Sybase Executes on Its Partnership Strategy

Transcription

1 Event Summary Sybase Executes on Its Partnership Strategy Abstract: Sybase has implemented a corporate partnership with a vertical market focus that it believes will develop into profitable channels. By Venecia Liu, Alex Soejarto and Mary Knox Strategic Planning Assumptions By 2004, 15 percent of Sybase's secondary (business unit) partners will seek alternate products because of lack of knowledge of Sybase products (0.6 probability). By 2005, 45 percent of Sybase's installed base will use Sybase Infrastructure Platform Group products (0.7 probability). Through 2006, 60 percent of Sybase's revenue growth will be driven by partnerships (0.6 probability). Publication Date:4 April 2003

2 2 Sybase Executes on Its Partnership Strategy Sybase's Semiannual Analyst Briefing Sybase held its semiannual analyst briefing 2-4 March 2003 at its headquarters in Dublin, California. The theme was "Information Liquidity" that is, speed and access of data to provide actionable analysis. Sybase provided updates on company components, including: Corporate Strategy Vertical Market Solutions Approach Central to Sybase's growth strategy is a continued focus on the Asia/Pacific region, especially on China, Japan and Korea. Recently, Sybase engaged in a regional alliance with NEC to resell SQL Anywhere Studio, enterprise application development, and joint sales and marketing initiatives in Asia/Pacific markets. However, Sybase's revenue primarily comes from North America. For 2002, the revenue breakdown was 59 percent from North America, 26 percent from Europe, 12 percent from Asia and 3 percent from other regions. The main theme of the analyst briefing was its emphasis on Sybase's corporate partnerships with PeopleSoft, Sun Microsystems and BearingPoint, as well as integration technologies. Sybase believes that these partnerships will develop into profitable channels. Additionally, it is focusing on select industries with a vertical market strategy. Visibility Through Corporate-Level Partnerships Beginning in August 2001, Sybase announced plans to solidify its channel strategy via acquisitions, and by expanding and developing partner relationships. It has delivered on each of these points. On 26 February 2003, ianywhere Solutions, a Sybase subsidiary that includes the mobility and wireless platform, announced that it had acquired AvantGo. The My AvantGo portal brought approximately 2,000 channels and 7 million users to Sybase, which will provide a pipeline for Sybase's future consumer applications. Currently, AvantGo applications are provided free of charge to consumers. However, John Chen, Sybase's CEO, has indicated plans to develop a business model that creates an additional revenue stream for Sybase from this portal. Sybase has expanded its corporate-level partnerships in two areas. BearingPoint has progressed from a partner for Healthcare Information Portability and Accountability Act (HIPAA) compliance solutions to include solutions and portals for customer relationship management, as well as for joint marketing strategies in China. BearingPoint recently has made acquisitions in the Asia/Pacific region; it is now the largest pureplay integrator in that region. Sybase's relationship with BearingPoint complements Sybase's growth plans for that region Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 April 2003

3 Penetration of Sun iforce centers is increasing for very large data warehouse (VLDW) solutions co-developed by Sybase and Sun Microsystems. This solution combines Sun hardware and the Sybase Adaptive Server IQ database for VLDWs. Since it announced this partnership in February 2002, Sybase has grown license revenue by $7 million. As this solution gains traction in the marketplace, Sybase expects further wins based on the price/performance that the VLDW offers. Sybase recently announced a relationship with PeopleSoft. Although this partnership is in its early stages, expectations are high for the integration of Sybase products, particularly for opportunities to integrate the Sybase database into PeopleSoft solutions. Testimonials by clients, particularly Legg Mason, indicate that this partnership has great potential to be developed into an effective channel for Sybase. Additionally, Sybase is continuing business-unit relationships with niche partners. Although Sybase has a small IT services team that provides consulting and support services, it has a clear strategy to avoid channel conflict. In negotiations with joint accounts, project management is left to the consulting and systems integration partners. Greater effort is being made to communicate the latest developments to this secondary channel, which has a significant influence on the revenue picture. Overall, Sybase has increased partner-driven revenue to 40 percent of operating margins. 3 Vertical Solutions Sybase capitalizes on market discontinuities by leveraging its technology and partnerships to address market requirements. Financial Services In response to the Sept. 11 terrorist attacks, in October 2001, the U.S. government enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act to prevent, detect and prosecute terrorism and international money laundering. Sybase created the PATRIOTcompliance Solution, which is designed to reduce risk by streamlining compliance, and to lower cost by reducing false positives. This solution draws on Sybase's integration technologies and a recent partnership with TightLink, which provides case management functionality. Sybase is looking to rebrand and extend the PATRIOTcompliance Solution to have applicability in other geographies. It also is seeking to address financial services needs with offerings in the areas of straight-through processing (STP) and disaster recovery, as well as with a number of financial-services-specific partnerships, including with Capco, Wilco AG, SunGard, Reuters and Thompson Financial. Financial Fusion, a Sybase subsidiary, serves the financial services industry with STP messaging solutions for trading organizations, as well as Web-based solutions for consumer, small business and corporate banking Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 April 2003

4 4 Sybase Executes on Its Partnership Strategy Healthcare HIPAA demands stringent standards for healthcare organizations by automating single transactions for claims administration and settlement, while maintaining patients' privacy and security. Because there are disparate stand-alone systems, and no standards and processes in place, in the healthcare industry, Sybase created the HIPAA Accelerator and analytic software solutions to address these challenges for HIPAA compliance. Sybase currently has more than 1,250 payer organizations and providers as customers worldwide, and several top U.S. managed-care organizations, including Kaiser Permanente, Cigna, Anthem and WellPoint Health Networks, as well as 29 of the 47 Blue Cross and Blue Shield plans. Sybase has more than 95 application partners, including The TriZetto Group, Siemens, GE Medical, Abbott Laboratories and Perot Systems. Federal Government Sybase believes it is well-positioned to offer solutions for homeland security in the United States. Sybase offers technologies in enterprise portals, data and application integrity, business intelligence, and mobile solutions. Federal clients include the U.S. Defense Intelligence Agency, the U.S. Navy, the U.S. Federal Bureau of Investigations and the U.S. Transportation Agency. Sybase has alliances with Integrated Data Systems (IDS), a systems integrator and software development company. IDS and Sybase have numerous client engagements, including the Joint Intelligence Task Force for Combating Terrorism portal. Telecom The financial malaise of the communications sector has affected the revenue of nearly every solutions provider, including Sybase. Telecom represents 18 percent of Sybase revenue. Sybase is now tied with Oracle as the top database provider in China (it previously was the leader). This foothold in the Chinese database market has led to other vertical opportunitiesinchina,suchasinthetransportationindustry. Gartner Dataquest Perspective Sybase is delivering on establishing partnerships and expanding channels. Joint plans, goals and resources are in place. As its vision is further defined, Sybase will face challenges in execution and implementation. It has proved to be capable in fulfilling its vision under the leadership of its CEO, John Chen. Sybase has undertaken a corporate-level approach to sales and marketing to provide a consistent message to channel partners and clients; previously, individual business units and geographies maintained their own budget and decisions for marketing messages. Secondary partners deliver a great deal of value to Sybase, but have been largely left to fend for themselves although developers have received considerable support Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 April 2003

5 5 Sybase touts its strong relations in Chinese market and has used this to entice other partnerships. In 2002, Sybase was the database leader in China. By early 2003, however, Sybase holds only a 0.2 percent lead over Oracle there. Sybase will need to strengthen and leverage its strong position by furthering its relations in other vertical market solutions to maintain its stronghold in China. Sybase is focusing efforts in other areas in the Asia/Pacific region, and it could become the No. 1 vendor in this region. For this to happen, its local Asia/Pacific field operations team must be proactive and garner client bases with branch extensions. Sybase has the right strategy for seeking leading IT services providers in the region. Gartner Dataquest Recommendations The key to strategic partnerships and alliances is not quantity, but quality. However, as long as secondary partners continue to influence the purchase of its products, Sybase must attend to the needs of these independent software vendors, resellers and systems integrators. Although Sybase does not experience channel conflict, it has been a rather silent partner. Sybase needs to have better communication with all its alliances and partnerships, for business units as well as corporate-level relationships. Sybase wants to offer other vertical solutions, but it lacks the vertical expertise and applications necessary to provide a full solution other than those areas supported by Financial Fusion (that is, retail banking, wholesale banking and electronic trade messaging). Sybase will need to engage with application service providers to strengthen its vertical offerings. Sybase delivers strong technologies for less cost. It must make its presence more known in the industries in which it wants to compete. Key Issues What approaches are companies using to effectively penetrate and develop vertical market opportunities? What are the key growth strategies of leading IT services providers? 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 April 2003

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