HP’s Acquisition Spree Births IT Automation Suite

A string of high-profile acquisitions may soon pay off for HP, as the world’s sixth-largest software company in the world on Thursday debuted Automated Operations 1.0, its integrated suite for automating IT operations across the enterprise.

The software-and-services suite, which HP calls “one of the key pillars” of its Business Technology Optimization portfolio, integrates applications from HP OpenView with others from Mercury Interactive, Opsware and Peregrine. Those three firms represented the most significant acquisitions made during HP’s frenzied buying spree of the past year and a half.

During Oracle’s OpenWorld conference earlier this month, HP CEO Mark Hurd made it clear that his company intends to strengthen its software offerings. The focus, he said, would be primarily on applications large companies use to manage, store and access all the disparate applications and information they collect in their datacenters.

“We’re really focused on this space,” Hurd said during the conference. “We want to lead in that category. These datacenters are becoming more expansive. We’re focused on network, systems and storage management that’s morphing into a new category that’s similar to ERP in its needs for the enterprise.”

Automated Operations 1.0 includes IT service management, business service management and business service automation applications. The suite’s promise is to eliminate all the time-consuming manual processes required to coordinate corporate data running on heterogeneous applications and architectures within a datacenter.

“We have been aggressively expanding our software portfolio in the last two years to broaden and deepen our capabilities to help customers improve their top and bottom lines,” Tom Hogan, senior vice president of HP’s software division, said in a statement.

The new offering also serves notice to competitors such as IBM and CA that HP intends to make itself right at home in the fast-growing asset management software sector, a market that IDC predicts will swell to more than $1 billion in 2008.

HP’s software sales last quarter doubled from the year earlier, clocking in at almost $700 million. It expects to record more than $2.3 billion in software sales this year and company officials said software represents the company’s fast-growing and most profitable unit.

As a result — and despite spending $4.5 billion and $1.6 billion, respectively, for Mercury Interactive and Opsware in the past sixteen months — HP is signaling plans to make further acquisitions in the near future.

“I think you’ll see continued industry consolidation,” Hurd said during OpenWorld. “Only a few companies, if you went and did an analysis of all the companies, are well positioned financially and technologically to make significant acquisitions. In the end, math wins. Only a handful—single digits—have more than $100 million in cash. We’re going to see more consolidation, not less.”

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