The 451 Group has published its take on the proposed acquisition of Sybase by SAP. The full report provides details on the deal, valuation and timing, as well as assessing the rationale and competitive impact in three core areas: data management, mobility, and applications.
As a taster, here’s an excerpt from our view of the deal from a database perspective:
The acquisition of Sybase significantly expands SAP’s interests in database technology, and the improved ability of the vendor to provide customers with an alternative to rival Oracle’s database products is, alongside mobile computing, a significant driver for the deal. Oracle and SAP have long been rivals in the enterprise application space, but Oracle’s dominance in the database market has enabled it to wield significant influence over SAP accounts. For instance, Oracle claims to be the most popular database for deploying SAP, and that two-thirds of all SAP customers run on Oracle Database. Buying a database platform of its own will enable SAP to break any perceived dependence on its rival, although this is very much a long-term play: Sybase’s database business is tiny compared to Oracle, which reported revenue from new licenses for database and middleware products of $1.2bn in the third quarter alone.
The long-term acquisition focus is on the potential for in-memory database technology, which has been a pet project for SAP cofounder and supervisory board chairman Hasso Plattner for some time. As the performance of systems hardware has improved, it is now possible to run more enterprise workloads in memory, rather than on disk. By using in-memory database technology, SAP is aiming to improve the performance of its transactional applications and BI software while also hoping to leapfrog rival Oracle, which has its disk-based database installed base to protect. Sybase also has a disk-based database installed base, but has been actively exploring in-memory database technology, and SAP can arguably afford to be much more aggressive about a long-term in-memory vision since its reliance on that installed base is much less than Sybase’s or Oracle’s.
SAP has already delivered columnar in-memory database technology to market via its Business Warehouse Accelerator (BWA) hardware-based acceleration engine and the SAP BusinessObjects Explorer data-exploration tool. Sybase has also delivered in-memory database technology for its transactional ASE database with the release of version 15.5 earlier this year. By acquiring Sybase, SAP has effectively delivered on Plattner’s vision of in-memory databases for both analytical and transaction processing, albeit with two different products. At this stage, it appears that SAP’s in-memory functionality will quickly be applied to the IQ analytic database while ASE will retain its own in-memory database features. Over time, expect R&D to focus on delivering column-based in-memory database technology for both operational and analytic workloads.
In addition, SAP touted the applicability of its in-memory database technology to Sybase’s complex-event-processing (CEP) technology and Risk Analytics Platform (RAP). Sybase was already planning to replicate the success of RAP in other verticals following its acquisition of CEP vendor Aleri in February, and we would expect SAP to accelerate that.
Meanwhile, SAP intends to continue to support databases from other vendors. In the short term, this will be a necessity since SAP’s application software does not currently run on Sybase’s databases. Technically, this should be easy to overcome, although clearly it will take time, and we would expect SAP to encourage its application and BI customers to move to Sybase ASE and IQ for new deployments in the long term. One of the first SAP products we would expect to see ported to Sybase IQ is the NetWeaver Business Warehouse (BW) model-driven data-warehouse environment. SAP’s own MaxDB is currently the default database for BW, although it enables deployment to Oracle, IBM DB2, Microsoft SQL Server, MaxDB, Teradata and Hewlett-Packard’s Neoview. Expect IQ to be added to that list sooner rather than later, and to potentially replace MaxDB as the default database.
I have some views on how SAP could accelerate the migration of its technology and users to Sybase’s databases but – for reasons that will become apparent – they will have to wait until next week.