Posted by James Kobielus on May 14, 2010
SAP’s acquisition of Sybase was one of those deals that just makes sense on so many levels for both parties.
SAP is of course one of the dominant brands in enterprise applications, and it also has strong business intelligence (BI), data integration (DI), business process management (BPM), and service-oriented architecture (SOA) offerings. But, until this bombshell announcement, SAP had been lacking some key solution components that it needed to compete more effectively with the other dominant IT brands—specifically, with Oracle, IBM, and Microsoft.
Unlike these rivals, SAP had been lacking an enterprise-grade database management system (DBMS) product of its own (no—the open-source MaxDB doesn’t qualify). Likewise, SAP has had no complex event processing (CEP) tools for truly real-time analytics and transactional computing. Furthermore, SAP had been lacking any in-database analytics features that would allow partners and customers to execute data mining, text analytics, and other advanced analytics features in its data warehousing (DW) platform. Also, though SAP has mobile access middleware in its NetWeaver platform, it has not been able to offer customers a truly world-class mobility-enabling toolset.
Enter Sybase, a venerable and diversified IT brand that brings all of these key capabilities—and then some—to its soon-to-be corporate parent. This is as important an acquisition for SAP as Business Objects was two years ago. It will prove just as pivotal a move for fending off aggressive encroachment by Oracle into SAP core accounts.
Where Sybase will prove most significant is in SAP’s data warehousing (DW) strategy. In many ways, they both need each other to stay relevant and grow their shares of this hypercompetitive market. A year or so ago, I included both vendors in my Forrester Wave™ for Enterprise DW (EDW) Platforms, but could not in good conscience include either of them in the leaders group. They both offer robust products, but both have significant competitive handicaps.
For SAP, its NetWeaver BW solution is a niche offering targeted primarily at existing users of its line-of-business applications. It only scales out to tens of terabytes, does not implement a shared-nothing massively parallel processing (MPP) architecture, and lacks some other key enterprise features, including cost-based query optimization, query predicate pushdown to an intelligent storage layer, and intelligent compression by data types.
Also, though SAP’s BW Accelerator (BWA) is an innovative product—offering a high-performance, in-memory, column-based query appliance—BW itself is still a software solution, not a preconfigured EDW appliance. At the time I published my EDW Platforms Wave, SAP was the only one of the vendors in that study whose flagship platform was not a completely preconfigured DW appliance or who had not yet committed publicly to rolling out a more comprehensive appliance product family. It still has not rectified that deficiency to my satisfaction.
Furthermore, neither SAP BW nor BWA (which deploys in front of BW) constitutes low-cost, petabyte-scalable EDW platforms. For SAP, these are significant competitive handicaps in today’s market. Many rivals—including established solution providers such as Teradata, Oracle, Netezza, IBM, and Microsoft—are pushing the scalability and affordability envelopes with commercially available EDW appliance offerings.
Finally, SAP lacks a solution-oriented focus to its packaging, pricing, or marketing of BW and BWA. The vendor does not bundle vertical or horizontal industry information models with these platforms, nor does it pre-integrate any of its BusinessObjects business intelligence (BI), data integration, data federation, data quality, or master data management (MDM) tools into BW/BWA-based solution packages. Contrast this with IBM’s elaborately vertical solution-oriented packaging and pricing of its IBM Smart Analytics System appliances—though it should be noted that neither Oracle nor Microsoft has gone far in this direction yet.
But Sybase has—in this and other complementary directions—which is why it is such an important acquisition for SAP. For more than 2 years, Sybase has been offering a low-cost DW appliance product family that preconfigures its columnar database, its data modeling and integration software suite (including extract transform load, data federation, and real-time integration functionality), and BI tools from partner MicroStrategy. Also, the vendor has scaled out Sybase IQ—the columnar heart of its EDW portfolio—through distributed parallel processing into petabyte territory. And Sybase has continued to strengthen its already impressive real-time, CEP, and in-database analytics features through both its own internal development and a wide range of partnerships.
Sybase’s competitive handicaps in EDW are not so much technical but a consequence of its considerable success in its core vertical, financial services, and its core customer-size segment: the Fortune 1000. Though Sybase has an EDW and analytics portfolio that can deliver value to the horizontal midmarket, it has not needed to pursue these deals as aggressively as, say, Netezza. That’s because Sybase is one or the premier DW vendors to the global financial services industry, which has continued to invest in analytics infrastructure at a healthy clip in spite of worldwide economic turbulence. As a result, Sybase has not placed a corporate priority on growing its EDW business across many verticals or sought out the smaller deals in midmarket opportunities. This lack of clear corporate commitment by Sybase to the broader EDW market can also be seen in its failure to either build or buy complementary solutions for content analytics, data governance, data quality, and MDM (all of which SAP has, thanks to its Business Objects acquisition).
SAP will almost certainly leverage its new Sybase business unit into these larger analytics market opportunities. SAP has effectively diversified out of its longtime large-enterprise focus in the past few years and become a credible midmarket vendor. Likewise, SAP has placed a huge focus on building out its in-memory columnar BWA technology into appliance-based DW offerings that can, it is to be hoped, go toe-to-toe with Oracle’s Exadata and other massively parallel rival offerings.
Let’s hope the soon-to-merge SAP/Sybase places high priority on aligning its complementary EDW strategies. For starters, the analytic-database geeks among us recognize that this is a merger of two columnar pioneers: SAP on the in-memory appliance-based side and Sybase on its core IQ technology, which is far and away the most widely adopted columnar database in the world.
Will the combined SAP/Sybase be the new king of columnar? Yeah, that sounds like a good banner theme for next week’s SAP SAPPHIRE and Sybase’s analyst summit. Yours truly will of course be at both.
Rest assured that I’ll fill you all in on what they tell us (that’s not under NDA).