Behind Enemy Lines: Salesforce.com and Rimini Street at Oracle OpenWorld
Both tech vendors are aiming to change the rules of game for enterprise software. And while they're going about it with two different business models, the companies share some things in common.
Tue, October 13, 2009
CIO — At first glance, Salesforce.com and Rimini Street are two high-tech companies that seem like they don't have much in common. One sells and hosts software in the cloud; the other services and supports aging enterprise software.
But during my meetings on Monday with them at Oracle OpenWorld in San Francisco, it became clear that they actually do have a couple of important things in common—besides the fact that both are treading on the enemy's turf. (Salesforce.com CEO Marc Benioff's heavily attended presentation on Tuesday was just outside the Moscone Center's grounds.)
First off, both companies' business models represent what the future of enterprise software will likely resemble: An established alternative to the constraints and costs of traditional on-premise software that we have come to know.
Salesforce.com's products are moving beyond its well-known SaaS CRM application. The Force.com AppExchange and Service Cloud are two revolutionary services that are trying to change the rules of the software development and delivery game.
In a Starbucks across the street from the Moscone Center, Ariel Kelman, Salesforce.com's VP of platform product marketing, talked about new products as well as the differences between on-premise software and Salesforce.com's cloud vision.
As to the differences between the two software delivery models and how Salesforce.com is judged by its customers, Kelman says that it's simple: "We are not profitable as a company unless our customers renew [their subscriptions]. We're not focused on a one-time upfront sale. How we market and sell is this: We don't sell vision, we sell customer success."
One interesting customer success story is Vetrazzo, a company that uses recycled glass to manufacture countertops. It was clear that Vetrazzo didn't want anything to do with traditional ERP once they saw the expected costs. So company executives built a prototype with Force.com, liked what it saw and is using a web-based ERP system today. According to Salesforce.com, Vetrazzo built, customized and deployed an ERP system in seven months; ROI was achieved in eight months.
Kelman and Salesforce.com are busy getting the word out at OpenWorld. "The reality [of what we can offer customers] is ahead of the perception," he says. "People are surprised with just how deep [our customers] are relying on Salesforce.com for apps or a platform."
Thirty minutes after meeting with Kelman, I walked up a block to the Westin Hotel, to the presidential suite to catch up with Rimini Street CEO Seth Ravin.
Rimini Street's alternative enterprise-software play is this: It offers third-party maintenance and support for a wide range of Oracle and SAP enterprise software products—at half the cost customers pay Oracle and SAP.
Because the global economic downturn has forced all companies to critically examine their IT spend (including those rather large maintenance contracts), Rimini Street has been able to grow its business not only in the U.S. but around the globe, recently opening offices in London, Sydney, Singapore, Rio and Amsterdam. "We'll be fully global by the end of the year," Ravin says.
But it is Rimini Street's new office in Munich, Germany, that has created the biggest stir. Last month, news broke that Siemens, one of SAP's biggest customers whose partnership is decades' old, was reportedly reconsidering its SAP maintenance agreements. Rumors swirled that Siemens was considering Rimini Street. (For more on this, see Siemens and SAP Flap: Much Ado About Nothing—Yet.)
While Ravin does not hide the fact that he has spent considerable time in Germany as of late, he declines to say anything more about any potential deal with the Siemens mothership.
Nevertheless, he's his usual bold self in making predictions: "Many of SAP's top-level customers are in discussion with us," and adds, a little bit later, "Within a year, we will have one or more of SAP's largest customers on board." To meet the increases in demand Rimini Street has experienced and expects, the company will staff up to 200 employees by the start of 2010. He pledges that the company will not dilute the ratio between the number of employees and customers.
Another thing that Salesforce.com and Rimini Street have in common is that the economic recession has driven companies to cut IT costs and keep them low now and in the future. Both companies' models attack the legacy costs of traditional on-premise software, and both companies are going hard after the entrenched competition in the enterprise software space.
Which leads to one more thing they share: They're the frequent target of corporate disdain and competitive venom from Oracle CEO Larry Ellison. (Nothing legitimizes your company better than an insult or slight from Larry.)
Sums up Ravin: "We have a healthy respect for our competitors, and we hope they have a healthy respect for us. Sure, you occasionally trade slugs, but you don't go after the largest companies' main revenue source and not expect them to come back at you."