We have known it for some time: SAP is looking into bigger acquisitions again after recovering from the financial drain and strain of the Business Objects takeover. Hasso’s new interest in database technology pointed in the direction of Teradata and later Sybase and when the supervisory board had a special meeting we knew that “something was brewing.”
The first criticism appeared quite quickly: SAP pays a very high price – and is it really worth that much?
That is one way of looking at the transaction. With SAP doing more than 80% of its revenue with its classical installed base, there is a more relevant question: what does it mean to SAP’s installed base that contributes (still) most to SAP’s bottom line?
Most of what SAP has bought is not of immediate interest for its installed base. The products do not run on the Sybase database products – only in the mobile area there are CRM-related solutions where SAP and Sybase have been partnering. So you might think that there are no implications.
I suggest that the “classic” SAP customers read a little more about the terms and conditions SAP is offering or will be offering in the non-ERP product categories. Here are some interesting findings:
- Sybase has all of its pricing in the Internet and you can order from a shop
- Sybase is offering support variants that are priced per incident (and the company boasts SAP-style profitability…)
- The most widely spread SAP product is arguably Crystal Reports. You can get it without support. If you want support, you must buy it for a year. No need to renew unless you want. No penalty if you pause.
This is not an exhaustive analysis. I am sure a huge variety could be found if you would scrutinize all the terms and conditions across all product lines. Why can SAP allow for more openness and flexibility in one area and not across the board? The answer is that competitive pressure and the degree of lock-in differ significantly.
Customers need to be conscious of the salient power of competition. There is no substitute – it is at the very core of our economic system and it is well worth being preserved. SAP user organizations will have a lot of food for thought when trying to leverage the variety that is now apparent in SAP’s portfolio. How about turning support off and on without a penalty – just as required? Or incident/case based pricing? Wasn’t that part of your recent discussions? All of this and much more can be had or will be available shortly – from SAP!
This is the second time that SAP has bought a company with large non-SAP related customer bases. This challenges SAP’s past position on openness and both old and new SAP customers should insist on a change in position. SAP itself is turning more and more into a best of breed vendor and it needs to acknowledge this. Non-SAP environments will have greater relevance to SAP unless SAP wants to alienate the newly bought customers by trying to force them into SAP’s ERP-lines. SAP will also face new challenges to comply with standards.
SAP wants to use Sybase primarily in the mobile and in-memory database areas. Here, new business models will pose a challenge. It is not conceivable that the currently prevailing terms and conditions for Business Suite and ERP will be ported to the Sybase portfolio across the board.
On the other hand, the new situation may result in customers getting SAP to loosen its grip, at least partially. Consistency and credibility are related and SAP could use more credibility quite well. Oracle is not always a good teacher.
SAP wants to become a leader in the emerging “on-device” market. This market will be served by many players and the Sybase products may be used by SAP and its competitors alike. SAP needs to become as much a trusted and credible supplier to these competitors as Sybase was. This is not SAP’s forte so far. Time will show if SAP can live up to this. Leaving the old management in place is not enough as we know from the days when Toptier was acquired. But maybe a learning curve is the next big thing.
Sapience
