Peregrine-Remedy marriage a mixed bag for customers

The acquisition of Remedy Corp. this week by e-business infrastructure software rival Peregrine Systems Inc. should bring a mixed bag of benefits and disadvantages to users, according to analysts.

On the plus side, Remedy users will have access to enhanced functionality, such as knowledge management, from Peregrine's Action Request business process authoring solution, said Michele Hudnall, senior research analyst at Meta Group, in Stamford, Conn.

The main disadvantage of the pairing, Hudnall said, is that it severely limits choices in the help desk services market.

"They've really become the gorilla in the market there," she said. "It does not leave the clients many choices."

Earlier this week, Peregrine officials said the goal of the US$1.1 billion cash and stock deal is to extend the depth and scope of its product line. The acquisition will match Remedy's base of small and mid-size customers with Peregrine's array of global enterprise customers, Peregrine said. Additionally, Peregrine said the combination will give customers the flexibility to combine Remedy's highly customizable applications with Peregrine's one-size-fits-most offerings.

Peregrine said the Remedy IT Service Management (ITSM) suite will become the company's flagship package for small-to-midsize organizations, while its own Peregrine products will remain the primary offering for large enterprise customers. Peregrine also said it intends to combine its own infrastructure management products with Remedy's business process authoring technology, the AR System. Peregrine said it will deliver the Action Request (AR) System 5.0 during the fourth quarter of 2001.

"By combining the Remedy AR System with our recently acquired technology from Extricity and our own Get-It studio technology, we will be able to offer a compelling and flexible industry-leading applications development environment," Peregrine CEO and Chairman Steve Gardner said in a conference call with analysts earlier this week.

William Hopkins, founder and CEO of Austin-based IT consulting firm Knowledge Capital Group, said the acquisition makes sense for both companies.

"It's combining infrastructure back-plane capabilities ... with front-end application problem solving technology," Hopkins said "It gives Peregrine access into the small and mid-size markets ... especially financial services."

While enterprise users are always at risk when their vendor is acquired, Remedy users should not be at a high risk of disruption because Peregrine officials have indicated they plan to continue to serve Remedy's markets, Hopkins said. In addition, because Remedy is more of a service-based company than a software package vendor, its customers will be easier to service after the acquisition because Remedy has been intimately involved in the development of customer applications, he added.

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