On the face of it, SAP's move to acquire Sybasefor $5.8 billion comes across as being roughly equivalent to buying the cow when the milk is relatively free. After all, SAP applications can already leverage to one degree or another most of Sybase's software portfolio.
Sybase has four core assets that have pretty much developed over the years independently of each other. The best known part of Sybase is the relational database. Sybase has seen some surprising growth in this sector, thanks largely to increased demand for high-performance databases, which Sybase has used to set itself apart from Oracle and IBM in the high end of the database market. Based on conference calls today, SAP plans to operate Sybase as an independent business unit, which is to say that the vast bulk of SAP applications will continue to be deployed on top of Oracle and SAP databases, as opposed to trying to push customers to the Sybase database.
Where the two companies have greater long-term synergies is in the area of in-memory data management technologies. As enterprise applications evolve, more code is being executed in memory. This is an area that both companies have been working on independently of each other, so how they can leverage each other's work in this space remains to be seen.
The third element of Sybase is its nascent business intelligence efforts. Sybase has made a lot of progress in this area as of late, but in terms of size and scope, SAP's BusinessObjects subsidiary dwarfs Sybase's business intelligence efforts, so the long-term prospects of Sybase's BI wares don't look too promising at the moment.
That brings us to perhaps the most interesting part of the deal. Sybase has done a terrific job of developing an independent platform for developing mobile computing applications. Most end users never see this software because it's embedded in mobile computing applications. As mobile computing evolves, IT organizations are becoming pretty savvy about not locking themselves into any particular platform by writing applications that are 'optimized' for a specific mobile computing platform. In addition, Sybase has developed a lot of the SMS technologies that telecommunications providers use for text messages. How that technology can be applied within enteprise applications to provide a Twitter-like capability across a federated set of applications is worth exploring further.
How all these technologies come together in any unified model is far from clear, especially as SAP says it's committed to maintaining Sybase's independence. But when all is said and done, SAP needs a place where it can focus a lot of its efforts to develop the next generation of enterprise computing applications around new and evolving approaches to data management that need to span public and private cloud computing platforms.
The challenge is accomplishing that well before Oracle and IBM do. It's worth noting, however, that SAP has a pretty active development lab in Northern California just over the Bay from Sybase. So don't be too surprised if the focal point of innovation within SAP starts to shift more toward Northern California, where there tends to be a lot less legacy application thinking than in Walldorf, Germany.