Sybase CEO John Chen: Tale of a Turnaround

What’s behind SAP’s acquisition of Sybase? John Chen, Sybase’s CEO, offered compelling clues in an in-depth interview shortly before the merger was announced

By Eric Knorr and John Gallant, ITworld |  Mobile & Wireless, Analytics, SAP

Telcos in the cloud

Knorr: We recently interviewed John Chambers at Cisco. It's very clear he's making a big bet on the cloud. It's also very clear that Chambers has telcos top of mind as important partners. So you're in with the telcos. Tell us what you think the role of the telcos is in cloud computing.

Chen: Every telco is talking about the cloud. I don't think I met a telco executive who didn't use that word in the first five sentences. And I've been on record saying that this is about the only area in which Larry Ellison and I are kind of aligned. My team always advises me not to say that. [laughter]

The majority of my customers have already been using a local cloud, a proprietary private cloud environment. All my trading systems around the world are clouds. You need to get to the definition of -- what does the company do? You need a definition of the cloud.

I have no idea why you guys are so excited about it. Isn't everybody's using it and doing it? The answer is yes. Because every time you have backup data centers, and you don't care where your application runs, and the application has no idea where it's getting the data and which processors are being initiated, that's a cloud.

Knorr: That's the private cloud.

Chen: That's the private cloud. The second level of cloud is the hosting cloud. I have a cloud computing environment by allowing you to send me your SMS messages and route them through my network, and you don't where the hell that is. Because my network actually grows with the telco; because a lot of times I use the telco platforms. So I don't actually have all the servers. I have a lot of the servers to stage the traffic, but I don't have all the servers. Sometimes I give it to Vodafone and Vodafone will deliver it to Deutsche Telekom. Sometimes I give it to Sprint and Sprint will give it to AT&T. And sometimes I give it to China Mobile and they will give it to Telstra in Australia.

So that's a real cloud. And arguably, that's what Salesforce.com does, and that's a cloud. And in my mind, that probably is the most real definition of the cloud, because you can see what the customer gets from it and you can see who makes the money. If you can identify those two -- why people use it and who makes the money out of it -- at least you have sustainability. So we have that cloud. Our messaging network's our cloud. And we're going to put more and more...we're going to put analytics on the cloud, we're going to put...

Gallant: Well, let's talk about that. So how does the product strategy evolve to embrace cloud?

Chen: There are some basic technology requirements in every piece of software that goes on a network of computers -- you may or may not know where it is and you don't really care. Multi-tenancy is a clear one. And it's a simple idea, right? Then there's the ability to do tracking and billables. You have to be able to bill. So those are all common functionalities in what we have done. We are committed as a company. Every piece of our software, database, analytics, mobile server, will all be cloudable, will all be cloud compliant. So you have all the multi-tenanted functions.

The final cloud is the EC2 type cloud, in which basically you say: I'm going to rent computing time. Telcos love to do that. You're renting; that's the data version of the voice we all grew up with. You could pick up the phone and keep calling; they just count how far and how long you call. And that's what telco wants.

When a telco wants to be in cloud computing. That's what it means. They don't care what application it is. Now, they may offer some of their own. Verizon wants to do it; AT&T is doing it with Symphony. All those guys are doing it. So that's why Chambers is very focused on that, because that's the only environment where you could see who's going to make money and how the audience or the user benefits from it.

Then there's Amazon.com. Amazon -- I don't want to piss them off publicly, right? But it's hard to see how they're going to make money in the long-term with that model. And the reason is that -- how many real serious enterprise compute entities will use a public cloud for their day-to-day operations? I find that a little hard to correlate.

Gallant: Do you think enterprises will do analytics in the cloud?

Chen: Yes, I think they should.

Gallant: If they're concerned about security, why would they?

Chen: Well, I think analytics in the cloud is not going to be -- you're not going to get the true copy of all data at the same time.

Gallant: I'm not sure I understand what that means.

Chen: That means analytics can function very well working on a representative set of data and some of the changes to that data. They don't need all the accurate pieces of data and they don't need all of the data. So there is a limited exposure -- other than the privacy issue. If they put your bank account on it, that's a privacy issue. But I would argue that when you have a sensitive security issue like that, then people won't put in on the public cloud. And that further enhances my argument that it's difficult to see how the public cloud could be prosperous.

Gallant: Not even when you use the cloud to open up analytics to the whole mid market or small business, where today most of those customers can't afford it?

Chen: We are doing that. We are trying to rent analytics on our own network. So people would basically dial in and pay us and we'll host the apps. And then people will pay us for what they use.

Knorr: Are you working towards a seamless extension of your licensed products, so you have them running locally, and then you could extend into the cloud if you need additional capacity or functionality?

Chen: Not yet. I hear what you're saying. Not yet. The answer is: We need to. Today you have our license and we're going to have to work with you to see how you could extend it into a cloud environment. And the reason that is -- and it's a selfish reason -- the industry hasn't sorted itself out on how much you charge for that.

It's not zero. Because if it's zero, I have a business problem. You cannot buy one copy, put it in a cloud, and have two million people using it. Now, conversely, the old days of selling you two million copies are gone, too. I'm not stupid enough to think that if I stuck my head in the sand that somehow, somewhere, the good old days are going to return. I'm realistic enough. So I said "not yet," because you basically hit the very reason why: An established software company can't afford to give it away.

Now, do we have to deal with it? Absolutely. Why? Because if we don't deal with it, somebody will deal with it, and we're going to be left out in the cold. And we don't want that. So it's a challenging topic. We know we have to do something.

The way I position this is that Sybase has a pay-as-you-go model and a buy-and-own-it model. I say it that way because that kind of defines the way I do business. I have not allowed the two to cross yet, which is your question. I will have to, and we're working on it, because we have no choice. I mean the customers will demand it and eventually it will happen.

Knorr: Not there yet.

Chen: We're not there. And the industry is not there. By the way, if you guys know any clever idea, please do call me and let me know. And I'll be very, very grateful, because nobody has figured this out yet.

Gallant: Microsoft is working on it. Sort of Office here/Office there kind of licensing.

Chen: Yes. Microsoft has a little different scenario than we do. But you're right. Partly because if they don't do it, the Google/OpenOffice stuff will hit them anyway. Arguably I could get a Google e-mail address and I could just use OpenOffice software - and I could use it collaboratively, too. I mean that's the beautiful thing about the Google thing, because you and I could be working on the same thing together.

Next page: Parting words

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Ask a Question