Why the HPE New “Spin-Merge” with Micro Focus Spells Trouble For HP Quality Center/ALM Customers

Back in a July webinar, Kevin Dunne, our VP of Strategy and Business Development discussed the rumors about the sale of HPE software. Turns out, the rumors were true. Watch the webinar here.

On September 7th, The Wall Street Journal reported, “Hewlett Packard Enterprise Co. disclosed an $8.8 billion deal to spin off and merge most of its software operations with Britain’s Micro Focus International PLC, the latest move by the Silicon Valley giant to narrow its business focus.” (Wall Street Journal).”

If you look closely at the details, you will notice that the agreement has HPE offloading their ‘non-core’ assets which include, Mercury Interactive’s HP ALM, HP Loadrunner, HP UFT and HP Quality Center.

Although the investors remain optimistic about the spin-merger, what does this mean for the actual users of these HP software products? What does this mean for the companies that have invested millions of dollars in these tools? One thing we do know for sure — what’s good for investors, is not always good for customers.

So, if you are concerned about the future of HP software, here are some things you need to know:

Micro Focus Will Focus on Cost Cutting

In the investor presentation about the “spin-merge”, HP showed the slide below. Notice the bullet point highlighted that says, “Opportunity for 20 percentage point margin improvement on HPE’s non-core software assets by the end of the 3rd full financial year following the close.”

What does “margin improvement” mean? Cost cutting. Micro Focus will strengthen revenue by reducing costs. This is nothing new for Micro Focus. Under the leadership of Kevin Loosemore, Micro Focus has been very aggressive with cost cutting strategies since 2011. The paragraph below from the Wall Street Journal provides more detail:

“Micro Focus’s current strategy is the product of a couple of profit warnings that forced Chairman Kevin Loosemore to take executive control in April 2011. Mr. Loosemore concluded that boosting growth wasn’t possible for many of Micro Focus’s IT infrastructure products, which provide companies with basic technological plumbing. So he focused instead on the bottom line. The company cut costs previously spent chasing growth, and worked to prolong the life of old software by providing maintenance and stitching new fast-growing applications onto it.” (Wall Street Journal)

This is great news for investors, not so great for customers. Why? Because the cost cutting will directly impact their ability to enhance the HP software over time.

Micro Focus has publicized that their business model involves acquiring technology franchises with significant maintenance streams and high switching costs. This business model fits right into the familiar HP strategy to charge a high perpetual implementation cost that will require a yearly maintenance stream for support and upgrades. (Microfocus)

Micro Focus’ model does not seek franchises with a laser focus on bleeding edge technology; rather, their consistent trend acquire and hold on to legacy systems They simply want to “milk the cash cow.”

HP Talent Drain and Product Uncertainty

When HP Octane was announced earlier this year, I attended a webinar to learn more. The speaker, Matthew Brayley-Berger gave a bold vision for the product roadmap. If I were a HP customer, I would have been very excited about the future direction of the product. However, in August 2016, Matthew left HP and moved to Amazon. This was just one month before the merger. There have been several other prominent departures including CTO Martin Fink and Chief Customer Officer John Hinshaw (PC World)

Now with this spin-merge and the departure of key HP staff, there is no question that the HP Octane roadmap, and any other product that was in active development, before the merger will be in serious jeopardy.

It Is Time to Make a Change

If you have been on HP Quality Center/ALM for a long time, the prospect of changing could be scary. You have a lot invested in the HP stack. Your team is well trained on the software. However, if you are trying to take an agile approach and move faster, HP software is probably slowing you down now. And it will only get worse in the future as Micro Focus stops enhancing the product.

At QASymphony, we continue to invest heavily in our products and create new innovative solutions that our customers love. Additionally, we have been able to successfully migrate many HP Quality Center/ALM customers to our platform. Here’s what one of our customers had to say about it:

“We were able to quickly migrate all our test cases from HP Quality Center to qTest and get the team up-and-running in just a few weeks. The implementation process was excellent.

— Radka Iordanova, Director of E-Commerce at Office Depot

We can help you make a quick and effective transition off the HP tools. Request a free migration consultation today and learn how you can move away from HP and on to modern testing tools.

If you want to read more about HP Quality Center, I’ve compiled a list of our resources below.

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