SAP Loses Sybase’s Chen After Gaining Blueprint for Deals

SAP AG (SAP) is losing a top executive from Sybase Inc., the largest acquisition in the German software company’s history, after fully integrating the maker of mobile applications for business management.

Sybase Chief Executive Officer John Chen will step down tomorrow after 15 years at the Dublin, California-based software maker, which was taken over by SAP in 2010 for $5.8 billion. The 57-year-old Hong Kong native helped expand SAP’s customer base from back offices to iPad wielding salespeople who need access to corporate data while on the go.

“It’s time for me to relinquish the ownership of this franchise,” Chen said in a joint interview with SAP co-CEO Bill McDermott yesterday. “I always thought about this like marrying off your daughter. You know it’s the right thing to do, you just want to hold on a little more -- but it’s time to move on to other challenges.”

Sybase was McDermott and co-CEO Jim Hagemann Snabe’s first major purchase to outmaneuver Oracle Corp. (ORCL) in mobile software and gain a foothold in databases, a market dominated by its archrival. The deal also provided a blueprint for Walldorf, Germany-based SAP’s more recent acquisitions to expand into cloud computing: SuccessFactors Inc. and Ariba Inc.

Photographer: Jin Lee/Bloomberg

Sybase Chief Executive Officer John Chen said, “It’s time for me to relinquish the ownership of this franchise.” Close

Sybase Chief Executive Officer John Chen said, “It’s time for me to relinquish the... Read More

Close
Open
Photographer: Jin Lee/Bloomberg

Sybase Chief Executive Officer John Chen said, “It’s time for me to relinquish the ownership of this franchise.”

SAP, which aims to double sales of mobile software to 220 million euros ($285 million) this year, will probably maintain 100 percent revenue growth from mobile programs for “the foreseeable future,” McDermott said. Sales from the real-time database software Hana and from the cloud will also double for years to come, he said.

Turnaround Expert

The world’s biggest maker of business-management software aims to exceed 20 billion euros in revenue by 2015, compared with 14.2 billion euros last year.

Chen took the helm at Sybase in 1998, during a fourth consecutive year of net losses, and shifted the company’s focus to mobile technology from its legacy as a database maker. When SAP bought it, Sybase had been turning a profit for seven years.

In an e-mail to employees today, Chen recounted how research firm Gartner Inc. predicted a 70 percent probability for “Sybase’s death” at the time hejoined the company. Under his watch, Sybase’s market value rose from a low of $362 million to the $5.8 billion valuation paid by SAP, he said.

Ambitious Targets

“Sybase was a very successful company on a standalone basis, but John had the temperament to see the dream of scaling the important idea of mobility to literally millions of people - - that’s where SAP came in,” McDermott said. With the addition of cloud software and real-time analytics, “we think we’ve got the nexus of forces, and a lot of that came through the Sybase acquisition and John’s leadership.”

Following Chen’s departure, SAP plans to expand the reach of Web-based mobile applications to small and medium-sized enterprises in countries such as China and Brazil, McDermott said. It will also tie the fast Hana database software into more mobile programs to allow customers to perform data analyses instantly while outside of their offices, he said.

The 2012 mobile revenue target “looks very ambitious,” New York-based Nomura analyst Rick Sherlund wrote in a note last week after SAP reported third-quarter software revenue that topped estimates.

SAP rose 1.4 percent to 56.27 euros at the close of trading in Frankfurt, bringing the stock’s gains this year to 39 percent and valuing the company at 69 billion euros. Redwood City, California-based Oracle is up 21 percent in the same period.

Alternative Positions

Chen, who said he had explored alternative positions within SAP before deciding to leave, never joined the parent company’s top management. By contrast, SuccessFactors founder Lars Dalgaard became a member of the executive board following the acquisition, while Ariba CEO Bob Calderoni was invited to the software maker’s global management board.

SAP’s decision to subsume the Sybase brand under its own marque and handing strategic responsibility to Sanjay Poonen left Chen largely with overseeing the integration process, said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, California.

“As the company has been blended into SAP, John Chen has moved to the background,” Greenbaum said.

Chen, who has served on former U.S. President George W. Bush’s export council and is also a board member at Wells Fargo & Co. (WFC) and Walt Disney Co. (DIS), didn’t disclose the financial details of his departure. In 2009, before Sybase was sold, his compensation totaled $9.3 million, according to data compiled by Bloomberg. SAP doesn’t report remuneration for non-board members.

Chen said he hasn’t decided what to do next, with options ranging from founding a start-up to running “a large company,” he said.

“It’s going to be in technology, I don’t have any other skills,” Chen said. “I’ve been working hard until this point and I’d now like to take a look at things.”

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.