Mike Lynch gains his autonomy

Having just done a business-class round-trip to Australia I am impressed by the skills of airline menu writers. I’m equally impressed by the people who write the press releases and statements for HP.  According to a number of references in the press about a conference call Meg Whitman, chief executive, had with analysts  Autonomy had suffered “very disappointing” licensing revenues in HP’s second quarter, ending April 30, with a significant decline year-over-year. Autonomy’s problems were “not the product … It’s not the market … It’s not the competition. This is classic entrepreneurial company scaling challenges – it’s a whole different ball game”.  So Mike Lynch goes, and now has a lot more time to spend the results of HP buying his company. Good for him!

Integrating the 3000 Autonomy employees (especially the sales team) into the 350,000 HP employees was always going to be an interesting challenge. The company was acquired in August 2011 and it would have taken several months just to physically bolt the two companies together.  If it is not the technology, market or competition then the only reason for poor sales lies at the door of HP and not Autonomy. I’m sure that the Autonomy sales and support teams would be determined to show the best that they were capable of. HP has made a decision on just the first substantive quarter of sales. It’s not surprising to me that Autonomy license sales have fallen as prospective customers wait to see exactly what HP are going to do with Autonomy. I’m sure that Endeca sales and Vivisimo sales will also fall for the same reason as Oracle and IBM respectively do the inevitable asset strip and integration of the products into their enterprise stacks both in terms of technology and license structure. Autonomy was a Mike Lynch-centric business, and his departure from the business is not likely to stimulate the sales team to do better next quarter, especially those who made good money from their share options. Indeed according to the BBC a number of senior staff have already left thte company.

Autonomy might not have been universally adored by its customers but it certainly was by its shareholders, and over the years the company proved to be fairly adroit at finding and integrating new businesses. It was certainly enterpreurial and innovative but to suggest that this was now a handicap would not have been the view of Bill Hewlett and David Packard. Many years ago now I had the priviledge of listening to David Packard give a truly inspiring address to a group of industry analysts, talking about his view of the future of innovative IT as a benefit to mankind.

There are indications  that Autonomy was courting Oracle as well as HP. I think the company would have been better off inside Oracle but HP wooed the shareholders with an extraordinary amount of money with seemingly no thought about how the acquisition was going to be managed.  What next for Autonomy?  It may be some time before HP sees an ROI on this particular investment and I suspect that many customers are now considering the future of their investment in Autonomy.

Martin White