Richardson speculates that SAP might have been trying to “throw a grenade into Oracle’s party” with the TomorrowNow acquisition. Oracle at the time was crowing about its Fusion product that, when finally released, is supposed to stitch together all the software packages Oracle has acquired over the years. (Oracle recently announced Fusion’s release date is now late 2008.) “It was either a brilliant marketing move or a gimmick,” Richardson says of SAP’s action.

Ray Wang, a principal analyst at Forrester Research, says that for its part, TomorrowNow, which focused exclusively on Oracle support services, was two to four weeks away from adding support services for SAP when it was acquired by SAP.

Former TomorrowNow President and COO Ravin said he cannot comment on specific TomorrowNow plans (due to confidentiality agreements). But Ravin points out that TomorrowNow “publicly commented about its intent to continue adding new product lines when the market and product opportunity were right.”

Nelson ended up sticking around at SAP, while Ravin lasted just three months. “I’m an entrepreneur,” Ravin says, “and while Andrew decided to stay on, I decided to go and build something new.”

The Alluring Business Model for Low-Cost ERP Service Providers

After leaving TomorrowNow, Ravin intended to start a new software company. But he kept coming back to TomorrowNow’s allure: With the big vendors getting up to 90 percent margins on enterprise software maintenance fees (meaning just 10 percent going toward actual support costs), even half of that still would provide a nice revenue stream to another TomorrowNow-like company, he says.

“It’s an unbelievably profitable business model,” Ravin says. So in September 2005, Ravin launched Rimini Street with a familiar-sounding mission: “To redefine enterprise software support using innovative, next generation support services delivered at more than a 50 percent savings in fees compared to a software vendor's annual support program.”

Rimini Street started out by supporting Siebel products and, as Ravin’s noncompete agreements have expired, his company has added PeopleSoft and J.D. Edwards applications to the mix.

Today, Ravin likens TomorrowNow and Rimini Street to fiercely competitive cousins. TomorrowNow has more than 300 customers, while Rimini Street has more than 50. During this past year, in particular, both companies were able to persuade more and more CIOs to buy into their enterprise software support plans.

And they did it with Oracle’s lawsuit looming over TomorrowNow—and SAP.

A Black Eye for SAP

For SAP, Oracle’s lawsuit has been a black eye and an unwanted public relations nightmare. Wang, the Forrester Research analyst, says he believes part of TomorrowNow’s problem was that it was a new and growing business, and not everything was explicitly spelled out for employees.