SAP announced today the acquisition of software maker, Sybase, for approximately $6 billion. The deal positions SAP to become a significant player in the mobile enterprise software market, offer additional flexibility to customers, and eventually move the company toward database independence from Oracle.
During the analyst conference call announcing the acquisition, SAP's co-CEO, Bill McDermott, commented:
This is a strategic moment for SAP and helps expand our market in mobility, in-memory computing, and analytics. It extends the crown jewels of both companies: our ecosystems and global reach.
Jim Snabe, SAP's other co-CEO, added:
This acquisition is consistent with our three pillar strategy: on-premise, on-demand and on-device. It fulfills our goal of delivering information anywhere, anytime, and on any device. We remain database, hardware, and platform agnostic.
On the subject of mobile devices, Vishal Sikka, SAP's Chief Technology Officer, said:
Mobile computing is an unmistakable and profound shift in the market. Sybase will be our platform to support all mobile devices, including Windows, Blackberry, Android, and others.
SAP has never ruled out acquisitions for the sake of innovation and market extension, which this deal reflects.
Database. During the analyst briefing co-CEO, McDermott, deflected a question about SAP using Sybase to gain database independence from Oracle, saying the focus is on innovation and customer choice rather than on competitors.
Top independent analyst, Merv Adrian, who previously worked as analyst at Forrester Research, told me he agrees this announcement is not about Oracle:
Initially, the Oracle angle offers primarily nuisance value. Porting the Sybase database will take a few quarters, especially if you include testing, and there will likely be little performance advantage to customers with the first release.
Eventually, as customers need to renew Oracle licenses, SAP will probably offer excellent financial terms on the Sybase database. However, even with favorable licensing terms, customers will still find migrating from Oracle to Sybase expensive and time-consuming. Therefore, there will be no lemming-like march to the Sybase database on the part of SAP customers.
On the other hand, SAP could use this acquisition to build an end-to-end bundle: production to analytic database using Sybase Replication Server to Sybase IQ with the Business Objects portfolio. Customers would find that a compelling analytic package.
Mobile. Personally, I am most interested to see how the mobile strategy impacts SAP's traditional ERP business. Will SAP use mobile primarily as a data distribution mechanism, or do devices fundamentally change parts of the ERP value equation? I suspect SAP recognizes that ERP-related information creation, consumption, and value is evolving in ways that will eventually require the company to rethink aspects of its core business.
Analyst Merv Adrian commented:
Sybase's mobile platform will help SAP innovate around customer decision-making at the end touch points in a mobile world. There is opportunity for SAP to change the ERP value equation based on mobile devices.
My take. Of course, some observers will criticize one aspect or another of this acquisition; that goes with the territory.
However, I believe SAP understands it has lost certain competitive edges over the last years and is now making a concerted effort to address this situation. The acquisition represents SAP's willingness to invest in new areas and markets. Only time will tell whether this bet pays off, but at least SAP is at the table.
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