From our partners at SmartBear
Yesterday, Hewlett Packard Enterprise (HPE) spun off and merged its software assets with Micro Focus for an $8.8 billion deal. The deal allows HPE to focus on its hardware offerings such as networking and storage, while divesting software offerings like cybersecurity, big-data analytics platform Vertics, and application management company, Mercury Interactive. The list of Mercury products includes well known tools like HP Unified Functional Testing (UFT), Quality Center, LoadRunner, Application Life Cycle Management, among others.
Over the next nine to twelve months, as the merger of Micro Focus with software business of HPE gets completed, it will be interesting to see which of the two firms (HPE or Micro Focus) actually ends up calling the shots and controls the future of the largest standalone software businesses. Especially when HP Enterprise shareholders will own 50.1 % of the renewed Micro Focus, while receiving $2.5 billion in cash, and will have an executive director as well as a number of non-executives in the new Micro Focus. Kevin Loosemore, executive chairman of Micro Focus, has continued to maintain that the management of Micro Focus management will run the new company and HP will have no say in the business once deal is done. However, that remains to be seen.
At the same time, the way two firms have traditionally operated are way different. HPE has consistently delivered an operating income margin (Operating Income/Sales) of around 20%, compared to around 45% of Micro Focus. This essentially means in order to maintain that income margin and ensure the new HP business doesn’t act as a drag on the existing profitability of Micro Focus and expected “synergies” are achieved from the merger, Micro Focus might have to make some cuts or even dump existing software assets of HP.
Over the last blog post, I touched upon how metrics and incentives linked to delivering such “synergies” and boosting profit margins can often not be good news for customers of the company that is being spun off and merged. In case you are one of the many HP customers concerned by the takeover, primarily because the uncertainty in the horizon and are thereby looking to reevaluate your relationship with HP, look no further. Over the past few years, we have had multiple HP customers switch to SmartBear tools. Some of the examples of our success stories can be found here. Recently in a separate blog post I had touched upon why we have been particularly successful in attracting HP customers with our tools.
Over the past few weeks, we have been placing a lot of emphasis on ensuring HP customers can migrate to SmartBear software tools in a low risk and no downtime manner. And as a result, we have been working closely with our partners to make certain HP customers can bring their data over to SmartBear tools in an automated, manageable, and a predictable fashion. Below is a short demo of a migration utility created by our partner Cigniti that automatically brings over assets from HP’s Unified Functional Testing tool to TestComplete as an example.