One day the entire world will be mobile and connected. Upcoming generations of business workers will be able to collaborate and communicate in real time. Entire economies will go mobile as emerging markets and countries go directly to an unwired economy. These are some of the predictions made by SAP executives during teleconferences on May 12 and 13 regarding the collaborative business software company's $5.8 billion acquisition of Sybase.
Sybase, a California-based provider of enterprise and mobile software, offers its clients the tools to analyze and mobilize information, a capability SAP wanted to add to its business applications. Founded in 1984 by Mark Hoffman and Bob Epstein, Sybase began as a database management system but now provides information management, analytics, and enterprise mobility solutions for the financial services, telecommunications, manufacturing, and government sectors.
[Editors' Note: CRM magazine awarded Sybase one of its CRM Market Elite awards in 2007. See that story here.]
"Sybase's core business will benefit from SAP's breakthrough in-memory computing technology," said SAP co-CEO Bill McDermott during the call. "SAP will extend our industry-leading business applications and analytics to billions of mobile users. SAP will be the only company enabled to deliver a full suite of enterprise software and next-generation business intelligence on any device at any time, fully harnessing Sybase's mobile platform."
McDermott, who took the reins at SAP in February along with Jim Hagemann Snabe, also acknowledged that SAP would benefit from leveraging Sybase's strength in financial services, telecommunications, and public services, in order to build upon the strong performances in SAP's focus industries.
The acquisition is also seen as a play by SAP against rival software provider Oracle, the leading provider of database solutions to SAP's customer base.
"This is a pretty serious salvo across Oracle's bow," says Joshua Greenbaum, principal at Enterprise Applications Consulting. "The ability [for SAP] to do mobile, and to go into these vertical industries more concretely, is a definite attack on Oracle."
SAP's May 12 press release listed several other key benefits:
- The realization of SAP's in-memory computing vision.
- Higher user adoption of SAP software and the goal of unlocking significant business value out of existing customer investments.
- Connecting all applications and data (SAP and non-SAP) and enabling them on mobile devices.
- The ability to tap into Sybase's messaging network to reach 4 billion mobile subscribers through more than 850 operator relationships worldwide, engaging consumers via alerts, transactions, and promotions on their mobile devices.
"This acquisition falls right in line with our three-pillar strategy of on-premise, on-demand, and on-device software," said Jim Hagemann Snabe, McDermott's co-CEO. "We are already the leader in on-premise software. We are expanding in on-demand. Now with the acquisition of Sybase we will establish our leadership in on-device."
Sybase will operate as a standalone unit under the name "Sybase, an SAP company," according to the press release. Its current management team will continue to run the business and John Chen, the chairman and CEO of Sybase, will be proposed for appointment to SAP's Executive Board, which includes both Hagemann Snabe and McDermott.
Because Sybase will become a separately managed subsidiary, rather than becoming integrated into SAP, the two companies have simplified what can normally be a tricky transition process for two businesses of this size.
"There isn't much overlap in the customer bases and products, so they're going to be able to do a lot right away," Greenbaum predicts. "The technology cross-fertilization process can take time…but they shouldn't lose much momentum."
Sybase has been relatively successful in recent years, having recorded 10 consecutive record quarters in revenue, profitability, and cash flow; the company has also generated $384 million in cash from operations.
But according to Gartner research and an article in Thursday's New York Times, Sybase still lagged far behind Oracle in the marketplace for database management software, with just a 3 percent share of that market compared to Oracle's 43 percent.
News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.
You may leave a public comment regarding this article by clicking on "Comments" below.