Moves to subsume Autonomy into HP have lent an increasing amount of irony to the company’s name, following the departure of founder Mike Lynch and the expansion of its key tools to become add-ons across a much broader range of products. Nearly one year on from the pound 7.1bn acquisition, what is the future for Autonomy?
The cultural differences underpinning HP and Autonomy – one being a hugely complex technology provider company, the other having held on to some of its roots as a start-up – meant the departure of former CEO Mike Lynch came as little surprise. But as HP tries to steer a new course for itself, where does Autonomy fit into the company’s strategy as primarily a hardware business?
Alan Pelzsharpe, analyst at 451 Research, is in no doubt that the outlook for Autonomy as we know it is bleak. “We are seeing the decline of a great British software company,” he said.
“For a lot of people, unfortunately that sum of money has tainted the whole thing – at 11 times the revenue [paid for the acquisition], the expectations from it were so high. Within weeks, everyone knew it was wrong, and that they’d made a huge mistake. The company has great products and people, but there is no economic sense in keeping it all going. It needs to strip it down, maximise the strong points, and move on.”
We are seeing the decline of a great British software company
Alan Pelzsharpe, analyst, 451 Research
Integrating Autonomy
Pelzsharpe sees rationalisation of Autonomy’s portfolio as the only sensible move going forward. “I don’t think anyone is in doubt that this was not the best acquisition in history. HP paid a lot of money, but it not only bought a search platform, but a massive portfolio of five record management systems, and archiving," he said.
“The departure of Mike Lynch and the senior management team means HP can now rationalise the portfolio. In the coming year we are going to see some hard decisions about what survives."
HP and Autonomy have six record management systems between them. Pelzsharpe questioned the need for so many and pointed out that supporting them would be a struggle. "[HP is] now looking at what it bought and what the value is beyond the IDOL [Intelligent Data Operating Layer] search platform,” he said.
Tim Jennings, Ovum's chief analyst for enterprise IT, agreed that HP is making the right strategic decision in integrating Autonomy across the business.
“I was surprised from the start the degree of independence Autonomy had, not so much in management, but in the fact there was very little effort in integrating the technology into the rest of HP’s software portfolio, and prior to the announcement a few weeks ago, it had a separate R&D team. To reap the benefits of an acquisition like that, you have to be looking to integrate the core technology into other pieces in the portfolio,” he said.
Jennings added that the IDOL platform lends itself well to being rolled out across other areas.
HP has typically been strong in securing and reducing the cost of handling information, records management, content management, security pieces, architecture, enterprise search, he said.
“I would really expect to see it make more emphasis on some of those areas, using Autonomy to give it the edge. What I’d like to see from HP is a solid two-year roadmap, where Autonomy fits in, providing incremental value,” said Jennings.
Increasing customer frustration
But while HP grasps at a strategy for Autonomy, its customers are beginning to get frustrated. Gartner analyst Ann Lapkin said Autonomy’s customer base has reported dissatisfaction with the company due to a high turnover is sales and support staff.
“I haven’t really seen a significant long-term vision from HP around Autonomy,” she said. “This [company acquisition] is a completely different focus from HP’s roots.
“I also find it a bit concerning that the guy responsible for Autonomy [Bill Veghte] is responsible for the strategy of three other things, so there is a serious question about whether he is going to be able to give that $10.2bn acquisition the focus it deserves.”
Brian Hill, principal analyst at Forrester, agreed that users are becoming increasingly concerned about the company’s direction. “We are hearing from customers who are quite frustrated, as they face uncertainty over product investments and whether they will continue to be supported,” he said.
“Frankly, the bumps from culture and product rationalisation are likely to continue. It takes a lot for corporate cultures to change, and by having new leadership that can happen.”
Autonomy had significant cloud-based archiving applications, which now have greater potential with HP
Brian Hill, principal analyst, Forrester
Looking beyond the integration
Hill said that once integration is complete, the road ahead will be smoother: “Autonomy has lost significant talent and a certain energy has now gone, but some of that excitement has the potential to be more than offset by a defined standardised approach to market Autonomy’s services.”
He said there is potential for HP in leveraging Autonomy’s assets. “We will probably see greater usage of cloud-based applications. Autonomy had gone down that path and had significant cloud-based archiving applications, which now have greater potential with HP. We will see HP make better penetration on the enterprise customer with big data applications.”
For a company that has created such innovative products, it is unlikely HP will allow Autonomy’s intellectual property go to waste. Indeed, at its Discover conference in Las Vegas, HP announced the integration of Autonomy’s IDOL platform into its Data Protector 7 software to provide a deduplication storage platform.
Paul Muller, vice-president of strategic marketing at HP, also told Computer Weekly the company has big plans for expanding Autonomy, including a desktop offering in the pipeline.
Stouffer Egan, US CEO of Autonomy, said: “HP has taken pole position in leveraging [big data]. By acquiring Autonomy, HP is now a leader in unstructured human information and big data analytics.”
But whether Autonomy will continue to be known for creating innovative products under its new guise remains to be seen.
