Despite an accounting scandal and bankruptcy filing for Peregrine within the last few years, HP found that the San Diego, Calif., company has put in place the necessary financial controls under new leadership to make it a "credible" acquisition, according to Todd DeLaughter, vice president and general manager of HP's Management Software Business in Roseville, Calif.

Peregrine President and CEO John Mutch put in place the financial controls and accounting systems that gave the company control.

"We're comfortable with what they've demonstrated in their financial reports to date," he said.

Peregrine, which as a part of its bankruptcy activity shed non-strategic assets, strengthens HP's position in the IT service management arena, making it a stronger competitor to market leader Remedy, now owned by BMC Software.

Peregrine altogether brings to HP's OpenView business software that provides asset discovery and tracking, expense controls, process automation, IT service control and alignment, along with business continuity and consolidation management.

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There is overlap between Peregrine's Service Center software and HP's Service Desk offering.

Rather than drop one or the other offering, HP intends to merge the two and invest additional resources into the integration effort.

"We'll combine those two teams and double up on the investment," said DeLaughter.

The acquisition strengthens HP's hand in the nascent but promising Configuration Management Database arena, which is intended to bring a greater level of automation and awareness of realtime IT asset configuration information, according to Jim Grant, a former HP OpenView executive and current competitor at BMC Software Inc.

"To do asset and change and configuration management, you've really got to have a very forward-thinking CMDB strategy.

What this says is that HP woke up and said, 'We've got to have a more substantial play around configuration management. I congratulate them on that," said Grant, now vice president and general manager of BMC's Service Management Business Unit in Sunnyvale, Calif.

The down side, however, is that HP will have its work cut out for it to deal with the overlap between products as well as rationalize two separate CMDB strategies, added Grant.

Its roadmap for integration won't be disclosed until the acquisition is complete, which is expected to take place in the first quarter of next year.

Click here to read more about HP's plan to purchase storage software company AppIQ.

"We'll support Service Desk and Service Center for a period of time until we can merge the two products. We'll protect customers' investment and take them to a more robust set of products for IT service management," he said.

The acquisition could also cast doubts about the future of a partnership previously announced between Peregrine Systems and HP rival Mercury Interactive Corp. around providing Mercury with a service desk capability.

Once the acquisition is completed, Peregrine will become a part of HP's Management Software Business.

HP intends to bring almost all of Peregrine's 700 employees into the HP fold. Peregrine has about 1500 customers worldwide, DeLaughter said.

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