Sybase rethinks business strategy
Vendor seeks respite from tumbling licence sales with focus on niche sectors. Cath Everett in Los Angeles reports.
Sybase is in the process of reorganising its business to concentrate sectors. Cath Everett in Los Angeles reports. on a consultancy-based sales model and a niche sector approach to boost dwindling licence sales.
As a result, the supplier intends to spend the next six months or so evaluating and implementing its revised strategy before making an acquisition in the services market next year.
Speaking to PC Dealer at the company's Powersoft user conference last week in Los Angeles, Mitchell Kertzman, chairman and joint chief executive at Sybase, said: 'The tools business has been shrinking gradually over the past year or so, and although we saw a little bit of growth in database revenue in the last quarter, we want licence sales to grow.'
He added: 'We would be interested perhaps in a services acquisition, but we have enough on our plate now and we're not going to pursue it until 1999.'
According to Kertzman, licence sales had suffered because the entire enterprise infrastructure had been hit by the year 2000 problem. Tools, however, have been affected most and vendors across the board are struggling because customers have slowed the rate at which they are building applications.
The situation has been further compounded by customer confusion over 'geopolitical wars' and whether they should back object technology and Java, or listen to the pro and anti-Microsoft camps.
Kertzman stated: 'The way to grow licences is to grow services, especially in niche markets such as telecommunications. We're carrying out a radical rethink of our business model.
'We need to have wonderful technology, but that's not enough any more,' he added. 'We also need to offer services and understand the customer's business and then show how technology and services can help that business.
Sybase as a company is not used to that.'
As a result, the vendor's services and sales units would start working together more closely and be integrated more with the partners' organisation, Kertzman revealed, so sales people could move to systems selling and focusing on niche sectors.
'We're hoping in the next few quarters to show a material change. This is a lot of John Chen's work (joint chief executive at Sybase). I have no plans to retire, although I will move across to become chairman,' he added.
While services generate about 40 per cent of Sybase's revenue, until now the business had focused primarily on consultancy and implementation around the Sybase product family.
The aim is to broaden out the skill set to concentrate on niche markets and related third-party products in fields such as finance, telecommunications, public sector and healthcare, and also to look at mainstream sectors such as sales force automation.
The vendor expects to have defined its areas of focus within the next three months.
Meanwhile, Sybase has consolidated its development tools family to try to make it more relevant to customer needs in the face of dwindling licence sales.
The aim is to provide users with a single development and deployment environment in the shape of Enterprise Application (EA) Studio. They can use this for building client/server and Web-based applications. The package was launched last week at the Powersoft user conference.
Rob Veitch, Sybase's director and general manager of Powersoft languages, said: 'EA Studio doesn't provide people with everything they could use, but it does supply them with 90 per cent. I believe the next phase of the market is looking at a tool that can handle complex problems and develop information systems to suit users' individual environments or niche markets.'
He added that the market had now matured to the extent where users wanted to build sets of applications, rather than just one package that could run in distributed client/server and Web environments. They also wanted to Web-enable their existing applications and use different clients for different purposes.
As a result, EA Studio will be sold either as a complete bundle or as different components, depending on developers' needs.
The product, which is being positioned as a replacement to and the next generation version of the Power Studio suite, will include version 6 of the Powerbuilder client/server tool and the PowerJ Java-based product.
They will be integrated so users can build components to run in either environment, but PowerJ will no longer be sold as a standalone product.
The Powersite HTML and Website manager, including App Modeller, will also be fully integrated into both products and no longer sold separately.
On the deployment side, the Enterprise Application Server will be based on a merger of the Jaguar CTS Web publishing and online transaction processing product with the Power Dynamo dynamic Web page content package.
They will no longer exist as standalone products, but users will be able to buy the merged server as a separate element from the Studio bundle.
The Power C++ development tool will be dropped from the suite and, following one more release later this year, will go into maintenance.
Raj Nathan, vice president of corporate marketing at Sybase, said: 'C++ is a very mature environment and, aside from maintenance, it's not clear what customers would need that was new. It's mainly used for OS development and server-side communications, not enterprise application development.'
Veitch added that he believed Java would replace C++ in businesses within 12 to 24 months, while Pascal and Smalltalk would be similarly marginalised.
As a result, Watcom C++ is also due to go into maintenance, although the S-Designer modelling tool will continue to be enhanced.
EA Studio is due to ship by the end of the year, while the next version, codenamed Vineyard, is scheduled to ship during the first half of next year.
This will include niche market development frameworks, support for Enterprise Java Beans and tighter integration between Powerbuilder and the EA Server.