Rimini Street Keeps Cashing in on Half-Off Oracle and SAP Maintenance Fees
At SAP's Sapphire show, Rimini Street CEO Seth Ravin expands his quest to provide an alternative maintenance and support service to Oracle's and SAP's -- for half their price.
CIO — Slightly more than a year ago, Rimini Street CEO Seth Ravin announced at SAP's 2008 Sapphire show that his upstart company would offer third-party maintenance and support services for SAP's aging suite of R/3 applications, beginning in 2009.
The new SAP support would round out the third-party maintenance services Rimini Street has offered since 2005 for Oracle's ERP and CRM apps: PeopleSoft, JD Edwards and Siebel. "SAP is always talking about the importance of customer choice," Ravin told CIO.com in 2008. "And we're going to come right back and say, 'OK, now it's time for us to offer choice to the SAP customer base.'"
Now a year later, Rimini Street announced (at Sapphire 2009, being held this week) that its support business for SAP's R/3 4.x, ECC 5.0, ECC 6.0 and BW 3.5 products is now open for business.
Ravin's timing couldn't have been any better: Maintenance and support fees are the IT gripe of the moment as SAP and Oracle customers face intense financial pressure to manage IT expenditures like never before.
SAP recently announced that it was modifying the pricing program for SAP Enterprise Support, in effect delaying the ERP giant's much-talked-about maintenance price increases. And Oracle followed suit just days later.
For Ravin and Rimini Street, the economic downturn and maintenance turmoil at SAP and Oracle have been good news. For instance, Ravin says canceled SAP projects have freed up more SAP-specific talent for his company to recruit. And since the SAP announcement last year, Ravin says he's been "beating customers back with a stick." As such, business has been good: Rimini Street's 2008 financial results show that the company quadrupled its 2007 figures.
In an interview from Sapphire, Ravin talked with Senior Editor Thomas Wailgum about what's still holding potential customers back from signing on with Rimini, how his former colleagues at SAP (he was a VP there at one time) treat him at the Sapphire conference, and how he was able to sneak into SAP's own backyard in Germany and talk to CIOs there about choosing Rimini Street.
CIO: How's everything been since the SAP announcement?
Seth Ravin: It's an interesting show. SAP is doing a lot of dancing down here [about maintenance]. We hear it from Oracle, too. You can only imagine the amount of requests they get on a day-to-day basis for discounts. But they've got to hold those lines, otherwise they won't be able to deliver those [quarterly financial] numbers. It's pretty tough for them.
[SAP President of Global Field Operations] Bill McDermott was on [CNBC] last week. McDermott said, in effect, that analysts have got to stop focusing in on the new license revenue because that's just an old measure. It's time to focus in on the important thing: Their strong maintenance renewal business.
My translation is that SAP doesn't plan to sell a lot of software going forward. And that's a whole shift of focus, and it really sort of describes what [SAP] is facing in general: Customers have more software already than they know what to do with—they're "oversoftwared"—and they're not looking to buy a lot of new stuff. And that's a real problem if you're in the software business.
CIO: Why do CIOs and potential customers say no to you? What's their rationale?
Ravin: First of all, it's a little bit unnatural to come along after you've had all these analysts say for years: "The best thing to do is get so close to your vendor, so you know what they're doing, and you have relationship with them. That's how you build the value in the relationship."
Here we come along, and in some cases we say: The best thing you can do is separate from your vendor. It's an unnatural, non-intuitive type of event, process and strategy, and it takes some people—in some cases—multiple years [to get comfortable with].
When we originally started years ago, people said, "What? A competitor? It's not just about negotiating about how much I have to pay for maintenance? I actually have a choice?" We had to go through a long learning process. Yet when we made the SAP announcement [in 2008] that we intended to launch the service next year, we were sitting there with a hundred companies—and we're talking about SAP's largest customers—already at our door five minutes after they heard about it looking for a proposal or a contract, and wanting to move forward.
