Sybase Acquisition Strengthens SAP's Hand Against Oracle, Microsoft

SAP planned $5.8 billion acquisition of Sybase

The acquisition will bring to SAP a broad range of mobile computing technologies -- just as the world is adopting mobile computing as a way of life. And it will provide SAP with more ammunition in its efforts to increase sales to SMBs.

Oracle, even before its recent acquisition of Sun Microsystems, has touted its ability to provide customers with the complete “software stack” from database software, to middleware, to applications. Until now SAP has largely been restricted to the application layer, although the company has met with some success with its NetWeaver platform and development environment.

With the acquisition of Sybase, SAP gains a database that it could tie more tightly to its ERP and CRM applications and possibly displace Oracle in some accounts -- or at least prevent Oracle from displacing SAP among SAP application customers, according to an analysis published by Jack Gold of J. Gold Associates, an IT analysis firm in Northborough, Mass. It also gives SAP an opportunity to penetrate accounts that now use the Sybase database, but applications from other vendors.

The move also may help SAP fight off Microsoft and its Dynamics applications, which have been competing with SAP in the SMB market.

But don’t look for SAP to suddenly become a major player in the database market: That battle has largely been won by Oracle, IBM and Microsoft with the open-source MySQL (now owned by Oracle) coming on strong.

For SAP the real jewel-in-the-crown is Sybase’s mobile technology, including the Sybase 365 mobile messaging and mobile commerce platform. The acquisition of that technology “will enable SAP to move its applications out of the back office and into the hands of the mobile workforce,” notes analyst Stuart Williams in a report from Technology Business Research, a Hampton, N.H., market research firm.

Sybase and SAP previously worked together to build smartphone front-end applications for SAP’s enterprise applications. As the number and diversity of mobile devices continue to proliferate, having Sybase 365 will help SAP extend end-user services to mobile business users and even consumers, the latter into such areas as mobile payments and mobile commerce, Gold notes. Sybase’s partnerships in mobility with Apple, Google, Microsoft and Research In Motion also will prove advantageous to SAP.

Peter Illari, a principal at Accelbus Systems, an SAP solution provider headquartered in Philadelphia, sees the Sybase deal as a game changer for SAP. "It's a positive step that brings them secure integration with mobile apps that run on Blackberrys," he said. "It's going to be a big help for financial companies."

A big question is whether SAP can pull this off. As Gold points out, SAP “does not have the most stellar history of buying companies and then maximizing its investment in the technologies it has acquired.” SAP said it plans to operate Sybase as a standalone subsidiary. But SAP is going to have to carry out some cross-integration work to fully realize the benefits of this acquisition. Just owning Sybase won’t be enough.