HP Acquiring Two for Automated IT

Hewlett-Packard Wednesday moved to fill what analysts said were major gaps in its management software strategy by inking definitive agreements to acquire automation technology companies Novadigm and Consera Software.

Palo Alto, Calif.’s HP has offered to buy Novadigm for pay $6.10 in cash for each outstanding share of Novadigm common stock, making the deal for the Mahwah, N.J. company worth approximately $121 million. Consera, of Bellevue, Wash., is a private company and HP refused to issue terms of that purchase.

What HP officials did say is that the assets of both purchases would work together to significantly bolster the company’s ability to offer utility computing under the broad “Adaptive Enterprise” strategy for aligning IT to meet business needs that change at a moment’s notice.

Rivals IBM, Sun Microsystems, Computer Associates and VERITAS are in various stages of similar “utility computing” strategies.

Nora Denzel, senior vice president of HP Adaptive Enterprise, said on a conference call that both companies would add automation capabilities to the HP OpenView software portfolio to provide a more “unified” structure for customers’ IT environments.

“Management software is crucial to customers who want to be more agile,” Denzel said, and provided an example to back her claim. “HP makes 500,000 IT changes per week, including those for pricing information and government regulations.”

“In many environments, IT changes are done manually,” Denzel continued. “IDC estimates that companies spend nearly $174 billion on ongoing operations and management of their existing IT infrastructure. Management software can automatically make these changes.”

To be sure, a big complaint has been the time IT workers must spend going from server to server patching security issues that crop up in the software nestled in the data center. HP is looking to take the work out of the human’s hands.

Denzel took time to explain the relationship Consera and Novadigm would play within OpenView, where they will operate as separate modules that can be used separately, or together. Comparing the companies to components in a car, the executive said Consera serves as the “cruise control” to manage error-prone IT tasks without human intervention.

Novadigm, she said, will “accelerate,” or provide performance adjustments for the data center as “traffic,” or data center request volume gets heavier. OpenView can monitor both pieces of software within a data center.

“Management software is the next big battle ground,” Denzel avowed, noting that IDC has projected worldwide management software revenues of more than $10 billion by 2007.

In broad strokes, this approach is similar to chief rival IBM’s e-business on-demand strategy to feed customers computing resources on the fly. Sun Microsystems, VERITAS and Computer Associates are other vendors’ eyeing plots of land in this space.

“HP’s move to combine Novadigm, Consera and OpenView is the next logical step in its journey towards helping enterprises become more adaptive and efficient,” said Rick Sturm, president, Enterprise Management Associates in a statement. “It should give HP a significant advantage against competitors.”

Consera is expected to close within 30 days, with Novadigm closing in the next few months. Novadigm and Consera products will be used across HP’s technology, customer and consulting groups under the global business software division.

HP began its quest to manage customers’ data centers in earnest six months ago. The purchases of Consera and Novadigm are the fourth and fifth companies HP has moved to acquire since announcing that Adaptive Enterprise would be the key to the company’s success in corralling customers’ data centers.

In September 2003, HP acquired both Talking Blocks for Web services management and Baltimore Technologies’ Select Access business for identity management. In November 2003, HP acquired Persist Technologies for information lifecycle management.