With the Sybase deal, SAP’s new management has shown a welcome display of strategic intent, but SAP has a number of questions to answer with respect to its role in the changing IT environment by Virat Bahri
SAP’s acquisition of Sybase doesn’t up the ante in the database and business analytics space immediately, but it is a welcome display of strategic direction on the part of SAP. Sybase is the leader in mobile application database with dynamic data movement technology, database for analytics and has presence in telecom and financial services. It helps SAP tap the growing number of mobile and smart phone users through its enterprise offerings. Wilson opines, “The major benefit to SAP is Sybase’s mobile middleware platform, which is device-agnostic and provides strong device security and management capabilities.” Oracle & IBM haven’t been too aggressive in mobile analytics, so SAP plans to steal a march.
There are other reasons, as a report by IDC confirms. Around 80% of SAP R3 users are on Oracle’s database, and SAP has been wanting to change that with little success. Sybase ASE provides SAP with a valuable database for its enterprise solutions. Obviously, it is not a replacement of Oracle, so it’s no wonder that SAP maintains that it will maintain database independence, i.e. support Oracle.
But in the long term, there could be some surprises. Henry Morris, Senior VP, Worldwide Software and Services Research, IDC, comments to B&E, “As per Dr. Hasso Plattner’s speech (Chairman, SAP AG), the phased roadmap to in memory leads to an end state where conventional relational databases are eclipsed by in memory. Down the road, this could threaten Oracle’s position as the most popular database under SAP.” Actually, third generation database technology with columnar and in-memory features (benefit of the Sybase acquisition) is also widely touted as the future. “These technologies are becoming mainstream, and are offered by a wide variety of vendors to solve common, real-world data management problems,” says Carl Olofson, Research VP, Database Management and Data Integration software research, IDC. Oracle, IBM and Microsoft already have databases based on these technologies. Assuming the deal does get completed after some contentious issues with Sybase shareholders are resolved, there are risks for SAP too. Firstly, the company risks alienating other mobile partners like Syclo and Sky Technologies. Also, its challenge will be to demonstrate that the combination of in memory and columnar technology is a genuine value addition to customers.
SAP clearly needs to do a better job in articulating the business benefits with solid use cases. While it gains advantages in the mobility space, SAP has to ensure that its enterprise products are suited to the changing environment where SaaS, on demand and cloud computing are in vogue. Business By Design (SAP’s SaaS solution) requires a very different go-to-market model than SAP has used historically in that it relies on a high-volume, low-margin model, quite different from the low-volume, high-margin model of the past. This will be one of SAP’s critical tests now. SAP has to also strengthen its vertical presence and build or acquire more applications to build its SaaS portfolio before the competition. In all, though McDermott and Snabe have proved, for once, that SAP retains the ability to think ahead of the market. But that claim, in the IT sector, holds water only for a quarter. The giant has to move more often, and faster.
For more articles, Click on IIPM Article.SAP’s acquisition of Sybase doesn’t up the ante in the database and business analytics space immediately, but it is a welcome display of strategic direction on the part of SAP. Sybase is the leader in mobile application database with dynamic data movement technology, database for analytics and has presence in telecom and financial services. It helps SAP tap the growing number of mobile and smart phone users through its enterprise offerings. Wilson opines, “The major benefit to SAP is Sybase’s mobile middleware platform, which is device-agnostic and provides strong device security and management capabilities.” Oracle & IBM haven’t been too aggressive in mobile analytics, so SAP plans to steal a march.
There are other reasons, as a report by IDC confirms. Around 80% of SAP R3 users are on Oracle’s database, and SAP has been wanting to change that with little success. Sybase ASE provides SAP with a valuable database for its enterprise solutions. Obviously, it is not a replacement of Oracle, so it’s no wonder that SAP maintains that it will maintain database independence, i.e. support Oracle.
But in the long term, there could be some surprises. Henry Morris, Senior VP, Worldwide Software and Services Research, IDC, comments to B&E, “As per Dr. Hasso Plattner’s speech (Chairman, SAP AG), the phased roadmap to in memory leads to an end state where conventional relational databases are eclipsed by in memory. Down the road, this could threaten Oracle’s position as the most popular database under SAP.” Actually, third generation database technology with columnar and in-memory features (benefit of the Sybase acquisition) is also widely touted as the future. “These technologies are becoming mainstream, and are offered by a wide variety of vendors to solve common, real-world data management problems,” says Carl Olofson, Research VP, Database Management and Data Integration software research, IDC. Oracle, IBM and Microsoft already have databases based on these technologies. Assuming the deal does get completed after some contentious issues with Sybase shareholders are resolved, there are risks for SAP too. Firstly, the company risks alienating other mobile partners like Syclo and Sky Technologies. Also, its challenge will be to demonstrate that the combination of in memory and columnar technology is a genuine value addition to customers.
SAP clearly needs to do a better job in articulating the business benefits with solid use cases. While it gains advantages in the mobility space, SAP has to ensure that its enterprise products are suited to the changing environment where SaaS, on demand and cloud computing are in vogue. Business By Design (SAP’s SaaS solution) requires a very different go-to-market model than SAP has used historically in that it relies on a high-volume, low-margin model, quite different from the low-volume, high-margin model of the past. This will be one of SAP’s critical tests now. SAP has to also strengthen its vertical presence and build or acquire more applications to build its SaaS portfolio before the competition. In all, though McDermott and Snabe have proved, for once, that SAP retains the ability to think ahead of the market. But that claim, in the IT sector, holds water only for a quarter. The giant has to move more often, and faster.
Virat Bahri
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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