by Adam Mansfield

The Rimini Street question

Mar 07, 20123 mins
IT LeadershipIT StrategyMobile Apps

Rimini Street is one of CIO UK’s 20 companies to watch in 2012

The long-term effects of the Oracle v. Rimini Street lawsuit (and countersuit) are not limited to the parties directly involved.

In fact, the consequences of the judge’s decision have the potential to profoundly change the 3rd party maintenance provider business model altogether.

Rimini Streethas unequivocally stated they have not and will never violate any software vendor’s copyrights in providing 3rd party support.

This has not, however, deterred Oracle from subpoenaing Rimini Street’s clients, demonstrating just how ferociously it plans to approach the January 2013 trial.

Although Rimini Street is postponing its IPO until the results are known, it is not resigned to defeat. Rimini Street is directly challenging the allegations made by Oracle.

It is insisting on the contractual rights of customers to self-maintain licensed software.

So what does this mean to organizations currently evaluating their software support and maintenance options? Here are the potential outcomes:

If Rimini Street Wins: If the decision falls in favor of Rimini Street, customers will have greater ability to decide who supports their licensed software and more freedom to seek lower maintenance costs (which can be 50 per cent lower with 3rd party providers such as Rimini Street).

Such a decision would make it very hard, if not impossible, for Oracle or any other software vendor to restrict their customers from using a 3rd party support offering.

Organizations would have more confidence engaging 3rd party support providers.

They would no longer, for example, need to fear that a detrimental court decision could bankrupt their chosen support provider or that software vendors such as Oracle would continually pressure the firm, thus distracting it from adding value to its offerings.

These concerns have kept a lot of organizations from adopting 3rd party support, even when it made better economic sense.

A Rimini Street win would confirm 3rd party support as a viable, long-term option for organizations of all sizes. This competitive environment could in turn pressure software vendors to improve the quality and value proposition of their current maintenance offerings and fees.

Without improvements, lucrative maintenance revenue streams for stable products and releases could dry up — an event no software vendor would welcome or afford.

If Oracle Wins: We suspect Rimini Street would have to retool its business model, at least in relation to Oracle support, or shut down.

The entire 3rd party support model would be vulnerable to major litigation, effectively putting up a barrier to entry too high to overcome.

It is not hard to imagine what life would be like for organizations that would need to go back to their software vendors to renew lapsed support, especially in those cases where several months or even years have passed.

To say it would be painful is putting it mildly.

It is certain that software vendors would recoup lost support fees. In fact, it is standard practice in most software license agreements for the vendors to be entitled to a back pay of maintenance fees and potentially an additional penalty.

We would also expect the software providers to be opportunistic with certain organizations by extracting additional license fees through upgrades, which would ultimately increase the maintenance base moving forward.

Lastly, Oracle will be able to maintain its leverage with its customer base, allowing it to increase maintenance.

The Oracle v. Rimini Street case could change the playing field for all 3rd party support providers and will have a significant impact on those organizations looking to break away from the maintenance shackles their software vendors have placed on them.

Adam Mansfield is director of services at Upperedge