Q&A: Sybase CEO John Chen touts a turnaround

He talked about his leadership at Sybase before the SAP acquisition was announced

Sybase CEO John Chen sat down for a wide-ranging discussion about his company's return from near-irrelevance in the late '90s, where the database software vendor is now, and what Chen sees for the future of the enterprise application market. The interview took place before SAP announced its plans to buy Sybase.

Few companies get a chance at a second life. WhenJohn Chensigned on as CEO of Sybase 12 years ago, the database software vendor was, in Chen's words, "a very, very dead company." Once a strong competitor to Oracle , Sybase had missed an opportunity to push into the enterprise application market Oracle now leads.

Over the next 10 years or so, Chen and his team helped Sybase turned around and reinvent itself as an enabler of the "unwired enterprise." Then, last month, enterprise software bigwig SAP signed a merger agreement with Sybase , citing the compmany's leadership in both mobile and in real-time analytics. The deal was valued at $5.8 billion.

Since that deal was announced, Sybase has had little to say. But in March, before rumors about the merger began circulating, John Gallant, Chief Content Officer for IDG Enterprise (IDGE), and Eric Knorr, Editor in Chief of InfoWorld , sat down with Chen for an hour-long chat as part of IDGE's CEO Interview Series. The interview explored how Chen was able to rescue Sybase and establish it as a key mobile enterprise player. The result: A discussion rare in its frankness - one that offers retroactive insight into the real reasons SAP found Sybase so attractive.

Excerpts from that interview follow.

John Gallant: You've got a pretty interesting and diverse product set. You have the database, analytics, mobile management tools, and mobile tools that are pretty widely deployed among the service providers. Help us understand how those different technologies fit into a cohesive strategy that makes Sybase unique. Sybase traditionally has been an infrastructure software provider to the enterprise. We started as a client-server database company and then moved into development toolsets when we acquired PowerSoft. And after I came on board, we continued to develop our database. Gradually, we positioned ourselves in high-growth areas, like analytics, mobile middleware, and mobile services. And how we envision that it all comes together is that we believe mobile enterprise computing is going to be the next really big thing.

If you think that e-commerce was a big sea change in the early 2000s, m-commerce will make e-commerce a very small thing. M-commerce reaches almost the majority of six billion people around the world.

Eric Knorr: What characterizes an enterprise mobile service as opposed to a consumer service? Applications must talk to applications; machines must talk to machines. There has to be intelligence gathering, mobile analytics, real-time reporting, all these things. We could be a leader in providing those kinds of infrastructures. It starts with backend infrastructure in a data center to people sitting here with a device. That's a whole stack of a computing path.

When you talk about the database, there are many aspects of it. An OLTP database sitting underneath applications and collecting records. That's a database. Data warehousing, analytics. That's a database. A database could be an embedded persistent store in the field, like if you're driving a truck, with a Fed Ex machine, or in U.S. Navy or Army deployment units - they have on-board computers. That's an embedded database. So to us a database doesn't really conjure up the image of a dark room and lights blinking. It's that plus many, many things.

And we really do believe in [a mobile] persistent store. Five years ago, that was a laughable subject, because there wasn't enough capacity, there wasn't enough battery to sustain it. Well, five years have gone by and things have changed quite a bit. Things like the iPad are coming out. Who knows what the next two generations of the iPad are going to be like? I mean this is not only an Apple story. How does an enterprise take advantage of all these technologies? How do we manage these things? What about security concerns, about who's going to use what to see what? And how do we build intelligence in?

I'm holding a device. I'm as good as what you tell me, right? Well, how do I know what you want, at what time? You can go on Amazon and they remember the history of your preferences and tell you what you ought to be buying next. That's just the beginning. You have to be able to deliver that information in a remote way. And all these applications, they have to be able to talk to each other agnostically.

You may have an iPhone and somebody else has a BlackBerry and somebody else has an iPad. Somebody else is staring at a TV; somebody else is looking at the voice-over-IP devices on my desk from Cisco . How does that all come together? Unified communication is the software architecture that's going to bring it through. We'd like to be a participant in that. And that's why we invest in messaging; that's why we invest in how to channel content. That's why we invest in how you manage devices; that's why we invest in all the encrypting of that information that goes over the airwaves. And that's why we invest in analytics, and that's how it ties back to what our core strength has been.

Gallant: That's quite a mouthful. How do you roll all that together? To us, this is the unwired enterprise concept: Having a layer of architecture that translates to products and services that people can actually deploy and employ. Not the entire stack, a layer of the stack. You could use my analytics engine over an Oracle database. You could put my services engine over any other company's engine, maintaining an open heterogeneous computing environment, which was the principle of Sybase to start with. So that's how it all ties in.

Knorr: You led the company into the mobile space very early. What did you see that other people weren't seeing? All the talk today is about mobility, but it wasn't when you started to drive the company in that direction. I knew we were going to get to that. That has a little bit to do with history. Most other CEOs will claim that they're visionary. The fact of the matter is that we backed into it somewhat, and to be really honest, we didn't have another choice. Because in the e-world, we lost it.

When I took over this company, we were behind in various technologies, not only in the e-world. We made our college effort trying to get there; we had our app server. But by that time, we were the seventh app server in the universe, where WebSphere and WebLogic already had 75% of the market. And then Sun had about 6%, and this guy has about 9%. And all of us have nothing, comparatively speaking. So you can't rebuild a company based on that....

We didn't have applications, like ERP and MRP. That was before my time. We decided not to go there. It turned out to be a near-fatal mistake. And when I came in, the e-world was big. Everybody's IPO'ing their business plan and everybody's making millions and Sybase had deteriorating revenue and was losing money and all that.

Fortunately, we had a good installed base and a good loyal set of customers. And they were questioning our survivability; so were a lot of people. So I knew [I had to] be making money and stabilizing the troops and stabilizing the customers [who said]: "Okay, you guys are going to be in business, I'll take my time moving away from you."

And that was the general concept in the 2000 timeframe. Everybody's making zillions of dollars and the stocks are 300 bucks in some of the companies. Most of them don't exist anymore, but...we were not doing anything. I mean our market kept low, basically with nobody following us. It was a very, very dead company at the time. So one thing we decided was...we need to be somebody that is interesting and worth following. That means that you have to do something that other people haven't done yet that will be meaningful over time....

So we decided to look at what we can do and what the world looks like. And fortunately, at that time, we partnered with a couple of companies, at least the people who were willing to chat with us. The big one was really Intel . They were pushing Centrino chips in the early 2000s. So they came up with this "unwired enterprise;" they spent $300 million to do this campaign. I had no money. So I immediately called myself "unwired enterprise." I see somebody's branding this and I don't have money to brand it. By the way, we didn't have credibility either. If I came up with "unwired enterprise," nobody would listen to me at that time, right?

...So, in some ways we backed into it, but we didn't really have a choice. We needed to leapfrog it, and we knew if we leapfrogged it correctly, it would be big time. If we leapfrogged it wrong, well, it's no worse than when we were given no respect anyway at the time.

Gallant: So how were you able to make the transition? The key was that we had a team of people who were willing to do this, who would hang in there. Because there were going to be a lot of ups and downs. And there were, but we have a great team. If you look at our executive team, we've been together for a very long time. I've been here 12 years; some of them have been here longer than I have.

If you remember, we acquired a company called PowerSoft. PowerSoft acquired a company in Waterloo, Ontario that does compilers. In the year 2000, nobody was buying compilers.

I was on a mission to cut costs and make money. So I flew up to Waterloo. At the beginning of the journey I was going to shut it down. When I got there, I was very impressed with the loyalty of that team and the capability of that team. So I came back and started thinking that there's got to be something that we could ask them to do.

Now, at the same time, coincidentally, it was the early days of Palm [which had been bought by 3com]. 3Com wanted to have a lot more intelligence on a device. Apple had failed at that with the Newton, if you remember. I said, well, these kinds of devices don't have a lot of memory or processing, but it's got to be able to do more than just keeping contacts, address books. I mean, it's got to be able to do more than that, right? So we started taking an interest in that.

I came from a chip design background. I used to design VLSI chips for Motorola. So I said -- well, we could apply the same concept, take the compilers and compile application-specific code. So take the hardware concept of ASICs, application-specific ICs, into application-specific code.

So I challenged the team in Waterloo. I said: What is the smallest database you could build? And this is very interesting historically. We went to 3Com and 3Com came up with some ideas about the smallest usable applets. Apple obviously is a much better marketing company, but we had that concept way back when.

So we were generating applets with our compilers. We had the first ultra-light Java compilers that could compile things down to 60,000 bytes. [Those apps] actually did something. They didn't do a lot. But 60 kilobytes is all they gave us in terms of real estate. Today that's nothing. But in those days, ten years ago, it was a different world.

So we got really interested in that, and then we won a lot of embedded business because of that. So at the time when IDC and Dataquest were tracking that market, called the embedded database market, the whole market was only $300 million. We owned almost 70% of that market. We were in all kinds of software, even Siebel - you know, all the CRMs - and Remedy. We were in handheld devices like FedEx and in all kinds of hardware, software. In fact, the government used it in the system for international travelers, with the palm reader. That palm reader is on our mobile database. High-end chain stores were using it to scan prices, like Andronico's. So we ended up doing very well.

Basically it was an open systems equivalent of a simple technology. What simple could do. We don't do hardware; they do the proprietary hardware. But I have the open systems part of it. So that's how we got started, and then after that we got into content delivery, we got into encryption, we got into device management, we got into collaborative software -- you know, Bluetooth, Ultra Wide Band.

Knorr: But you still have the Sybase database business and large database customers. And on the analytics side, you can't say that's all mobile, right? They're separate. You can't retrofit everything into the mobile model, right? Over time, we could. Now, the market has to develop and our technology has to be able to develop, too. In some of our R&D centers, we're working on mobile analytics. We're mobilizing our analytic engine, Sybase IQ, so IQ will specifically focus on messaging, encryption technology, and all that stuff. So over time, we could.

Today, you're right. We don't. We're creeping a lot of the stuff into it but not in a very grand way. For example, we have backend databases that are able to transmit SMS messages. Now, it's not a big deal. It's not going to win the Nobel Prize. But, on the other hand, it is something that will alert techs and our support center and everybody else that -- something is going wrong with your system, with your server. And it's been very well received by our customers.

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