HP Incubates Opsware

HP Software’s “Extreme Makeover” took another step at the end of last week when it closed the Opsware deal. Since the deal was announced almost exactly two months ago, we’ve been wondering whether it would be a replay of the Mercury deal, which amounted to more of a reverse acquisition. Yeah, HP bought Mercury, and the Mercury execs left standing (the ones tainted by indictment were long gone by that point). But many of the Mercury principals quickly took the helm in sales, marketing, and product development.

The Opsware script will be a bit different. Like the Mercury deal, Opsware CEO Ben Horowitz now takes over product R&D for the combined entity. But the rest of Opsware is being, what HP terms, “incubated.” It amounts to HP leaving the Opsware growth machine alone for now.

That makes sense, for a limited time. Much of Opsware’s appeal was that it was the fresh player on the block for managing change to IT infrastructure in real-time that until now has been beyond the grasp of “mainstream” systems management frameworks from the usual suspects. And the company’s growth curve was just beginning to break into the black.

With last week’s announcement of System 7, Opsware has made significant strides towards addressing a key weakness: the lack of integration between its server, network, and storage automation pieces. It’s glued them together with its process automation piece (from its own iConclude acquisition), where changes in provisioning of IT infrastructure from server back to storage and network can now be automatically triggered by an ITIL workflow, or where any action taken in any of the modules can now automatically bring up the appropriate workflow.

So HP is probably smart in not wanting to rain on Opsware’s parade, for now.

In the long run, Opsware must become part of the mother ship because its products have too many potential synergies with the rest of HP Software. There’s a long list, but we’ll just give a couple examples: there are obvious tie-ins between HP’s Service Desk and Business Availability Centers with Opsware’s change management capabilities. In other cases, HP’s portfolio could provide the depth missing from Opsware’s offerings, with the CMDB (configuration management database, the system of record for the layout of your IT infrastructure) being the prime example.

HP’s strategy reflects the common dilemma that software firms face when they acquire companies that are younger in the growth curve. Assuming that you’ve bought a company to add to your product set (as opposed to expanding your market footprint, like EMC and VMware), you’re going to find yourself in a balancing act. You don’t want your legacy culture to smother the innovation machine that you’ve just acquired, but you also don’t want to miss out on the synergies. Besides, isn’t that why you bought the company in the first place?