A New Era Dawns for Sybase

  • Written By: M. Reed
  • Published: March 8 2001

A New Era Dawns for Sybase
M. Reed - March 8, 2001

Event Summary

Sybase, Inc. (NASDAQ: SYBS) has announced an agreement to acquire New Era of Networks, also known as NEON, (NASDAQ: NEON) in a stock-for-stock trade valued at approximately $373 Million. After completion, Sybase will create a new e-Business division integrating NEON and other parts of its product suite. Within the last month, Sybase has announced record earnings and completed a three-year re-engineering effort to transform themselves from a database vendor to a provider of e-business solutions.

Denver, Colorado-based NEON offers a range of enterprise application integration products and services in the application-to-application (A2A) space. (It should be noted that TEC treats A2A as nothing more than enterprise application integration, or EAI, by another name). Key NEON products include NEONProcess Server, NEON e-Biz Integrator, and pre-packaged solutions called NEON Adapters that are designed to work with specific off-the-shelf applications and standards. According to the vendor, with NEON Adapters customers can easily integrate best of class ERP, CRM, supply-chain management and e-Commerce applications including those from SAP, Siebel, i2 and BroadVision.

According to John Chen, chairman, president and CEO of Sybase, "With NEON, Sybase will be able to capitalize on the most important segment of the e-Business marketplace - one that necessitates the integration of existing applications with new e-Business applications. With this, Sybase can join the top-echelon of e-Business infrastructure providers, capably servicing some of the most demanding environments in the world."

Market Impact

This announcement is yet another chapter in the continuing saga of Sybase's recovery from near disaster. Not too many years ago, Sybase was considered a has-been in the vendor community, with declining revenues, a defecting customer base, and the fourth or fifth (out of 5, dueling with Informix for the bottom rung) ranking relational database management system.

Since that time, Sybase has refocused on vertical markets, released new versions of its software (including Sybase Adaptive Server IQ Multiplex for Windows NT which was proven to support a 2.0 terabyte data warehouse on NT and won the Winter scalability award; and also their enterprise portal product, Sybase EP), and moved into the lucrative application integration market space. According to CEO Chen, "e-Business will be for this decade what the database was for the '80s and packaged applications were for the '90s and Sybase will be a leading e-Business platform provider." They are one of the last of the major software vendors to enter the application integration market, but will be able to hit the ground running due the breadth of their product offering, established customer base, and strong sales, marketing, and support organizations.

Other vendors, especially the smaller ones, will have to keep a wary eye on Sybase to see how they approach the market, and what distinctive competencies they highlight to customers. These vendors may be forced to modify their marketing message to counter Sybase's moves, a novel concept in the last few years, since Sybase was generally a follower, not a leader.

User Recommendations

Customers evaluating EAI (or IAI, or A2A, or B2B, pick your acronym) solutions should include Sybase on a long list of vendors for technology selection. There are many vendors which compete in this space, or ones similar to it, and due diligence must be exercised to ensure that what the vendor says they sell is what is actually "in the box". Sybase is promising technology that is actually being delivered to customers, and should be able to provide reference accounts that have implemented environments similar to the one being contemplated by the evaluation team.

Along with a strong management and a vision for e-Business enablement which many vendors lack, Sybase brings to the table an ability to support long-term customer relationships. Over the years, database management system vendors have become quite facile at servicing and supporting customer relationships that last for many years (the life expectancy of a typical RDBMS). This capability is absent in many of the smaller vendors, who are more used to shorter product cycles. Indeed, one of the reasons given by Ardent Software to explain its merger with Informix in late 1999 was that Ardent could leverage just this type of expertise from Informix' worldwide sales and support organizations.

In the "e-Business infrastructure provider" market, Sybase will be competing with vendors such as Informix/Ascential, IBM, BEA Systems, NEON Systems (not to be confused with New Era of Networks), WRQ, IONA Technologies, Oracle and Microsoft, among many others. Customers should engage in a careful needs-assessment exercise (especially in the area of what platforms data must be extracted from) before speaking to vendors, and can then further refine their product requirements as the selection process progresses.

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