Techno maestro

With record revenues and more financial institutions than ever looking to better handle their risk management, US software maker Sybase is bucking the trend during the global downturn. Claire Ferris-Lay talks to the CEO, John Chen

Tags: Sybase IncorporatedUSA
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By  Claire Ferris-Lay Published  April 9, 2009

John Chen has tried and tested most mobile phones on the market. While it's not unusual for the latest phone to tempt people away from their favourite handheld device, the difference with the CEO of Sybase is that he still uses them all.

"I once ran into the chairman of Ericsson and the first thing he asked me was what phone I was using. At the time I was using another [brand] and he said to me ‘you want me to buy your stuff and you don't use my phone'... so now I carry the phone of anyone I want to sell to," he laughs.

He quickly adds that he doesn't have a favourite brand. His diplomacy or at least his persistence should be commended. Despite the global economic downturn, Sybase, a global enterprise software and services company based in the US, recorded its most successful quarter ever and its biggest yearly profits, topping the $1bn revenue mark, in January.

With an increase in financial institutions looking to better manage their risk and a lack of infrastructure across the world forcing many banks to utilise fourth generation mobile phone technology for bill payments, Chen remains bullish on the year ahead.

"We are fortunate," he smiles. "We are in a position where we are doing well in the fundamental business itself and we are doing well pretty much all around the world in terms of generating interest. We are hiring people, stocks have retained high values and we are buying companies."

Total revenue for the fourth quarter increased by three percent, full year revenue increased by ten percent compared to the previous year, while stock remains up 9.73 percent year to date. Not bad considering independent technology and market research company Forrester Research predicts that global purchases of IT goods and services will equal $1.66 trillion in 2009, down three percent, after an eight percent rise the previous year.

The software maker's involvement in the mobile phone industry is set to be one of the firm's biggest areas of growth this year. Sybase's increase in fourth generation technology, which allows users to check their bank account balances and make transactions via their handset, is largely fuelled by a greater acceptance of the technology and a lack of infrastructure in the Third World, says Chen.

"The reason why that [area] is important is because... mobile banking, mobile payment systems, remittance, are all starting to develop, its becoming a mature industry," he explains. "We now have a system in Austria where we own 80-90 percent of paying bills through handsets. If you go to Austria and get into a cab, you can pay via your cellphone.

"In Nigeria only one million people can have a relationship with the bank so what happens to the other twelve million? They use the phone to buy electricity. Developing countries have that lack of infrastructure so the phone is very important, not everyone can go home and get on the internet, there's no such concept."

Sybase owns 45 percent of cross border text and picture messages globally and last year reported that more than 200 billion messages were sent using their services. Adding to the figure, in July the firm acquired a unit of Cable & Wireless, which helps mobile phone users around the world exchange text and picture messages cross country, for an undisclosed sum.

Under the terms of the deal Sybase also gained exclusive rights to sell a mobile data roaming service, which supports continued use of data services like mobile web for subscribers when abroad.

To date, the firm's biggest growth in the mobile sector has been in Asia, but Chen says it's a natural progression for more countries to take up Sybase's mobile technology.

"Europe is a lot more advanced... in using mobile devices and more trusting. Some parts of Asia have a lot of phones so that's a natural thing to use [while] in other parts... they don't have that infrastructure and so they have to use phones. India is the same."

Most recently the firm signed a deal with American bank, Citigroup which will allow their credit card users to be notified once a transaction is made, as well as provide them with the capability to approve or decline the transaction before it takes place.

The slowest take-up market for this type of technology says Chen, is in America. "It's always the slowest in telecommunications," he says. "I think the way we did our deregulations hurt us a little bit; I don't think we have put enough infrastructure development in between telecoms."

Chen also expects the firm's analytics platform to perform particularly well, in part due to the banking crisis. On March 31 the company launched IQ15, the latest version of its analytics server designed to help businesses deliver accurate analysis quickly. The existing analytics platform was the firm's biggest seller during the last half of 2008, says Chen.

"Today because of the banking crisis around the world all of the regulators are now coming in and identifying whether [or not] you are taking too much risk, or you have credit issues. In order to do that you need tool and we are one of the few companies that are able to provide those tools."

Despite the tremendous decline expected in IT sales, Chen is optimistic both Sybase's analytics platform and mobile services will represent growth for the company in 2009. "We obviously recognise this downturn because the business was so strong in the last couple of years [that] we were able to grow ten to eleven percent. We expect to be able to grow around eight to ten percent on a compound basis [this year]... we actually feel bullish about business."

As an international company with around half of its operations based outside of the US, the biggest challenge for the software manufacturer has been the dramatic decline of the Euro and the British pound, both of which have fallen to record lows against the US dollar in the last year.

"We do 30 percent of our business in Europe [and] over 50 percent of business outside of the US. The UK is a huge hub for us, [as is] France and Germany. In Asia, Australia, Japan, China and Korea - if you add all those together, six out of eight [countries] have very weak currencies so we have to overcome that," he says.

"[But] we cannot affect macroeconomics, notwithstanding [the currency issue] we are in the mode of hiring people and investing - carefully."

Weak currencies and a strong balance sheet will allow Sybase to snap up bargain companies, says Chen. In January the firm acquired German firm, paybox Solutions AG, a mobile payment solutions firm, allowing Sybase to extend its mobile infrastructure to mobile payments.

"It is a great time to buy. It's a very competitive environment so there are a lot more companies that are willing to entertain the idea of our company," he explains. "We carry a lot of cash so we are willing to invest... We would prefer to do more spending in Europe, because I am picking up some things at a reasonable discount. In addition to that we have a lot of cash overseas and it would be nice to use the local currency to do that."

Sybase has had a presence in the Middle East through both the financial and telecoms sectors for the last twenty years. Around 80 percent of Islamic banks across the region are signed to the company's online banking platform while other banks including the National Bank of Abu Dhabi, also utilise their services.

While Chen sees this region as a huge area of growth for Sybase going forward, a lack of companies specialising in Sybase's technology will not result in acquisitions he says.

"In the Middle East it's a little harder for us to make the investment because there aren't a lot of companies that do the kind of thing we do. The strategy [has instead] got to be trying to hire more people and extend the reach rather than just buying," he explains. "The Middle East grew twenty percent on a compound basis in the last two to three years. It has the same growth rate as China so to us these are the two biggest markets," he adds.

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