Content Copyright © 2011 Bloor. All Rights Reserved.
This blog was originally posted under: The Norfolk Punt
I’ve been at Sybase’s Analyst Summit at the New York Stock Exchange. The immediate point of interest, of course, is that Sybase still seems happy with being acquired by SAP—perhaps partly because it gets to run itself as an independent company still (unlike that other recent SAP acquisition, Business Objects), although it will presumably be absorbed eventually. And, of course, as part of SAP, Sybase gets a better chance to talk to the CEO instead of just to technicians. SAP got the market-leading Sybase Unwired Platform (SUP) mobility platform to take it into the 21st century, in exchange.
It also got a pretty strong database technology, in the form of the Adaptive Server Enterprise (ASE) DBMS. The latter perhaps isn’t so obvious a need, since SAP runs on all the market-leading databases anyway, but it means that SAP can now match Oracle, perhaps its obvious competition in the application space currently, with its own database. This turns out to be more than just a status thing as Oracle drops support for its HP-UX customers. SAP has quite a few HP customers (about 10k of them), running SAP on Oracle on HP UX, who now have to migrate somewhere. They are probably not especially happy with Oracle—which probably makes dumping Oracle for ASE quite attractive. ASE is a rather underrated DBMS generally, outside of the financial services marketplace anyway, with its own in-memory database, and there’s no technical reason why it shouldn’t compete alongside SQL Server, Oracle and DB2 (and it has an equal provenance, with some excellent customer stories).
So, now that Sybase has good access to SAP’s customerbase, Sumit Kundu (Sr. Director, Product Management, Data Management and Tools) says it’s going after a lot of potential new customers for ASE. HP-UX customers aside, perhaps SQL Server seems the obvious target (although Microsoft’s SQL Server database is now a very long way from the database Sybase sold it years ago) but Kundu points out that Oracle is probably more prevalent amongst SAP’s enterprise customers and, in the nature of things, not every Oracle customer is going to be all that happy with the company’s services.
Perhaps this is all a sign that SAP is discovering more “gold nuggets” in its acquisition than perhaps it originally expected. Bloor might suggest that it looks at Sybase’s development tools—Power Designer is an excellent enterprise architecture modelling tool, probably of real use to customers trying to model and customise SAP standard processes and adapt them to their own specific business processes. Now, if SAP gave a Power Designer license away free to all its customers (or, possibly, anyone who wants it) it gains a toehold for the further expansion of the Sybase/SAP platform….
Sybase has a lot more to offer than just its excellent mobility platform and a fine database, and Sinan Baskan (VP, Global Financial Services Solutions) explains that it has a lot of domain expertise in Financial Services and Risk Management, together with the event processing technology it acquired with Aleri. At present, it mainly exploits its CEP (Complex Event Processing) technology for financial services and telco applications but, in Bloor’s opinion, near realtime, event driven, proactive applications are probably are the way of the future for automated business applications generally (well, a significant subset of them anyway)—and Sybase has the technology! Irfan Khan, Sybase CTO, went into this in a bit more detail—CEP is now the basis for a next-generation information platform, apparently, and you can now exploit CEP with a mixture of SQL and scripting. Think of moving from transaction processing to processing streams of events. Worth checking out, I think.
Still, although I thought the Sybase/SAP story was a strong one, I wouldn’t want to be mindlessly optimistic. There are issues, particularly around managing the SAP integration without upsetting (and losing) any of the good technicians on both sides. And, Sybase will need to work out its relationship with the Business Objects part of SAP. Sybase probably wants the advanced analytics and has significant domain expertise, leaving the data management side of business intelligence—data quality, ETL etc.—to Business Objects. However, Business Objects may not see it that way. Sybase is also, perhaps, moving out of its comfort zone, talking to the business rather than to technicians. Nevertheless, I didn’t get the impression that these issues were causing serious problems.
Sybase has a very strong reputation in Financial Services still and seems to see the big picture. One stream of its NYSE event finished up with a look at managing emergence from the recent recession, financial risk analysis and the increasingly stringent regulatory environment—and we were all given a copy of “Regulating Wall St—the Dodd-Frank Act and the new architecture of global finance” edited by Viral V. Achyra, Thomas F. Cooley, Matthew P. Richardson and Ingo Walter (Wiley, ISBN 978-0-470-76877). As the new UK Bribery Act comes in, I suppose such presents are a whole new issue to worry about; but as the cover describes this as “not a quick read, [but] a useful reference work on an enormously complex piece of legislation, dealing with an even more complex financial reality”, I think it’s hardly the same thing as being bunged a large bottle of Scotch!
We learned that Mark Zandi (Chief Economist and Co-Founder, Moody’s Economy.com Inc.) is pretty optimistic for the future—financial companies are profitable again; as people default on loans, household debt is reducing (but banks have the profits to cope); and credit quality is improving (as the FDIC closes lots of small banks). An interesting kind of optimism then—overall, good for the system, not so good for the dead wood and overcommitted borrowers who form the “collateral damage”. Is a dystopia where bankers live a prosperous life in gated communities, with private security keeping the poor at bay, where we want to end up, I sometimes wonder. And, as I was wondering this, Anthony Saunders (John M. Schiff Professor of Finance, Stern School of Business, NYU) and Professor Matthew P. Richardson (Matthew Richardson, Charles E. Simon Professor of Financial Economics / Director, Salomon Center, Stern School of Business, NYU and one of the editors of the book mentioned) successively gave a rather less rosy view of the new regulatory system, around Basel III and the Dodd-Frank Act.
It rather seems to me that one of the uses of the new breed of financial analytics tools may well be to “game” the regulations, while underpaid regulators struggle to keep up. Overall, I think that the view was that the intentions of the regulations were good, but that they might be less effective than hoped, in practice. This is the third attempt at Basel III and it was clear that calculating Basel III compliance in something like real time (so you can manage the risks) is not trivial—and its requirements are sufficiently onerous in terms of capital reserves to make running good Value at Risk (VaR) models just about a requirement for banks to stay in business. Which should be good for Sybase’s analytics sales, of course. BASEL III still has a fairly arbitrary 3x multiplier for reserves in its algorithms (which means that you don’t want to start looking risky, so that you invoke the reserves multiplier)—and lets hope it gets applied everywhere this time, not just to European banks… Saunders suggested that, if Basel III fails, a lot of people think that perhaps we shouldn’t bother with a Basel IV.
Dodd-Frank seems like a valiant effort too but still seems to expect the survivors to pay for other peoples failures, which rather encourages risk taking; and it isn’t “principles based”, which makes “regulatory arbitrage” against the rules likely (ie, the movement of money into riskier and “innovative” investments, just because the capital requirements for something weird have been made rather low). The big issue of course, is that a clever, agile, regulator will get poached by the firms being regulated and paid lots more money to advise on “complying with the letter of the regs while evading the spirit wherever possible”…
So, this was an interesting, thought provoking event. We’ll watch the further evolution of SAP with interest.