Hewlett-Packard (HP) has been dogged by bad press recently, following its US$8.8 billion write-down of U.K. software company Autonomy which it bought in 2011 and its weaker-than-expected fourth-quarter showing.
More seriously, the company alleged that accounting improprieties distorted the US$10 billion value of Autonomy when the deal was struck, and this brought about more public scrutiny. A class action lawsuit from a disgruntled investor also has been lodged.
Competitors sniffing around
The uncertainty over Autonomy also signals open season for competitors to poach existing HP customers.
OpenText, an enterprise information management software vendor, announced Wednesday it is offering a complimentary trade-in deal for Autonomy users to switch to the company's software. The deal is open until Dec. 31, 2012.
CEO Mark Barrenechea said: "We want to help Autonomy customers concerned with uncertainty about the future. With the trade-in offer, we're providing an opportunity for a simple switch to OpenText software with no increase to a customer's current software costs, but with a clear, confident path to future value and more innovation."
In the midst of these developments, one company executive, Paul Muller, acknowledged the IT vendor has much to do to turn its fortunes around. In an interview with ZDNet Asia, the IT management evangelist for HP's software division, admitted the company faces the challenge of having to rapidly educate its large salesforce--following an acquisition--on the pros and cons of the newly-acquired capabilities.
Additionally, it has to speed up the development and packaging of integrated offerings which combine existing and new capabilities into easy-to-consume bundles for its customers. This is something HP is working hard on, Muller said.
That said, he offered the fact that there are "amazing assets" such as Vertica, TippingPoint, ArcSight, and Fortify Software which HP has assembled, and these provide the arsenal for the IT vendor to target its three "pots of gold"--namely, cloud computing, big data, and security.
Supporting this claim, Muller noted HP's software arm bucked the trend of decline across the organization's other business units to register a 14 percent year-on-year growth in its fourth-quarter financial showing, driven by 9 percent license growth, 9 percent support growth, and 48 percent growth in services.
"We need more consistent delivery and proof-points of how we are integrating our various IT components for consumers to foster confidence among buyers, but I believe we have passionate people on board and we will be successful in doing so," he stated.
One example HP is synergizing various capabilities from its acquisitions is through its revamped business service management (BSM) software, which was just released on Wednesday. He pointed out that a new feature of BSM, Operational Analytics, is a result of integrating ArcSight's Logger log management technology with the company's internally-developed capabilities in crunching data such as machine data, logs, events, topology, and performance information. Combining these, Operational Analytics is able to deliver actionable intelligence about the health of IT services across various platforms such as mobile devices and hybrid cloud environments, he noted.
"You need big automation together with big data. There's no use for insight if you cannot execute on it," Muller stated.
With such integrated product offerings, the executive is hopeful enterprise customers will be won over by how HP is pooling its resources more strategically and invest accordingly.
Customers frustrated by "distraction"
Asked if the company is facing any customer backlash from the negative press on the Autonomy fiasco, Muller acknowledged enterprise customers are "frustrated" by the issue and it is a "distraction" to the work HP is doing. This is in addition to the flip-flopping of corporate strategy from software to infrastructure and other management issues.
He added, though, that customers "understand the value and capabilities" of HP and many will continue to maintain their relationships with the IT vendor. After all, mergers and acquisitions (M&A) is not new to the company and it has a track record of having successfully bought and integrated companies such as Mercury Interactive, he said.
The executive also stressed the IT vendor has always been focused on growing its software business, and there has been no change in this aspect with the leadership transition of Leo Apotheker to current CEO Meg Whitman.
The "perception" of being software-focused can be attributed to how the company had entered new markets in big data and security through acquisitions such as Vertica and Autonomy for the former, and ArcSight and Fortify for the latter, he explained.
Apotheker previously said software was "the glue" to hold together the company and allow it to capitalize on the more profitable value-added services sector, rather than rely on the commoditized hardware businesses such as PCs and servers. However, following her appointment in September 2011, Whitman stated she was moving away from the software-focused direction and will instead focus on its core strength--IT infrastructure.
"The core of HP is infrastructure," the CEO said. "We are the world's largest provider of IT infrastructure...and our servers, storage, networking, PCs, printing and imaging [make up] 70 percent of our revenue. We need to stand up and be proud of that core."