Oracle CEO Larry Ellison could very well be driving around in his US$ 445,000 Lexus LFA right about now, laughing uncontrollably.

Shortly after HP bought Autonomy last year, he not only told the world that the enterprise software company wasn’t worth the US$ 11 billion that HP paid for it, but that his lieutenant, former HP Chairman and President Mark Hurd, had considered it to be overpriced, when it was allegedly pitched to Oracle, at US$ 6 billion earlier in the year. 

In case you don’t know, last week HP announced that it would be writing off more than 5 billion dollars related to its purchase of Autonomy and that it was thinking about legal action related to “serious accounting improprieties.” More than 15 different financial, legal and accounting firms were involved in (and blessed) the transaction, according to Reuters.

Whether Autonomy cooked its books, or not, something else needs to be considered; paperwork aside, does a 5 billion dollar company look like an 11 billion company?

I don’t think so.

At least not to people with their feet on the street; and though I’d put Ellison and Hurd on that list, I’d also include others who are less likely to be considered experts. Take for example, salespeople who recently left the company, journalists who cover the beat, account executives whose companies sell complementary products, headhunters who specialize and know which companies are engaged with what technologies and what people are saying about them and so on …

My guess is that many of them, like Ellison, would have seen a problem with Autonomy’s US$ 11 billion price tag and possibly even with the purchase in general. Was Autonomy actually in mega high growth mode in its fifteenth year in business? Was it compelling enough a technology to revitalize HP or to turn it into an enterprise software leader?

The Problems Run Deeper

Though not every enterprise company is my customer, many, if not all of those who are, talk to me about e-Discovery, Information Management, ECM and Big Data constantly because my company specializes in identifying and placing top talent in these areas. The interesting thing is that few of them (even those who own it) have been talking about Autonomy very much over the last five years. (Until now, that is.)

This wasn’t the case 10-15 years ago when Autonomy was new, or 7 years ago when it bought Verity, or 3 years ago when it bought Interwoven. The latter two increases in “chatter” were generated by news of the acquisitions versus actual interest in buying anything from Autonomy.

And it’s not just that that’s problematic, but many of the big law firms who once raved about Autonomy / Interwoven have said that they were starting to explore other solutions and other options. I can honestly say that I don’t remember any of them saying that they were looking to move to the product. In contrast, they did ask about what solutions their competitors were using.

The same can be said for other customers, in other verticals; there was buzz going around about Google’s Enterprise Search. Microsoft’s FAST and Vivismo, which IBM recently bought, also caught their attention. These vendors can reportedly handle data in motion and at rest. I needn’t remind you that these are the days of Social and Big Data.

Forrester Analyst Leslie Owens would likely agree that Autonomy’s problems (and therefore HP’s) go beyond screwy accounting. She said this to the NY Times:

They (Autonomy) didn’t invest in R&D; they didn’t have regular software releases; they weren’t transparent with a road map of where they were going; they didn’t seek customer feedback. Customers complained, but the promise of managing all their information and making better decisions was so attractive. They bought more.”

Not only that, but Forrester asked for a demo of Autonomy’s new IDOL software and has yet to receive it. 

Another Weak Link

HP, from my point of view, has another problem with the Autonomy purchase as well; namely former HP boss, Leo Apotheker, who made the recommendation for the buy.

How Apotheker got the top job at HP in the first place still baffles me. He had just been dumped by SAP (SAP won’t say that he was fired, instead SAP Supervisory Chairman of the Board Hasso Plattner spins it at as “We didn’t fire him. After a special meeting of the board last Sunday, he was informed that his contract, which expires at the end of 2010, would not be renewed. Following that, we came to a mutual agreement that he would resign immediately.”)

Fired_shutterstock_87455693.jpg

I’d call that fired.

In any case, why HP chose Apotheker to lead the company out of the many other equally, if not more, qualified tech executives on the planet is a mystery. Being a headhunter, I cannot fathom calling a client and telling them that my recommendation for their most vital hire was someone who had just lost his job because he had created a rift between management and the employees. Better choices had to exist and HP had deep enough pockets to attract them.

But they didn’t do that. What was HP’s board thinking?

And how could Apotheker’s radical plans to buy Autonomy, spin off HP’s PC division, and quit the mobile device business that it had just entered with a US$ 1.2 billion purchase of Palm go so unchallenged?

Apotheker’s tenure at HP lasted less than a year which is hardly enough time to talk to customers, learn about their pain points and seek to address them with new solutions. Instead Apotheker tried to take what worked at HP and destroy it.

All of this leads me to wonder, regardless of whether Autonomy exaggerated its numbers or not, if Autonomy (the technology) has any kind of a future at all (especially while it’s owned by HP).

What’s your take? Would you buy Autonomy? Is it a technology that your company would invest in?

Image courtesy of winnond (Shutterstock)