Photo courtesy of HP

Hewlett-Packard (HP) has begun its search for new leader for Autonomy, which it acquired last October for $10.3 billion. The new executive will fill the role vacated by former Autonomy CEO Mike Lynch who left in May. HP announced his departure at the same time as its poor second quarter financial results, which showed a 31.6 decrease in net profits. For many, Lynch’s departure was very unexpected. Only months before, he had proclaimed Autonomy was the future of HP.  In December, he gushed that his company had lost no significant members of its staff in its move to HP, and that Autonomy’s new owner understood the high-speed, agile culture. In hindsight, Lynch spoke much too soon.

Autonomy’s early performance was disappointing. HP’s new business unit posted significantly lower sales than it had as an independent company. HP’s CEO, Meg Whitman, attributed the issues to “entrepreneurial company scaling challenges.” Whatever the issue, Lynch was just the last in a long line of leaders to bail from Autonomy. The entire management team and 20 percent of its staff left less than a year after the HP acquisition. The turmoil drew the negative attention of investors and analysts who criticized the high purchase price and openly questioned if Lynch really made an effort after his $800 million HP payday.

HP is hoping to move beyond its Autonomy troubles and find a new chief for Autonomy. HP’s chief strategy officer, Bill Veghte, has been serving temporarily as the leader for Autonomy since Lynch’s sudden departure. Industry watchers say HP is looking internally and externally for candidates. Whoever steps in the challenging role will need to address financial, culture and morale issues.

“The challenge for HP is it doesn’t have an enterprise software gene in its sales DNA. The opportunity is to integrate HP’s core solutions with autonomy,” says Wikibon senior analyst Dave Vellante.  “This must be a high priority for HP in order to get an ROI for what was a very expensive acquisition. It has to leverage Autonomy capabilities and IP across its portfolio and it has do do so quickly. If it does, HP just might surprise some people.”

Despite what HP’s recent investments might suggest, executives at HP’s annual HP Discover conference earlier this month made it clear that HP has no plans to reinvent itself as a software company. Software will play a role in the company’s success especially with regard to big data. HP demonstrated its big data commitment this month releasing both a new Autonomy powered clickstream analysis platform and a new version of Vertica.. Ultimately, however, HP will remain strongly focused on what it has historically done well – infrastructure and services.