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Analysis: Sifting Through the SAP-Sybase Tea Leaves

Sybase has a number of well-regarded products. That's why experts are concerned about the disposition of its best-of-breed DM assets.

In retrospect, SAP AG's acquisition of Sybase Inc. seems like a no-brainer, even at a reported $6 billion purchase price.

As industry veteran Mark Madsen puts it, "If I were buying into this market, I'd buy Sybase too." If nothing else, says Madsen, a principal with business intelligence (BI) and data warehousing (DW) consultancy Third Nature, Sybase gives SAP broad analytic reach.

"I believe they saw the rising analytic database market and wanted in." With more than 2,000 IQ customers -- including users in several key verticals -- Sybase certainly gives them that, Madsen suggests.

The analytic aspect of the acquisition takes center stage, of course. It's largely thanks to demand for its (venerable) Sybase IQ analytic database that Sybase has enjoyed a revival of sorts.

Sybase has several well-regarded products, which is one reason industry watchers believe SAP got a bargain -- even at $5.8 billion.

In addition to Sybase IQ, there's Sybase Adaptive Server Enterprise (ASE), which -- in spite of its substantially diminished market share -- remains entrenched in key verticals such as financial services.

What's more, Sybase boasts a creditable -- and in the case of both its replication (Sybase Replication) and federation (Sybase Data Federation) assets, enviable -- data integration (DI) portfolio, too.

Add in a market-leading mobile portfolio (anchored by its Sybase iAnywhere subsidiary), a best-in-class modeling tool (Sybase PowerDesigner), and several application- or vertical-specific offerings (Sybase Complex Event Processing; Sybase RAP The Trading Edition), and you have a recipe for an especially robust technology stew.

A Mobile Computing Boondoggle

In spite of its best efforts, Sybase never could leverage its premium ingredients (Sybase iAnywhere; Sybase IQ; Sybase ASE; Sybase PowerDesigner; Sybase Replication, and Sybase Data Federation, which is based on technology acquired from former EII-high-flier Avaki Corp.) to dramatically improve its standing relative to rivals IBM Corp., Microsoft Corp., and Oracle Corp. in the broader data management (DM) market.

Although IQ has given Sybase new life in the combined BI and DW market, it nonetheless continues to trail its DM rivals -- to say nothing of entrenched leaders such as Teradata Corp. or SAS Institute Inc. -- in this market, too.

Sybase iAnywhere, on the other hand, is a juggernaut in the mobile computing space. SAP co-CEO Bill McDermott and other officials say the pieces of Sybase's iAnywhere mobile portfolio are what prompted SAP to pursue its acquisition bid in the first place.

Sybase DM is a value-add that tops off iAnywhere and the other layers of Sybase's mobile computing offerings. Unfortunately, DM is often considered optional.

"I feel … we can take SAP representatives at their word when they say that the acquisition of Sybase is mostly about extending the reach of SAP applications via mobile devices and mobile infrastructure," says Philip Russom, senior manager with TDWI Research. "After all, Sybase's mobile business kept the company afloat for over a decade as the database business faded into legacy oblivion and as attempts to build up an integration portfolio amounted to little."

Ahead of SAP's annual Sapphire user conference in Orlando, McDermott and co-CEO Jim Hagemann Snabe defended Sybase's near-$6 billion asking price, touting that company's mobile computing credentials. Russom points out that Sybase more than delivers the mobility goods.

"Sybase has shown real leadership in the mobile computing realm, with a full complement of products and services. Don't forget that Sybase owns and operates a bevy of data centers that constitute a considerable infrastructure for mobile computing at a time when data center services are a hot item."

Whither Sybase DI?

Sybase's data integration (DI) assets comprise a wild card of sorts. SAP will almost certainly sustain products such as IQ, and probably ASE. On the DI front, however, it will have to make some hard choices about overlapping products.

SAP already has creditable DI technology, thanks to its acquisition of Business Objects (which fielded formidable ETL, EII, and data quality technologies); Sybase, likewise, boasts an impressive DI stack. Russom is at once intrigued by -- and concerned about -- the ultimate disposition of Sybase DI in the post-acquisition process of assimilation.

"I think Sybase was on the right track to acquire and build a portfolio of data management and integration products. These tools represent a growth market, but Sybase didn't put much behind these, so I don't see much market penetration," he observes.

SAP's acquisition history -- and, particularly, its acquisition of the former BusinessObjects SA (which is comparable -- both in size and in price tag -- to its Sybase bid) -- is somewhat encouraging, Russom continues.

"Business Objects … executed well on their strategy for a fairly comprehensive and unified product line for diverse data management and integration tools. Luckily, at least so far, Business Objects' concept of enterprise information management … is still intact post-merger with SAP."

On the one hand, says Russom, Sybase DI -- and particularly offerings such as Sybase Replication Server -- could complement SAP BusinessObjects' enterprise information management (EIM) push. "I can imagine how Sybase products might possibly fold into the grander EIM scheme, but anything … is pure speculation, since I'm sure that even SAP and [BusinessObjects] folks are today nowhere near making such decisions.

"Even so, I'll stick my neck out and express my hopes that Sybase Replication Server will enter the EIM fold, since it's a quality product and SAP's EIM stable currently lacks its advanced replication and synchronization capabilities."

Third Nature's Madsen -- a veteran DW architect and in-demand DW consultant -- has a slightly less sanguine take. In practice, he says, he rarely encounters Sybase DI. From Madsen's perspective, SAP has less of an incentive to sustain products such as Sybase ETL (which it acquired four years ago from the former Solonde AG) or even Sybase Data Federation (which, though it's based on best-of-breed technology, overlaps to a degree with BusinessObjects Data Federator). That said, Madsen -- like Russom -- thinks highly of products such as Sybase Replication and Sybase PowerDesigner.

"SAP becomes a full-service data integration provider with [Sybase] Replication and other products like modeling [i.e., Sybase PowerDesigner]," he points out. "These were gaps in SAP's portfolio of BI tools," adding that the additions of both PowerDesigner and Sybase's PowerBuilder RAD offerings give "SAP … some modeling and development tools that are SAP-agnostic."

The issue doesn't so much involve technology -- no one disputes that SAP has the DI solutions in its EIM portfolio -- as wherewithal: SAP doesn't seem to have put a lot of marketing muscle behind EIM, says a veteran DW practitioner who asked that his name not be used.

"I think SAP has done well with BusinessObjects, but the data integration side is another story," this person argues. "I don't think there's much market share. ETL consultants are hard to come by. Customers tell me that they can't find any consultants, and SAP charges a whopping $400 to $500 per hour for their data quality consultants. When I heard that, I knew I had to start boning up," this person concludes.

A Delicate Touch

TDWI's Russom also expresses concern about how SAP's Sybase unit will be managed in the future. In this respect, he stresses, its track record with BusinessObjects is less reassuring. "I'm not so certain that we can take SAP representatives at their word when they say that Sybase will operate as an autonomous business. They made similar promises upon acquiring Business Objects, yet reneged within a year," he explains.

A loss of autonomy could prove especially damaging to Sybase's iAnywhere unit, according to Russom. He says that iAnywhere enjoyed success in part precisely because Sybase remained mostly laissez-faire in its dealings with it.

"The mobile business within Sybase has long enjoyed substantial autonomy, which has worked well for them," he concludes. "We'll have to wait and see whether tighter reigns slow the innovation this product line is known for."

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