SAP today announced an agreement to acquire Sybase, Inc. for $5.8billion. Sybase has a broad portfolio of solutions, so the question comes to mind: what is the strategy, the driving force behind the deal? What are the Sybase crown jewels that SAP is after?
The main three assets Sybase brings to SAP are obviously a database, a mobile infrastructure and real-time analytics. Is it the combination of all of these assets or is there a distinct difference between those portfolio elements? Here are some first thoughts from my side on SAP’s strategic intention for the deal:
This deal is not focused on Sybase’s database assets. Why?
- The Sybase market share on databases is too small to make a big difference for SAP. Most SAP applications are currently running on Oracle, and there is little appetite in the market for replacement projects.
- SAP is Oracle’s biggest database reseller and makes significant business out of this and won’t shoot itself in the foot. Thus they will of course continue to sell and support Oracle, DB2, etc… Anyways it’s an important element of SAP’s strategy to support multiple databases, but first it means investment to extend this support to the new family member (Sybase’s database is currently not supported!). In the long run, however, it won’t hurt to have in-house database expertise as the market changes and new opportunities will come.
- The new, at least long-term, database strategy of SAP is ‘In-Memory’. SAP just started the adoption of in-memory in the analytics space, but it is a declared goal to expand in-memory to more and more applications over time. Watch Hasso interviewing Hasso on that very topic – Funky! In summary I think there is little strategic value in the Sybase database to be a main driver for the deal.
This deal is partly driven by SAP’s mobile strategy.
- Yes, SAP’s NetWeaver Mobile infrastructure didn’t really kickoff to become a leading mobile technology in the market, not even the SAP mobile application market. Many customers complemented SAP’s mobile applications with 3rd vendor technology and SAP has embarked on a strong partner based strategy since early 2008 including RIM, Syclo and Sybase.
- Since March 2009, SAP and Sybase have already had a very close co-innovation partnership. Both companies jointly developed, e.g., the co-branded and co-supported Sybase Mobile Sales for SAP CRM and Sybase Mobile Workflow for SAP Business Suite. However, it’s still a different story to have key technology in-house than to rely on partners.
- Thus I believe that in the mobile space the deal has more of a protective character, making sure that the Sybase assets are not getting into the wrong (guess whose?) hands.
A large part of the deal is about real-time analytics.
- Sybase acquired in February this year Aleri, a leading solution provider for CEP – complex event processing! Since then, Sybase has been a leading vendor in the space for real-time analytic processes and decision support. Analytics/BI is one of the fastest-growing markets in software and plays a key role in future market trends like Smart Computing. SAP already invested billions into this space with the acquisition of Business Objects, and it is still a race between the big four, IBM, Microsoft, Oracle and SAP, to determine who has the best and most sophisticated BI solution in place. IBM made a huge step with the SPSS acquisition to become a leader in predictive analytics; SAP now becomes a leader in real-time analytics.
- Sybase’s analytical assets include industry solutions such as Sybase RAP a Trading & Risk management application for the Financial Services industry. Financial Services is an industry SAP has identified as a key target growth market and has invested huge amounts but with limited success so far (the Deutsche Bank announcement recently was an important breakthrough). The Financial Services industry is one of the few industries where real-time really means sub-seconds and, with the Sybase technology and expertise, SAP is now in a unique position to deliver best-in-class, unique solutions to this vertical.
- Real-time CEP & In-memory = BOOM ultrafast, real-time handling of large data volumes. The combination of SAP’s latest and greatest in-memory technology with Sybase’s CEP real-time processing can result in solutions that are currently unmatched in the market and become a pillar of SAP’s renewal process as a thought leader and innovator.
- You can read some more details and insights on the complementary and overlapping aspects of SAP’s and Sybase’s BI portfolios in the blog of my colleague Boris Evelson.
- Another interesting reflection on the deal is posted in the blog of my colleague Paul Hamerman.
- A more detailed view on SAP's (mobile) middleware strategy regarding the Sybase deal is posted in the blog of my colleague Stefan Ried.
- You can read some more details on role of the mobile technology for the deal in the blog of my colleague Michele Pelino.
- And, as there will be more upcoming blogs from Forrester analyst colleagues, I will update this blog post and link them here for your convenience.
The Sybase deal is not the big, strategic acquisition that will prevent SAP from getting boxed in by competition in the long run (e.g., see my recent blog ‘What recent acquisitions mean to SAP?’ and ‘SAP Changes Continue – 10 Predictions for 2010’), but it’s definitely a strong step into the right direction, a commitment to innovation and demonstration of leadership of the new board: Thumbs up, SAP!
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