* Peregrine Systems is a great addition to HP
HP last week announced the acquisition of Peregrine Systems, a company that would have served as a prize for many would-be buyers.
Though it has seen its fair share of turbulent times, the management team at Peregrine successfully pared back the organization, refocused its product strategy, and perhaps most importantly tuned its partnership standings. ServiceCenter has been filling the service desk and asset management gaps for both Mercury and IBM – IBM particularly for service desk and Mercury for asset management.
Peregrine has also made progress in the areas of integration, IT analytics with its Optimal IT, and in creating visibility around the Configuration Management Database (CMDB) – initiatives that are all right in the middle of important IT trends today.
HP’s primary reason for purchasing Peregrine is to support HP’s Adaptive Enterprise strategy and more specifically to fill its need for comprehensive asset management products. In addition, HP expects to take advantage of Peregrine’s service desk strengths to build better service desk software.
HP was very forthright in its articulation of product and technology plans at the time of the announcement. The company is rightly focused on customer retention and wants to ensure that Peregrine’s customers remain on board and are not left stranded. To this end, HP will be supporting Peregrine’s announced product strategy and will begin to merge the roadmap over time with the expectation that it will take about 18 months for full integration of the product lines.
One of the most obvious impacts of this acquisition is the dynamic created in the service desk market. Peregrine represented one of a handful of dominant service desk vendors in a market that has a large number of very small help desk products. Even though consolidation in this market is taking place, the leading vendors have long been Remedy, Peregrine, HP and Computer Associates. This acquisition will immediately take a contender for the number one position out of the running. It will also create turbulence over time as HP and Peregrine sort out product details and make choices that directly affect customers.
Both HP and Peregrine have a CMDB story to tell. Peregrine’s position has supported the idea of a CMDB for many years, with strengths that include automation capabilities for reconciling configuration items (CI) and the integration of many disparate data sources. HP’s CMDB covers CIs related to a broad range of technologies. The two stories together will become much stronger, though the challenge of mapping services to infrastructure will need to be resolved – perhaps by keeping Mercury in the mix with its Appilog technology or by using a similar technology.
HP’s decision to buy Peregrine, in retrospect, seems intuitive, as it strengthens HP’s software group financially, competitively, and technologically. First and foremost, HP gains asset management, third-party integration tools, and CMDB technology that can truly enhance its current position. HP and Peregrine have been heavily entrenched in ITIL for many years and made a commitment to a process-based approach long before the rest of the world – particularly North America – decided that it was a good idea. Enterprise Management Associates expects that the ITIL synergy will help to ease the inevitable culture challenges that exist in any merger environment.
The combined company will need to define its customer base. Peregrine has historically targeted only large enterprises. HP has been much more open than that, also targeting small to midsized businesses. Over the long term, the company will need to look at how it can cover the whole range from SMB market through the enterprise, similar to the way BMC does with its Magic and Remedy product lines.
Finally, Peregrine offers HP a new product, Optimal IT – a benefit over and above the obvious. Optimal IT puts sophisticated tools in the hands of IT managers, enabling them to look at various scenarios and cost components. This new product introduces yet another competitive environment for HP to address, but the advantage is that it provides HP with unique positioning for its service management story. Combining Optimal IT, a consolidated CMDB, openness through integration, and asset management capabilities, HP will be much better positioned than it has been vis-à-vis its competitors.
