Hewlett-Packard senior VP HP Software Thomas Hogan says, "The short answer to the question of whether the gamble on HP-Mercury Interactive paid off is that it has been an astounding success." He made the comment in an interview with "Globes" at the HP Software Universe 2007 conference in Barcelona. "In my opinion, the acquisition wasn’t a good move; it was a great one, and I couldn’t be more pleased."
Hogan went on, "As for the question why this is the case, that's a little more complicated. When we make an acquisition, we monitor growth, profitability, customer satisfaction, and the ability to keep employees. Except for US sales, where there was some erosion and where we were forced to hire, all the other variables were in line with expectations or exceeded them.
"In addition, with the acquisition, HP sent a message to the market that it is a very serious player in the software field. Mercury 's transactions have been excellent, but I think that it also put HP on the map."
Hewlett Packard Co. (NYSE:HPQ) operates in three software sectors: the first and largest is business technology optimization (BTO), through the company's OpenView product, and which now includes Mercury; the second is business information optimization (BIO); and the third is telecommunications (OpenCall).
Hogan says, "The telecommunications field is undergoing the greatest change that we've seen in our lifetimes, and we want to lead it."
"Globes": Where do you see Israel fitting into this strategy?
Hogan: "10% of the people in my organization work in Israel. Compared with the rest of the world, great work is being done in Yehud. I won't say that Israel is the Mecca of software development, but it's essential for HP Software, and that's not about to change."
HP executive Ronen Armon told "Globes" that HP Software's activity in Israel had suffered in the past year from a wave of departures in the aftermath of the takeover of Mercury. "Employees always worry after a takeover, and there's also a generation change. This doesn’t necessarily happen because of the company's profile, and there's definitely a difference between the profile of Mercury and that of HP. Whereas Mercury was able to provide a sense of intimacy, that's a lot harder at HP."
Armon continued, "The challenge of leading or developing a product within HP isn't suited for everyone, and it requires a different set of talents and requirements. It's true that there's been churn, some of which I see as positive, because it's important to rejuvenate from time to time, but I don’t see this as something extraordinary that defies an explanation."
Was the extent of the churn in Israel greater than elsewhere?
Armon: "It's possible that immediately after the takeover, we saw a greater rate of departure in Israel, but I don’t think that it's any different now compared with other places."
What are your plans for growth in Israel?
"We assume that we'll grow in Israel. This is a very good territory, and we see this as an advantage that we have a critical mass in Israel, and we're ready for organic growth. Although Israel isn't cheap, and we have hundreds of people in China and India, but the development culture in other places is different."
HP Software Israel country manager Oded Breda is responsible for domestic sales. As far as he is concerned, this year HP will take steps to emphasize its local presence. "In Israel, Mercury is perceived as a software testing company that has penetrated the IT management sector. This year will be the year of transition, and it will soon be hard to distinguish between the products and the companies we get them from."
HP acquired Mercury in 2006 for $4.5 billion.
The writer was a guest of HP at the conference.
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2007
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