In the largest technology industry acquisition of the year, SAP announced plans to buy Sybase for about $5.8 billion. SAP said the merged company will focus on serving "unwired enterprises."
There are clear synergies between SAP and Sybase across both product lines and markets. SAP expects the merger to help the company hasten its reach across mobile platforms and drive adoption of its in-memory computing vision, which in turn is expected to spur greater adoption of SAP software. Sybase's mobile platform will also connect and enable SAP apps and data on mobile devices.
Meanwhile, the companies expect SAP's in-memory technology to give Sybase the opportunity to improve the performance of its analytics offering and extend the reach of its event-processing and analytics solutions to new industries. SAP's tech should also beef up Sybase's core database business, the companies said.
The Mobile Enterprise
Jim Hagemann Snabe, co-CEO of SAP, noted that mobile devices are becoming the preferred interaction point with business applications. He then pointed to how this plays out in the merger.
"The combination of SAP and Sybase will give users the option of running their operations from leading mobile devices and will unleash the full power of mobility, including messaging interoperability, content delivery, and mobile commerce services, across all companies and roles and in any location," Snabe said.
Warren Wilson, an analyst at Ovum, agreed that the merger will strengthen SAP's hand in mobile applications. But, he added, the acquisition may also signal a shift in the company's long-standing strategy of growth through internal development and acquisition.
A Shifting Growth Strategy
Indeed, Sybase is SAP's second major acquisition. The company snapped up BusinessObjects, a business intelligence and analytics vendor, for $6.8 billion in 2007. If SAP hadn't moved on that deal, the company would have sorely lagged behind Oracle and IBM in what now is a critical market for database vendors. But do two acquisitions signal a shift in growth strategy?
"Sybase and SAP have been working closely together at least since 2003, when they announced plans to align SAP's small-business ERP suite, Business One, with Sybase's data-management solutions," Wilson said. "Little more than a year ago, in March 2009, they forged an agreement to use Sybase's platform to mobilize SAP's flagship Business Suite. Given that history, it seems likely that the acquisition isn't sudden at all but has been under consideration for some time."
Wilson thinks SAP is moving toward a dual strategy rather than a hard U-turn. As he sees it, the company is combining careful internal development and bold acquisitions -- and that strategy should serve SAP well in a competitive market.
"SAP's internal-development strategy has allowed it to retain its leading market share, by wide margins, in enterprise resource planning, customer relationship management, and supply chain management," Wilson said. "But the markets have viewed that approach as stodgy while rewarding Oracle for its hyper-aggressive acquisition strategy by driving its stock price dramatically higher over the last few years."