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Monday, May 17, 2010

Looking into SAP's bid for Sybase, and what this means for Dynamics AX

Like some of you, I am sure you had your interest peaked with last weeks news about SAP's bid to purhcase Sybase for some $6 billion dollars. This is a premium bid, well above Sybase's closing share price, the day before the bid was announced.

Some have speculated that the higher bid premium was actually to try and wave off a swoop in by HP possibly to take and get Sybase for it's own Enterprise Software offerings.

With that talk aside, lets focus back on the SAP bid, and assume it's going to move forward. With that, there is plenty of coverage about this on the blogsphere, and lets start with R. Wang's coverage here.: News Analysis: SAP Bets On Innovation With $5.8B Sybase Acquisition

In this Wang covers the highlights of what SAP is getting with the purchase of Sybase, which focus around.:

  • Sybase is a leader in mobile platforms

  • Massive data volumes require in-memory databases for rapid access (IMDB)

  • Cloud technologies bring SAP into the future (Focused around Amazon EC2)

Now let's move forward, and read a blog post pointing out by PartnerCompete, found here.: SAP and Sybase: A Waste of Time for Everyone Involved

In this, the final end that Dennis Byron points out is that such a move by SAP is setting themselves up, once the Democrats are out of office, to be purchased by Microsoft. (Among some other good points, and history lessons to be found in his post.)

So now lets get into focus Microsoft Dynamics ERP line, and specifically Dynamics AX. In a recent blog post, from Panoroma Consulting Group, they performed a survey and found that in the survey results Microsoft Dynamics leads the SMB ERP marketspace. Microsoft Dynamics: Preferred ERP Software Vendor for SMBs? (Currently leader in the Small Enterprise as well).

Now lets talk about what the speculation is around SAP and Sybase. It seems as if SAP is focusing big money, and effort into the larger Enterprise, with complex software. To directly compete with Oracle, with it's complex software. It also seems, as pointed out by PartnerCompete, that SAP is not focusing on the Mid Market space, which is tauted Business ByDesign is suppose to be addressing.

Check out ZDnet's, Dennis Howlett's, post about SAP SAPPHIRE conference that is starting soon.: SAPPHIRE 2010: SAP's last chance?

In this Dennis points out.:
"Being a fan of conspiracy theories I’m starting to think that last week’s Sybase acquisition is a clever ruse to deflect talk away from what many of us thought was going to be the ‘front and center’ mega launch of Business ByDesign. BYD seems to have been relegated to a luncheon engagement towards the end of the conference."

Now lets pull all of this together, we have all the turmoil that has been taking place with SAP and it's countless CEO's, and revolving management door. Now we see this move, which has really nothing to do with the Mid Market, and the mobile platform that Sybase has? It's not worth 6 billion dollars!

The bottom line, SAP is trying to have a bigger stack offering, and that means it will be competing with Microsoft and Oracle, in a deeper offering than just the Enterprise Software, and BI offerings. It also means that it's focused on heavy, complex software, for super large Enterprises, and is not focusing on the Mid Market as promised. (Bye-Bye BYD, before you even get started!)

So for Microsoft Dynamics AX, this means that being the Flagship ERP product of the Dynamics ERP line, it is the market leader in the Mid Market space, and going for larger and larger Enterprise customers. Feeling pressure from Microsoft and Oracle, SAP seems to be doing a back move to try and have a more true stack offering to it's larger Enterprise, but the Sybase database offerings just don't seem to match, other than they do have a good IMDB offering.

And for the larger Enterprise customers remark above, lets look at the Microsoft TwoTier offering.: Connect your local entities to headquarters with Microsoft Dynamics for your two-tier ERP solution

This new offering, is ready for Dynamics AX, which is well covered by MSDynamicsWorld.com, found here.: Microsoft Allows Integration of Dynamics AX with SAP Via New Connector

Now take the above move by Microsoft into consideration for the remark I made about Larger Enteprises. The Two-Tier pitch, and focus for having Microsoft Dynamics AX the second Tier ERP package for larger Enterprises with many divisons is a two pronged attack at a high level.

Not only does it allow to Dynamics AX to continue to push gains of being the Mid Martker leader, which most Divisons of Larger Enterprise fit under, it also setups Dynamics AX for the future of when the Larger Enterprise see the Lower TCO, what can be done with Dynamics AX, and how fast things can be done, that it becomes easier for the larger Enterprise to switch it's HQ package out for Dynamics AX, getting in line with all it's Divisons that are ahead of it.

For Microsoft Dynamics AX, what the Sybase purchase by SAP most likely means then, is that SAP is giving in the mid market to the leader, and trying to shore up it's death grip on the Enterprise as Dynamics AX continues it climb into that space as well.

Maybe that's being a little over confident, and time will tell, lets see what comes out of SAPPHIRE 2010. However, this is my take, and yes I am a Microsoft Partner, and therefore believe this as is. Still I believe we will start to see BYD continue to loose steam, before it really has taking off, and SAP wondering what to do, in order to continue to grow it's customer base.

The other side of this is the cloud, and we will leave that for the next time around on this topic!

That's all for now, but check back soon!

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