Why would SAP buy Sybase? Hint: It's not for the database.

I have to admit that when I heard that SAP announced their proposed acquisition of Sybase, my first reaction was: "Why?" followed by "Sybase is still around?"

Sybase was a real contender for being the database heavyweight champion back in the '90s, but Oracle won the belt, and has been the undisputed leader ever since. SAP sells a lot of Oracle database licenses - the preferred database platform for SAP is Oracle.

For SAP to acquire Sybase to try to take away Oracle's preferred database status makes no sense, and yet, since Sybase is a database company, that is a logical first thought. But, according to SAP's press release, that is not the reason. The reason is mobility.

It turns out Sybase has been very busy in the mobility world these last few years. They have always had mobility as part of their strategy - they released SQL Anywhere back in the '90s to synchronize central database data out to mobile (i.e. laptop) users. But, in the intervening years, they have expanded their mobility scope well beyond databases, moving up to applications like mCRM, mobile marketing, and mobile payments solutions, and mobile SMS/MMS networking.

I can give you all kinds of stats about how more and more people are using mobile hand-held devices to access the internet, but it is obvious, isn't it? Just look around - people are glancing down at their mobile phones all the time. Last year's Halloween cover on The New Yorker showed parents looking at their phones while their kids are trick-or-treating. It is ubiquitous. Sybase built a set of technologies and services allowing companies to do business from mobile devices. SAP is the top-tier ERP vendor. This makes sense.

Sybase gets SAP's in-memory database technology, which I discussed last week in my post "In-memory Databases Do Not Excuse Fat, Bloated Applications". SAP adds database skill depth to develop this further, and Sybase has the wonderful install base of SAP customers to help drive sales once it is ready for prime time. This is strategic for both companies.

I had a chat with Shawn Rogers, VP of Research, Business Intelligence and Data Warehousing at Enterprise Management Associates, an IT analysis firm, and he brought up another value that SAP gets out of this: Sybase IQ, their business intelligence system, and which marries well with SAP's other acquisition, Business Objects. In words of Shawn, this combination allows both to be "faster, better, and smarter."

Sybase has also experience with Software as a Service (SaaS) and network services, which can only help SAP in developing its SaaS products.

So, there are synergies here, but it is mobility that matters. This is the key thing that SAP gets out of this. In a world where everything is mobile, Sybase has the software, infrastructure, and services, to allow SAP to push its ERP and CRM offerings to wireless handsets, and that is huge. If played well, this acquisition could make SAP the leader in mobile ERP and a real player in mobile CRM.

It will be interesting to see where SAP takes this. For existing SAP customers, this is all win. I am curious how SAP will use this to acquire mid-market customers. If they come up with a true Software as a Service (SaaS) offering for their ERP and marry it with Sybase's mobility and Business Intelligence offerings, then they will have a strong contender.

See also:

When a software system fails: Should it stay or should it go?

In-memory Databases Do Not Excuse Fat, Bloated Applications

The Three Rules of Reports

Third Party Software Support: Yes or No?

Mark Patterson blogs about ERP, CRM, Financials and other business software for ITworld. Follow him on twitter @dudester.

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