Thursday, May 13, 2010

SAP to Acquire Sybase, Day 2 - Kevin Benedict's Thoughts and Analysis

SAP's annoucement that they intend to acquire Sybase is still rumbling in my sleepy head.  Several years ago when I was the CEO of a mobile enterprise application company, I partnered with Sybase/iAnywhere.  As a result, I have a deep appreciation for both their strengths and their weaknesses.  I believe this acquisition or a similar one was inevitable, as SAP has been highlighting mobility since last December, but the timing still took me by surprise.

I expect that events and presentations at Sapphire will bring clarity to this move, but in my current fog of confusion I give you my thoughts. 

I have been recommending for some time that SAP should own the mobile integration layer.  Variations of this have been called Gateway, DOE, NetWeaver Mobile, etc.  I think this move will clarify in the future how mobile applications should integrate with SAP.

Let's take a look at some of the direct quotes from the SAP executive suite:

"We see a huge emerging market for the real-time, unwired enterprise. With this strategic move, SAP becomes the number one provider in this market, a significant first mover advantage for our strategic growth ambitions," SAP co-CEO Bill McDermott.

"This acquisition falls right in line with our three pillar strategy of on-premise, on-demand, and on-device software…Now, with the acquisition of Sybase, we will secure our leadership in on-device, further cementing our ability to bring information to users anytime, anywhere, and on any device. As mobile applications for consumers have changed the world, the way people live and communicate mobile applications for the enterprise will have an equal profound impact in the way they work. We want to make sure that SAP solutions can be accessed from all leading mobile devices," Jim Hagemann Snabe, SAP co-CEO.

"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," said Vishal Sikka, SAP’s Chief Technology Officer.

Now let's take a look at a couple of statements from analysts and industry dignitaries:

Credit Suisse analyst Peter Goldmacher noted that SAP levered up to pay $5.8 billion for a $400 million business (Sybase’s mobile pieces).  "While the dream around mobile is big and Sybase is the undisputed leader, it is going to take a long time before the mobile business can move the needle for SAP. There is a smaller near term opportunity within SAP to mobile-enable a portion of its existing ERP apps," says Goldmacher.

The problem with Goldmacher's comments on near term opportunities is that Sybase does not have many mobile ERP apps, SAP's mobility partners do.  This will need to be worked out very fast.

Dennis Howlett in his article, "SAP acquires Sybase for $5.8 billion, but why?" echoed the questions I asked yesterday.  On the subject of custom application development he asked, "Does SAP think that Sybase and in-memory gives them an entree to this massive market [Telcos and Financials]? If so how does it plan to manage all the integrations required? Where is the rapid apps development environment [for mobile applications] that would make SAP a natural choice?"

While this move by SAP may be a good long term move, it introduces a host of near-term problems for customers and partners.
  1. 2010 is the year of mobility at Sapphire.  The exhibition floor is filled with innovative and powerful mobile application vendors that have invested in SAP partnerships.  What does this move mean for them?  They have powerful mobile applications today, where I see Sybase as a longer term play not a 2010 or even 2011 answer.
  2. SAP needs to immediately clarify their recommendations for what customers should do today to address their mobility needs or risk introducing sales and market paralysis.
  3. Sybase does not have a user friendly, graphically rich, template based rapid application development environment for enterprises or systems integrators to develop mobile enterprise applications.  It requires deep programming skills and knowledge to utilize their mobile middleware.  I know as I have used it.  What does that mean?  There are very few mobile enterprise applications available today from SAP/Sybase.  The innovation in mobile applications is coming from the likes of Vivido Labs, Leapfactor, Sky Technologies, ClickSoftware and Syclo, all of which are SAP mobility partners and have booths at Sapphire this year.
  4. Syclo is a key co-innovation mobility partner with SAP.  What does this announcement mean to them?  Their Sapphire focus and messaging likely changed yesterday.  
  5. SAP customers need mobile enterprise applications now.  How does this acquisition help?  It doesn't in the short term.
  6. You can bet that all SAP mobility partners are gathered in small rooms with whiteboards today.  They are likely to be grumpy at Sapphire from lack of sleep.
  7. There is an ABSOLUTE need for rapid application development tools and environments to help design, development, test, deploy and support rich or thick client mobile applications without significant programming.  These tools are available today from SAP mobility partners like Sky Technologies and Syclo.  These tools will need to be expanded to incorporate some of the mobile middleware functionality that the Sybase acquisition will bring to the table.
Bottomline: 

Sybase is not known for their mobile applications.  They primarily license mobile middleware and mobile databases to companies that develop mobile software applications.  SAP users need mobile applications.  Mobile applications, not mobile middleware, provide the ROIs customers seek.

Sybase/iAnywhere has been arguing for years internally on whether to develop their own SDK and enterprise mobile applications.  In the past they have chosen not to so as not to anger their OEM clients.  In fact, they only had a very small professional services team to deliver custom mobile applications.  I don't see Sybase/iAnywhere suddenly being the mobile enterprise application company.  They are very technical types who can ramble for days on the value of their synchronization, but have little insight into user interfaces, business processes and mobile applications.  This can change, but this has been my experience.

Companies looking for mobile solutions should not expect to find them in the SAP/Sybase acquisition.  The ready for market mobile enterprise applications will be available on the show floor at Sapphire next week.

SAP's mobility partners, those that develop thick or rich mobile client applications, may find value in aligning their future mobile middleware strategies to take advantage of the new SAP mobile middleware offerings.  However, this will be an infrastructure alignment and the end customer should not see much of a difference.

SAP mobility partners, that offer mobile micro-applications with rich user interfaces and experiences, are unlikely to see much impact in the near term from this acquisition.  I expect that SAP will provide a more standardized approach for integrating mobile applications and mobile device management into their ecosystem over time, but again this is not likely something that a customer will notice immediately.  Changes like this are mostly done behind the scenes.

SAP has been pondering how to best monetize mobile applications that integrate with their ERP environment.  Sybase has this down.  They have been embedding mobile databases and mobile middleware and charging a per device fee for many years.  They will likely be able to influence how SAP monetizes the mobile environment going forward.

There was a reason SAP had a partnership strategy for mobile applications.  There are literally thousands of different mobile applications that different business applications, industries and markets require.  SAP cannot possibly supply them all.  They have the responsibility to standardize the way these mobile applications interface and interact with their ERP environment, but they must depend on the ecosystem to fulfill the demand.  This has not changed.  Sybase does not bring a large inventory of mobile applications.  SAP's mobility partners will likely remain the source of tactical and industry specific mobile applications both in the near term and in the long term.

I look forward to your comments!  We will figure this all out together :-)
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Kevin Benedict
SAP Mentor, SAP Top Contributor,CEO Netcentric Strategies LLC
Mobile Industry Analyst, Author of the report Enterprise Mobile Data Solutions, 2009
Mobile Strategy Consultant and Web 2.0 Marketing Services
http://www.netcentric-strategies.com/
www.linkedin.com/in/kevinbenedict
http://twitter.com/krbenedict
http://kevinbenedict.ulitzer.com/
http://mobileenterprisestrategies.blogspot.com/
***Full Disclosure: I am an independent mobility consultant and Web 2.0 marketing expert. I work with and have worked with many of the companies mentioned in my articles.
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