When SAP bought Sybase back in 2010, it appeared that the main target was its mobility software. Sybase’s core and original business – database – was widely perceived as a ‘nice to have.’ It was making money and it had some very loyal customers – and a good position in financial services, a vertical SAP is targeting for growth. But the mobility piece was the jewel in the crown: everyone wanted mobile-enabled SAP (or was expected to).
When SAP bought it, Sybase was (and remains) the fourth biggest database vendor in the world – albeit a fairly distant fourth behind IBM and Microsoft, who are some way behind Oracle, and SAP installations didn’t generally run on Sybase. But over time, the usefulness of the database business to SAP has become much more evident.
The first clear example of this came in the re-use of technology: using Sybase’s Replication Server as a route into HANA, which is of course one of SAP’s most strategic platforms. The use of Sybase ESP (its complex event processing technology) as a HANA feed is under development in projects right now.
Second, as “big data” looms ever larger in people’s thoughts, Sybase’s IQ product – now over 15 years old and very mature – is looking increasingly interesting to the market. Columnar databases, like IQ, are suddenly a hot ‘new’ category in the big data context. Sybase IQ revenues are up 400% in the last five years and it’s adding around 200 customers per year. There are over 4,500 customer installations, and the company reckons it has never actually lost one (unless they went out of business). BI/analytics is a major strategic theme for SAP, and IQ is complementary to its other offerings.
Third, it’s well known that the majority of SAP installations run on an Oracle database. (When SAP does well, so does Oracle.) But Oracle is also SAP’s fiercest competitor when it comes to enterprise apps. The relationship between the two has not been untroubled. SAP would dearly love Oracle database users to switch to Sybase’s ASE OLTP database as an applications platform, both for the incremental revenue and to reduce its need to collaborate with its rival. Conversely, it would also like more Sybase customers to adopt SAP business applications. For instance, many financial services companies, despite their heavy IT spending, are relatively modest in their use of packaged solutions, with a lot of home-grown solutions: an attractive market for SAP’s packaged applications.
Bringing it all together
Hence, for all these reasons, SAP is in the process of folding the Sybase organization into the parent. It will no longer be “Sybase, an SAP company” – rather, the Sybase products will be brands from the one company.
Already the sales organizations have been merged and we predict a big focus on cross-sell. The marketing functions will be next, and the technical teams will then be brought together (at the moment, for example, the HANA team is in a different organizational unit than Sybase’s database folk).
Going forward, SAP has some levers it can pull to promote cross-sell: a particularly powerful one, we think, will be to promise that the release cycles of SAP (apps) and Sybase (database) will come into lockstep, thus potentially saving customers cost in downtime, regression testing, etc., for upgrades.
All eyes on April 10
The company has said that there will be a unified product strategy announcement on April 10. Thereafter, we expect to see SAP going after Oracle’s database business in earnest. SAP’s customers and partners, especially IBM and Microsoft, will be watching this very closely.
Back in December, Steve Lucas, EVP of Business Analytics and Technology at SAP, predicted that the company (including Sybase) would be number 2 in database by 2015. That’s a bold goal. By our estimates, that implies tripling database revenues. But it seems evident the company is taking this goal seriously. How, and if, it will get there will become clearer on April 10.