What does Sybase have that SAP wants? An analysis of the acquisition, 5 days on.

[Former Member]

SAP have been tight lipped about mobile strategy since the beginning of the year and it seems clear that we have found out why. In the midst of the acquisition and the SCC regulations about forward looking statements that surround it, comments are very hard to come by outside of the official press releases. I work as the Head of Technology for a SAP Services Partner – Bluefin Solutions – and we are not bound by this. The phone has been ringing off the hook and everyone wants to talk about... nothing. I’ve spent the last few days reading between the lines and listening to what people haven’t been saying – and this is my opinion on the subject.

So with that in mind, what do Sybase have that SAP want? More than you might think at first glance, actually.

1) Mobile Platform – Apps, apps and apps.

As I’ve written many times before, SAP’s mobile strategy has not been a strength in days gone by. That however is the past and today, SAP have the opportunity to get it right. I dearly hope that they have what it takes to give clear messaging to cure the customer confusion, but buying Sybase sends out a very clear signal. This needs to be backed up by clear messaging in Sapphire, and I’m led to believe that this will happen. I’m sure the speech writers have been working 24/7!

Syclo’s official position is clear. SAP have made it clear that the co-innovation remains the same as it did and that they will continue to offer the mobile apps that they did before. So this means that the Mobile Asset Management (MAM) solution and the Mobile Asset management for Utilities (MAU) will remain with Syclo. As will CRM Field Service. This is all well and good but how will customers feel about this, especially if Sybase produce a competing solution? Would Syclo even consider being an apps builder on the Sybase platform? They are big on professional services and could certainly do so if they wanted to. One thing is for sure – Syclo’s support that they announced today for RIM (iPhone is already supported) finally puts them in the ring as a real MEAP provider and this is a great shift in direction.

We’ve been saying for a long time that a mobile platform is great, but without Apps it’s only part of what customers are looking for. The chairman of Sybase, John Chen, is well known for being an opponent of the apps that Sybase has produced, and showed very strong leadership in Sybase. I don’t know him personally but given his character, it seems likely that John will step down after a consultative period and move onto pastures new. The strategic direction that Snabe and McDermott are likely to impose on Sybase seems certain to me to be towards more Apps. Expect CRM Field Service on Sybase SAP (they built a lot of the technology for this into Business Suite 7.0 Innovations 2010), Mobile Direct Store Delivery (van sales) and several new apps.

I don’t think that the platform will change much because SAP needs to protect Sybase’s existing customer base. I am convinced they have learnt their lessons from the Business Objects debacle and as a result, I think that for now, SUP will stay as is. Customers however are slightly uncomfortable about the “two sets of middleware” position that SUP brings  - for SAP customers must have NetWeaver Mobile 7.1 and SUP to support mobile apps. I understand that they have gone some way to do this by allowing the next set of ERP on-line business processes to interface directly with SUP, but this will be for online scenarios only. Online/Offline scenarios like CRM Mobile Sales etc. will still require the NetWeaver Mobile 7.1 Data Orchestration Engine.

2) Mobile Cloud – a bipartite mobile strategy?

Sybase reach some 4 BILLION people on the planet via some 800 cellular operators on their messaging platform. SAP have made no secret that they want this sort of reach in the next 3 years and they have bought their way into this. It’s no coincidence that SAP bought Sky Data at the tail end of 2009 and with it they acquired a new SVP of Mobile Strategy, Kevin Nix (who had previously headed up Sky). I suspect that SAP plan to split their mobile strategy into two halves. The first half is the existing co-innovation strategy, building apps on the Sybase SAP platform.

Will we hear a bipartite strategy which brings mass-market mobility for SAP integration scenarios? I’m thinking for the sort of scenarios like the iPhone app that Centrica have developed for meter reading. Rumour goes that their new app that they are testing allows you to photograph your gas meter and send the reading directly into ERP. Pretty cool stuff. Will we see HTML5 web apps available that are multi-platform, built on a combination of Sky and AjaxWeaver’s technology? In the cloud? It’s not unthinkable, for sure. And will SAP co-innovate with partners to deliver this in a market style fashion? It’s not impossible!

3) Database – or rather, the people.

The database platform seems to be the elephant in the room. I worked on Sybase’s database platform some 10 years ago and it was awesome. Scalable and resilient, with the best technology in the world for mobile synchronization. In terms of market share they have fallen well behind the big 3 – IBM with DB2, Microsoft with SQL Server and Oracle with... Oracle. But what’s more SAPDB, now MaxDB is only really suitable for small deployments and SAP never really had their heart in it.

What Microsoft did with SQL Server was really smart. SQL Server 7.0 and 2000 really sucked compared to Oracle 8, and at this time IBM was in the process of acquiring Informix. IBM decided that what they really wanted was the clever technology elements of  Informix for its existing DB2 database platform. Microsoft cleverly came along at this point and  poached the disenfranchised developers from IBM. If we look at where SQL Server has come in the last 10 years, this seems like it may have been a wise move.

By now both Oracle and Microsoft have very strong database platforms. Oracle and SAP are no longer best friends and now Microsoft is competing directly with SAP with its Dynamics platform. SAP is one of the largest buyers of both SQL Server licenses and it is very reliant upon those relationships in order to support its platform. SAP has (allegedly!) been courting Teradata for a long time but Teradata is not for everyone – only for big and hard databases.

All this brings us onto Sybase, which is a multi-platform database, and I’m told, could easily run SAP from a technology perspective. So you have to believe that SAP must intend to build a premium database platform alternative to MaxDB. The only problem I have with this is that most businesses have existing skills in one of the big 3 database platforms for other systems, so convincing customers to go Sybase would require something compelling. I’m not convinced that I can see the compelling event but time will tell. My view is that SAP will probably not end up building on top of the Sybase DB platform but will instead use the people to develop interesting new in-memory technologies.

This also almost certainly precludes a Teradata acquisition in the near term. SAP have bought a scalable database platform now and their coffers will be empty. They have partnered with Teradata and NetWeaver will run on Teradata. I think that for now, they have what they need and won’t be tempted to put their hands in their pockets again.

4) In-Memory Analytics – the elephant in the room.

I suspect this is where a lot of the real money is at, but the details will take some time to emerge. In-Memory is enormously important because magnetic disk storage is on its way out. SSD is growing and will replace magnetic storage in enterprise storage within the next few years. SSD effectively makes storage in-memory before we start and it entirely changes the proposition from a hardware perspective. I think that SAP will combine the development teams from SAP and Sybase to produce new in-Memory products. What with?

SAP have a best of breed in-memory solution with the Business Warehouse Accelerator (OK, it’s all TREX under the hood!). I’m not yet clear what Sybase have to add to the party apart from some additional integration complexity between SAP BusinessObjects Explorer and BWA and this feels to me like it smells of the kinds of problems that SAP had with the Business Objects acquisition. My advice would be to stick to getting Aurora out (SAP BusinessObjects XI 4.0 by any other name). It currently sits in the Q4 2010 timeline along with NetWeaver BW 7.3, which it will be closely bound for those customers with a SAP Data Warehouse.

SAP NetWeaver BW 7.2 was cancelled this year because customers wanted a fuller release rather than a set of interim releases, and they wanted more functionality than 7.2 had in it. This pushed BW out to the end of this year (NetWeaver BW 7.0 EHP2 will ship in the interim, I would think), and as a result, aligned with the Aurora timeline. This makes perfect sense but  I’m conservatively supposing that since Aurora will be such a big release, it is likely to slip. Adding more complexity to this release by attempting some Sybase integration for in-memory analytics would be a mistake, in my opinion.

5) Customers

Like with the Business Objects acquisition, Sybase has a considerable order book of support customers and open opportunities. It has publicly stated that Sybase will be autonomous and operate as “an SAP company”. Even if you are cynical and think that this is just a ploy to avoid a negative market reaction, you can be sure that SAP is taking Sybase’s existing customer base seriously. Sybase is platform independent, both from a database perspective and a mobility perspective and customers running SAP only represent a portion of the revenue.

Conclusion

Sybase seems to me to be an excellent fit to SAP from a platform perspective and I am very excited about the months to come. My Mobile team has been using the Sybase Unwired Platform for CRM Mobile Sales since the beginning of the year and we went live on this over the weekend (more on that, later!). For now, SAP needs to let the iAnywhere guys from Sybase get on with one thing – building apps, apps and apps. Only with a suite of industry aligned mobile solutions can SAP deliver what its customers need over coming years.

And whilst the mobile guys are at it, get the database and in-memory teams together and build the platforms of the future.