Mercury Interactive: The 98% Solution

Mercury Interactive: The 98% Solution

Todd Spangler

Mercury Interactive, which cut its teeth on software for testing Web applications, has managed to convince customers it also has the chops to monitor the performance of applications running their businesses.

The company’s approach is fundamentally different from that of the incumbent players in this market. Unlike products from BMC or Computer Associates, which typically use small agent programs on every server, Mercury’s system is “agentless.” That means its software gathers server data, for example, via existing operating system functions or other monitoring products.

Because Mercury’s products don’t require agents, they’re considerably easier to roll out, says Ellis Admire, Lillian Vernon’s director of emerging technologies. “Very few companies offer application-monitoring tools that are as easy to implement,” he says.

In mid-2002, Lillian Vernon needed to quickly deploy a monitoring system to make sure its Web site, which accounts for 40% of the retailer’s sales, would not crash during the coming Christmas season. The information-technology team installed Topaz and SiteScope in less than a week and had it fully deployed in 60 days, according to Admire. “It does 98% of the monitoring we need to do,” he says. “I’m not sure it would be cost-effective to get that last 2%.”

But not every user of Mercury’s testing software is convinced the company can play in the systems-management major leagues. Memorial Hermann, a health-care provider based in Houston, uses Mercury’s LoadRunner and WinRunner to stress-test applications before they go live. However, the organization manages its production systems with BMC’s Patrol. “You can do one thing very well, but I’m not sure many vendors can do all things extremely well,” says John F. Barr, lead systems architect at Memorial Hermann. He says BMC Patrol is uniquely able to monitor the OpenVMS operating system, which runs the company’s medical-information systems.

Dick LeFave, CIO of Nextel Communications, has deployed both Topaz and SiteScope and says he’s happy to see Mercury expand into monitoring production systems—as long as the vendor doesn’t abandon its application-testing products, which the wireless phone company has used extensively for five years: “They can’t afford to lose focus of what got them to the dance.”

Application Performance Management

Mercury Interactive

379 N. Whisman Rd.,

Mountain View, CA 94043

(650) 603-5200


Employees: 2,322

Amnon Landan

President, CEO

Prior to joining the company in 1989, he spent four years with the Israel Defense Forces. Holds a computer-science degree from Technion-Israel Institute of Technology.

David Murphy

VP, Corporate Development

Handles investments and acquisitions; joined Mercury in January 2003. Previously was CEO of Asera, a supply-chain management software startup acquired last year by consulting firm SEEC. Before that, he headed IBM’s Tivoli division.


Application Management Foundation (formerly called Topaz) provides a central repository for collecting data, analyzing results and setting alerts. One of its key applications is SiteScope, agentless monitoring software that tracks 65 types of applications, operating systems and devices.

Reference Checks

Nextel Communications

Dick LeFave

Senior VP, CIO

(703) 433-4000

Project: Wireless phone company uses Topaz and SiteScope to monitor 2,000 servers; it claims to identify 80% of performance issues before users notice.

University of Florida

Mike Conlon

Dir., Data Infrastructure

(352) 846-2506

Project: Installed Mercury’s application-monitoring tools in conjunction with its deployment of PeopleSoft’s financial and HR applications, a project that spanned September 2002 to March 2003.

Lillian Vernon

Ellis Admire

Dir., Emerging Technologies

Project: Gift retailer uses Topaz and SiteScope to monitor the four Web servers and four IBM WebSphere application servers that power its e-commerce site.

PHH Arval

Tim Talbot

Senior VP, CIO

(410) 771-1900

Project: Vehicle-management company monitors eight servers that run its customer-service portal with Mercury’s tools.

Apollo Group

David Pinkus

Sr. Dir., Software

(480) 966-5394

Project: University of Phoenix’s parent company, which has 25,000 employees, installed Topaz and SiteScope two years ago to monitor the performance and availability of PeopleSoft, Oracle and other applications.

Nebraska State Patrol

Terry Pell

I.T. Supervisor

(402) 479-4939

Project: Law-enforcement agency uses SiteScope to track the performance of 40 servers, which include a database of statewide sex offenders.

Executives listed here are all users of Mercury’s products. Their willingness to talk has been confirmed by Baseline.

Other Financials**

Total assets – $2.06B

Stockholders’ equity – $761.97M

Cash and equivalents‡ – $791.40M

Long-term debt – $815.15M

Shares outstanding – 97.78M

Market value as of 6/25 – $4.67B

** As of March 31, 2004, except as noted

‡ Includes short-term investments

Mercury Interactive operating results*

2004YTD20032002Revenue -$156.81M$506.47M$400.12MGross margin -82.8%84.6%84.8%Operating profit -$21.23M$48.57M$67.89MNet profit -$18.91M$41.51M$65.20MNet margin -12.1%8.2% 16.3%Earnings per share -$0.19$0.45$0.74R&D expenditure -$17.29M$55.61M$42.25M

* Fiscal year ends Dec. 31; YTD reflects first three months

Source: company reports

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Baseline.