HP Thinks It Can Turn Autonomy Around

After defeating a shareholder insurrection that largely stemmed from how it handled the Autonomy acquisition, Hewlett-Packard is trying to resuscitate the fortunes of its troubled analytics-software unit.

Robert Youngjohns, senior vice president and General Manager of the Autonomy division within HP software, conceded that the controversy surrounding the acquisition and its aftermath has proven a significant distraction for the company. But he also suggested that HP management has gone to great pains to isolate the management of Autonomy from the actual litigation. “It’s a noise factor that’s obviously hard to ignore,” he said. “But it has been a noise factor.”

Still, the noise level surrounding Autonomy is not likely to quiet as long as litigation persists. Back in November 2012, HP accused Autonomy’s management team of using “accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company.” It alerted the SEC’s Enforcement Division and the United Kingdom’s Serious Fraud Office (Autonomy is based in the U.K.), and announced it would take an $8.8 billion write-down on Autonomy’s value. That sort of thing tends to generate headlines for a long time.

Despite that write-down, HP isn’t giving up on Autonomy. Youngjohns described how the HP Autonomy business unit will focus on three core areas, with an emphasis on Big Data analytics: if everything goes according to HP’s plan, the Intelligent Data Operating Layer (IDOL) indexing engine at the core of the Autonomy portfolio will evolve into a layer of software leveraged by diverse analytic applications, all with the goal of finding the right data within massive datasets.

“We think there is going to be huge demand for this kind of capability in a number of applications such as security and insurance fraud,” Youngjohns said. “We see it as really augmenting domain intelligence in specific areas.”

HP Autonomy, he added, will also focus on information governance and Web content management: two classes of applications traditionally handled by IDOL. The former is an area that organizations can no longer afford to ignore: “When it comes to information governance and compliance it’s not so much about the costing of doing it as it is the consequences of not doing it.”

At the same time, he conceded that information governance is very much an emerging field: “Clearly boundaries are starting to blur between different areas. There’s no reason for example, why there needs to be a different engines for managing backup and archiving applications.”

But analysts aren’t so convinced that HP can save the Autonomy ship. “In some ways Autonomy will be like a bad penny that will keep coming back to haunt them as long the litigation persists,” said Alan Pelz-Sharpe, and industry analyst with 451 Research. “They can upsell Autonomy into the existing HP installed base, but for new license sales the Autonomy brand is a problem.”

Indeed, HP could have more success selling Autonomy technology when it’s embedded inside other HP products. “Autonomy is really set of fungible products and technologies,” said Melissa Webster, an industry analyst with International Data Corp. “Everybody has already heard about the issues with Autonomy; the question now is what to do going forward.”

Ultimately, any rebound in HP Autonomy’s fortunes will hinge on whether IT organizations can truly get serious about managing data as an asset. Most of those organizations aren’t particularly good at managing data—something that Youngjohns believed had more to do with the immaturity of policy-based approaches to managing data than the actual talent of the people handling that data.

“Customers need to be able to index data in a way that allows them to get at the data,” he said. “Otherwise all you really wind up with is digital landfill where the data is not useful and is never likely to be useful.”

The Piranha Tank

Right now no one is quite sure how much of the promise of Big Data is hype.

“Big Data is being oversold,” 451 Research’s Pelz-Sharpe said. “Everybody talks about information governance, but nobody does it.” However, a tipping point is rapidly approaching: “We are at the point where the cost of managing data is just ridiculous, so this discussion is going to have its day.”

Youngjohns also thought that organizations could soon find themselves forced to deal with Big Data management. “The key is to be able to index all that Big Data in a way that allows people to get at. A policy engine like IDOL automates that process in an intelligent way,” he said. “Otherwise all you have is what people are starting to call a Big Data lake.” As Web interactions evolve more towards real time, organizations will want to automatically surface additional content based on the data anyone is consuming at any time—which, at least in theory, will create an opportunity for IDOL, which could provide real-time indexing and search capabilities across massive amounts of data.

Combine that with information governance, and it’s clear why Youngjohns insists that the Autonomy unit can generate opportunities for HP in a still-maturing Big Data market.

In terms of competitors, Youngjohns says that when it comes to HP’s two biggest rivals there are stark differences that customers should consider. “HP Software is about providing an end-to-end approach for managing data through software rather than services,” he said. “We’re not about darkening the skies with expensive consultants.”

There’s no shortage of competitors in any one of three categories that HP has identified as areas of focus for Autonomy. The challenge will be getting IT organizations to appreciate Autonomy as a new layer of enterprise data-management software, versus technology that simply gets embedded inside any number of point products.

“Enterprise search technology definitely has a place when it comes to Big Data and just about everybody has a Big Data project under way,” said IDC’s Webster. “HP is trying to take Autonomy into a new market where there will be a lot of competition.” It’s a piranha tank out there, and HP needs to swim through it while weighted down by all this negative publicity—definitely no easy task, but one with potentially high rewards on the other side.

 

Image: HP

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