design" but I see another motivation for Microsoft, which has far more to do with hard-nosed competition than touchy-feely interoperability. Why? Look
here: $157 million revenue and 73% year-on-year growth for VMware as part of EMC's second quarter.
Microsoft recognises that server virtualisation is becoming an important initiative for many organisations and, more significantly, that VMware clearly has the momentum and the mind share. The company must know that its current offerings just don't stack up - particularly when it comes to the management tools which are what, and will increasingly, differentiate virtualisation solutions. And of course, it's almost a year before the Longhorn server wave gets under way - and longer before customers begin to deploy. Not forgetting, as well, that virtualisation is a key foundation stone of the Dynamic Systems Initiative.
Microsoft is threatened on many fronts and I think the company would rather have Xen-enabled Linux running on Virtual Server (Windows can already run on Xen by virtue of existing colloboration, which includes licensing of Microsoft's VHD virtual machine file format by XenSource), than see it running on VMware.
All of this competition can only be a good thing for organisations considering a virtualisation initiaitive. It's important, however, not to let all of these machinations about the underlying virtualisation engines obscure the bigger picture. The value of server and desktop virtualisation can only be fully realised with effective management and monitoring solutions which also deal with other resources - storage, network, applications (SOA anyone!) - and allow those resources to be delivered in a way which reflects business process priorities.
IT-business alignment: it's the process, stupid
...to paraphrase something that some US President or other might possibly have said.
CBDi analyst Richard Veryard
responded to my
recent blog entry on the validity of MWD's strapline ("advising on IT-business alignment).
I think he partly agrees, but I also think he misses something fundamental about the IT-business alignment thing. It's my fault: I didn't make it clear, at all, in my previous post.
Alignment is a process of refinement, not a journey with a fixed destination.Richard says:
But the difficulty
[with my "three aspects to alignment" perspective]
is that alignment connotes synchronization and inhibits innovation. Business and IT simply don't work to the same timetable. Alignment is symmetric - if you align A to B, this means B has to be aligned to A. That's okay if you don't ever want to change your business strategy (which many old-fashioned IT strategy planning methods assumed) or experiment with new forms of IT in advance of any business requirement. But it's hardly appropriate for the dynamic volatile world that IT vendors and consultants claim to support.When we talk about alignment - and this is a critical part of our forthcoming book as well as the stuff we do in our day-jobs - we're talking about the
process of bringing IT closer to how the business works. That's subtly but profoundly different from transforming IT to a "fixed point". Yes, there is an attempt at synchronisation here: but it's an attempt to synchronise movement, or at least minimise latency between movement, of business and IT. The core is an attempt to synchronise the process of change management, if you like.
This is explicitly brought out in the third of the three aspects: aligning IT change with business change. Yes, as Richard points out,
"business and IT simply don't work to the same timetable". That's the point: aligning IT with business is all about the process of bringing these two timetables closer together. Mostly from the IT perspective, as it's business which has to have the last word.
In most organisations, though, there's work to be done in understanding what a "timetable" even looks like, metaphorically speaking, before anything else can happen...
New podcast episode: on user-centric identity and EMC's shopping habits
In this episode: Neil Ward-Dutton chairs. Neil Macehiter gives an explanation of the concept of user-centric identity, and talks about the wave of activity that's currently going on in this area - including Projects Bandit and Higgins, and commercial efforts from Microsoft and Google.
Jon Collins then picks up the mic and gives his take on EMC's acquisition of security technology provider RSA. Is EMC the Imelda Marcos of the IT industry?
Here's the
podcast audio: alternatively you can
subscribe to the feed.
As always: let us know if you have any feedback or suggestions for topics to cover in future - or alternatively, if you'd like to be interviewed on a future podcast.
IT-business alignment - is it just fluff?
An anonymous commenter on my recent "
SOA petition" post here proffered:
Could you drop the "IT-business alignment" waffle as well? That would make things just perfect.
We've been aware for some time that the term "IT business alignment" is in danger of becoming yet another one of those "look at me, I'm a strategic thinker" platitudes, tossed casually into conversations to make peoples' heads nod in meetings. And yes, it did cross my mind, given our
increasingly high-profile stance against gratuitous buzzphrase invention, that we might be
hoist by our own petard on this one.
But we're going to stick by our strapline: "advising on IT-business alignment". Why? Because that's what we aspire to do, and we can't find a succinct way to say it using other words. And also because we're not just throwing those words around: we're actively trying to educate ourselves, our customers and industry in general about what it *means* to optimise IT within businesses, for maximum benefit to those businesses. And, most of all: because "alignment" is what businesses are telling us they want from IT.
At the very highest level, at MWD we explain the challenge and the process of alignment in terms of improving the *relationship* between a business and its IT provider organisation(s). That means we're not talking about the problem or the solution in technology terms. Why? Because the real problems in real organisations which lead to IT failing to deliver business value aren't about technology: they're about organisation and culture.
There are three elements to the story:
- aligning IT investment with business strategy
- aligning IT delivery with business priorities
- aligning IT change with business change.
We strive to bring all our research and consulting back to a central question: "how does this improve the business value that organisations can get out of their IT investments?". Our very
first report attempted to put a stake in the ground on this point, and we've been refining and building on our ideas ever since.
We know we're not alone in thinking this is an important topic: we (along with Dale Vile at our partner
Freeform Dynamics) have been contracted by Wiley & Sons to write a book about it...watch this space. It's shaping up to be a really fun project.
On that note, if you have practical experience of the challenges organisations face in achieving this objective and ways of addressing them then we would love to talk to you.
