Mobile master

John Chen, president and CEO of enterprise mobility specialist Sybase recently completed his first visit to the region. Imthishan Giado met with him to discuss the future of enterprise software.

Tags: Enterprise softwareSybase IncorporatedUnited Arab Emirates
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Mobile master CHEN: At the present time we are still hiring selectively, and there’s no reason to start laying people off. (George Dipin/ITP Images)
By  Imthishan Giado Published  July 25, 2009 Arabian Computer News Logo

What is the purpose of your visit to the region?
To see customers. This is my first trip to the Middle East. Therefore by definition, it's my first trip to Dubai. We've been doing business for a long, long time. We have seen some very strong growth in the last three years - we've been growing 28% on a compounded basis and have a lot of customers here in this region. I've been very fortunate to visit and talk a little bit about the company and our strategy and direction and meet our customers.

We have about 80% of the Islamic banking market, so it's a very dominant market share. We have ten internet banking customers in the Gulf region, which makes us number one in the region. The company overall is very oriented to the financial as well as the telecoms verticals. That's the similar profile everywhere around the world and we operate in 38 different countries.

Are there specific verticals which you target with your products?
We have a lot of different verticals but the biggest two that represent 40% of our business is 20% from telecom and 20% from financials. The financials are banks, brokerage houses, and insurance companies, investment banking companies. Outside of that, in more of an IT-developed economy like the United States for example, we do quite a bit of healthcare, quite a bit with the technology companies and we do quite a bit with governments,
of course.

Has your position in the market for software and services been affected by the recession?
We've had two record years, six record quarters in a row, both in revenue and profit and cash flow. We're growing the company organically last year at 11%. The economic slowdown - especially given that we have such a big financial sector exposure - has not affected us negatively yet.

Do you see a dip in revenue for your particular market segment coming this year?
It depends on how long this recession is going to last. Let me explain why we haven't seen it and then I'll answer that question. We haven't seen it because of our two major product lines that are selling very well today. One is in the analytics world. What we do is provide a risk analytics platform for banks and financial institutions to provide dashboard on how much risk they're taking, anywhere from just a trading risk, or a credit risk.

The other one is mobile - mobile banking, mobile commerce, mobile messaging, we're literally the number one in market share around the world. Not a very big market, it's about $400 million for us last year. It's big enough but not a huge multibillion dollar market. It's growth rates are very high, like 29%.

A lot of the mobile computing makes its way to the enterprises, whether it's banking, or payments, or just pure mobile extension of applications. Even in the downfall, these are very much needed technologies. If the economy on a worldwide basis persistently goes bad, especially if it lasts beyond this first half of the year and goes deep into the second half, there are a few things that will affect us.

Number one, at a certain point in time, the capital spending, even if they need it, is going to have a practical value of whether they can actually get the money. Number two is the currency; we do 50% of our business outside the United States and 30% of that is in Europe. These are very heavily hit areas in terms of currency.

Not withstanding that, we think that our mobile infrastructure software will continue to be bought, that the analytics software will continue to be popular, the internet banking system will continue to do well.

As of yet, you have not announced any retrenchments - are any such plans on the cards?
We're still hiring people around the world, very selectively. We've got record profit and revenue so there's no reason to lay anybody off. We've got to be very careful in terms of how we add more [staff]. We're buying companies - we bought a mobile payment company in Germany in the last day of last year. We are the very rare exception to the rules. We don't really see a major weakness other than the macro currency issues.

Do you have any future acquisition targets in mind?
We see a lot of opportunity partly because the strategy that we laid out in both the analytics and the mobile commerce strategy are very new markets. We are in many instances, the number one leader in terms of market share. So it's a small market but a very new market.

This downturn reset all the prices. Since we do have money and we generate cash and a good profit, it's a good time to invest in it because people's expectations were not as lofty as they used to be.

Which segments of the software market are likely to be affected?
In a market where people sell applications by the seat, especially enterprise applications, they are going to have a very tough time, partly because around the world people are being laid off and virtualisation drives a lessened number of servers. Both of them are the way that business has been done in the past, and that's why you see - this is very interesting - software as a service, that business seems to be okay. Any premise-based stuff - if you just sell more of the same thing, it's going be very difficult.

We see the business in professional services - including ours - not doing very well because people just don't have the money to spend on re-architecting things. If it takes too much work, out-of-the-box, it's a problem sell in this environment. Companies just don't have the people or the money to pay for those people.

Will big-ticket, high-concept technologies like virtualisation also suffer in the months to come?
Currently, yes. It's true in the green IT area - and there are two reasons. The first is that it requires a level of investment that people may not see an immediate return. The second is that the whole issue with green IT is that a lot of people think that if you wait for another 12 months, the market will be even more mature and you will have more choices. That of course, is always a reason not to spend. Every time you have a reason not to spend, that's a problem.

I've gone through this stage with mobile computing four or five years ago. People would say that they could wait and they would ‘shop ‘instead. Green IT is in that mode - I'm sure that there is a trigger point in the future where everybody is just going to jump in quick and hard. I would say that the market is still waiting for some leadership.

In the past, you've commented on the possibility of an American CTO - is there a need for a similar figure in this region?
Let me answer what I said in an interview with Information Week. It's always dangerous to assign - and I don't care if it's a country or anything else - a chief technology officer. It's because the moment a person gets that title and starts doing the job, they think they have the mandate to pick the technology.

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