Applications vendor is counting on breakthrough combinations with Sybase mobile and analytic technologies.
With acquisitions being a growth engine for most large technology vendors these days, the pressure is on SAP to buy. But is the planned acquisition of Sybase, a $5.8 billion deal announced yesterday, a good fit? The answer depends on SAP's ability to execute.
IBM's rule on acquisitions, recently articulated by software executive Steve Mills in announcing the purchase of Cast Iron Systems, is that the company be in an adjacent market and that it offer synergistic promise. Sybase doesn't meet the first test well in that the database and mobile platform provider is not really in an adjacent market. Indeed, that's a key reason SAP vowed yesterday that Sybase will be run as a separate subsidiary and that it will not pressure SAP customers to switch to Sybase databases.
So the value of this deal is all down to synergies. There are plenty of opportunities, starting with mobile access to applications and extending to potential blends of SAP and Sybase data management technologies, including in-memory analysis, column-store analytic databases and complex event processing.
In announcing the deal yesterday, SAP executives put a big emphasis on Sybase mobile capabilities, which include the Sybase Unwired mobile client development platform and Sybase 365, the vendor's mobile messaging and mobile commerce services business. Sybase 365 is an "interoperator," passing messages among more than 700 network customers, including popular service providers such as AT&T, Sprint, Verizon and Vodafone. The Mobile business accounts for about $400 million, or about a third, of Sybase's $1.2 billion in revenue, but it is the fastest-growing part of the company. SAP executives said Sybase will give it "first-mover advantage in delivering the real-time, unwired enterprise," and they cited plenty of stats underscoring the growing importance of the global market -- including projections that the mobile internet will be ten times larger than the desktop internet.
Sybase and SAP already have a 14-month-old partnership whereby SAP's mobile applications are being developed and delivered on the Sybase Unwired platform. Supported device platforms include RIM, Google Android, Apple iPhone and iPad, and Microsoft, a breadth of offerings competitors will have trouble matching.
Will buying Sybase enable SAP to go beyond what it can achieve through partnership? "The first reason for the acquisition is one of strategy," said SAP co-CEO Bill McDermott in response to that question yesterday. "We identified an addressable market that would be substantially increased if we had mobility as a serious capability."
SAP also mentioned Sybase's global data centers, which exchange as many as 1.4 billion messages per day. That capacity and related data-center expertise could soon figure in delivering SAP cloud computing offerings, starting with the soon-to-be-rereleased Business ByDesign service.
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