HP studies the IT infrastructure library with Opsware buy

Seeking to broaden its footprint and support for IT infrastructure libraries (ITIL), Hewlett-Packard (HP) is offering $1.6 billion to buy Opsware. Should the deal close, it would bring IT infrastructure change management and run book automation tools currently lacking in HP's infrastructure management products, previously branded as OpenView.

09/01/2007


Seeking to broaden its footprint and support for IT infrastructure libraries (ITIL), Hewlett-Packard (HP) is offering $1.6 billion to buy Opsware. Should the deal close, it would bring IT infrastructure change management and run book automation tools currently lacking in HP's infrastructure management products, previously branded as OpenView.

Cofounded by Mark Andreesen as Loudcloud back in 1999, three years later the company changed its business from that of a managed service provider to selling the data center automation tooling it had originally developed for the business. Specifically, Opsware's offerings manage change in the data center, with tools that track operating configurations of servers, networks, and storage. While it originally developed the server product internally, the other pieces came through acquisitions and are still in the process of being fully integrated.

Opsware scored some victories along the way, including a resale agreement with Cisco , which OEMs and resells Opsware's network automation product. And just last year, Opsware acquired iConclude, a provider of run book automation tools that help data center administrators automate workflows based on policies.

While Opsware never recorded a profit, the $100-million company shaved losses to just $1.7 million by Q4 of fiscal 2007, and was giving guidance that it would soon break into the black.

Traditionally, Opsware's data center automation tools ran alongside systems management frameworks from HP, CA, and others. In acquiring Opsware, HP would fill a gap by adding change management to its line, which largely monitors IT infrastructure. It also would work closely with HP's Service Desk, which is used for managing trouble tickets; and with HP's recently introduced Configuration Management Database (CMDB), an ITIL-inspired product that acts as the system of record for IT infrastructure configurations.

Given that the deal has yet to close, HP could not disclose product plans. But it did say it would retain the bulk of Opsware's staff. That includes CEO Ben Horowitz, who would be put in charge of HP's Business Technology Optimization group, which directs product strategy for the original OpenView line.

The proposed deal would be HP's third largest after the $25-billion acquisition of Compaq, and last year's $4.5-billion buy of Mercury Interactive.

The significance of the Opsware deal is that it bulks up HP's Software business, which received new backing under current CEO Mark Hurd's watch. Demonstrating that it is now a strategic business for HP, the company is breaking out revenue figures for software separately. Back in March, it disclosed that the unit made 8.5-percent profit and grew more than 80 percent last year, counting the Mercury acquisition.

In turn, naming Opsware's Horowitz to a key role would be consistent with HP's previous strategy during the Mercury deal, whereby HP retained key executives to run HP Software's product strategy.

HP expects the deal to close by Q4 2007, which would be October 31.





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