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May 20, 2010

Analysis: How John Chen saved Sybase from oblivion

In the late nineties it looked like Sybase had had its day, having lost the database wars and seen patchy financials. It was an obscure executive from Siemens Nixdorf, John Chen, who got the firm back on an even keel with a honed strategy and a return to growth. The news this week that SAP is to buy Sybase for $5.8bn may be the end of an era, but it was an era fascinating to watch. Jason Stamper reports.

By Jason Stamper

Having teetered literally on the brink of irrelevance and financial implosion, Sybase’s chairman, CEO and president John Chen steered the company back into a position of thought-leadership and renewed relevance to enterprise IT. Within a few years of Chen taking the reins, analysts ranked Sybase as the number one in mobile middleware, the number one for mobile databases and the number one in mobile device management.

Go back to 1998 and Sybase was anything but a picture of health. The company may have posted sales of $872m, but it also posted a net loss of $93m, with a restructuring charge alone costing it $74m. Few would have placed bets on the company achieving a successful turnaround, let alone it regaining a position of thought-leadership.


Unkown quantity

But in November that same year John Chen, a relatively unknown quantity having formerly been president of the Open Enterprise Computing Division of Siemens Nixdorf, and before that chief operating officer and president of Pyramid Technology, took the reins of a company few would have wanted to lead back then. The company may not have seen stellar growth every year – few have who endured the dot-com collapse – but under Chen’s stewardship the company has been consistently profitable and always seemed to be in the right place at the right time.

So how did Chen get the company back on an even keel, what was his vision of its value proposition for enterprise IT departments, and how did Chen keep Sybase a step ahead of the competition?

Summing up Sybase’s proposition in an interview with CBR in 2005, Chen explained: “I want to maintain my number one position as the software technology provider for extending the data centre to the edge.”

It may sound straight-forward, but things were not always so at Sybase. “The first thing I needed to do when I joined was restore the confidence of the people,” said Chen. “I needed to restore confidence that you have a theme and can execute. I didn’t want to wander off too far from our core competencies any more.”

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According to Chen the company had become over-diversified, and lost sight of its core competencies. “A lot of our businesses were very inefficient,” he told CBR. “I was asking, ‘why are you doing this?’ You know we had an SAP consulting business – what for? We had a product that competed with Microsoft Visual Basic – what for? I had to get rid of some bits and pieces.”

Chen’s mantra is that the company must be good in every market it operates in. If it isn’t, he either redoubles its efforts or gets out of that space. “I want to make money and have a good business in everything we touch,” he explained. “I don’t do anything that loses money. That saved us from the dot-com bubble. I don’t believe in loss leaders. That means the leaders have lost.”


Execution, execution


“Then it is up to your ability to execute,” Chen continued. “I broke the company down into smaller pieces – there used to be just one P&L. But now we have embedded, the database, tools, analytics and application server. I believe that fosters more of a fast-acting culture, which is more important. And now our execution is better than most.”

Sybase may no longer compete on the strength of its database alone – that battle is now fought by Oracle, IBM and Microsoft – but on a message of integrating the IT infrastructure from the centre right out to the edge, where enterprise IT meets mobility. “So I’ve built a stack to allow real business mobility to happen: for people doing mobility, I want them to call us,” said Chen. The company’s database business is still very profitable, however, giving the company cash to invest in its more modern technologies.

Under Chen’s watch, Sybase hit the acquisition trail to bulk out that portfolio. In 2005 it bought UK-based ISDD and its OmniQ unstructured data searching technology. “Today IT only sees 10% of what can be searched in a company,” Chen told us in 2005. “Unstructured search – that’s really powerful. Others search for data and content. I’m searching for data and patterns. Google will probably get into this in the future.” Google did indeed get into this market, as did Autonomy and Fast Search and Transfer (bought by Microsoft), IBM (with Yahoo) and others.

Also in 2005 Chen went out and bought Avaki, which he said offered enterprise information integration (EII) technology: “It gives us one window to multiple data stores. We’re already selling that today standalone, and I’m not sure we will embed that technology because I may want to keep it database agnostic.”

Meanwhile, thanks to Sybase’s acquisition of Excellenet some years back and with it its excellent Afaria mobile management software suite, Sybase’s iAnywhere remains the company to turn to for the management of heterogeneous mobile devices and data.

CBR caught up with Chen again in September 2008, and found him grappling with how the company would adapt to the new economics of cloud computing. He was taking cloud seriously, though he is not one of those who believe that cloud will completely replace the IT department. “There’s always a customer preference thing with IT,” he told us. “A lot of people want to buy it [their own IT infrastructure], own it, treat it as a capital expense and depreciate it over time.”

Chen said then the company had various cloud computing capabilities to pursue thanks to the likes of its iAnywhere mobile messaging and management platform, analytics, integration and data warehousing.  “You still need a database and messaging in the cloud, so this is all goodness to us,” he said.

Yet it was also noticeable how little had changed in terms of Chen’s vision of “extending the data centre to the edge”. It’s a vision that Chen has remained true to over the years, so there really is some credibility due when SAP’s Jim Hagemann Snabe, joint chief executive, describes the firm’s motivation for buying Sybase in these terms: “Mobile devices are becoming the preferred interaction point with business applications, whether the user is a factory supervisor, a retail manager or an entrepreneur in a developing nation. We want to make sure SAP solutions can be accessed from all leading mobile devices. The acquisition of Sybase will allow us and our partners to do just that.”

It will be interesting to see whether SAP can make this acquisition a success. Risks include the difference in cultures, the complexity of integration and the perception that the Sybase technology is less platform agnostic than it was – though we won’t know for some time whether this is anything more than just a perception (rivals are likely to use this in their campaigns peddling fear, uncertainty and doubt, of course). One thing is for sure: John Chen went from a somewhat obscure executive at Siemens Nixdorf to a chief executive who can be really rather proud of his achievements at Sybase.




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