by Chris Kanaracus

Third-Party Software Maintenance: Five Things You Need to Know

Aug 27, 2010
ERP Systems

Big savings are promised, but are there trade-offs to bypassing vendor support in lieu of third-party support providers like Rimini Street?

Big savings come with trade-offs. Jeff Rishel, vice president of IT for Graham Packaging, says the company’s support-related expenses have dropped substantially since turning to Rimini Street for software maintenance. And service quality has improved. Rimini, one of the few companies supporting applications from ERP giants SAP and Oracle, will keep your systems humming and supply tax updates and bug fixes. But upgrades still require vendor support.

You have to be stable. Rishel says CIOs should consider their business’s stability before turning to third-party maintenance. New SAP customers should stick with their vendors for now because they can’t guarantee that their ERP landscape won’t change soon, Rishel said. For example, customers may make acquisitions or realize they want additional functionality. Both scenarios could require adding user licenses, complicating the move to third-party support.

You can always go home again. Not upgrading SAP or Oracle can mean savings that dwarf the drop in support fees, says Rimini Street CEO Seth Ravin. But “being on third-party maintenance doesn’t mean you’ve severed all ties to a vendor,” says analyst Ray Wang, a partner with the Altimeter Group. In fact, companies that decide they want to go back on vendor support to upgrade can use their defection to a third party as leverage in negotiating a new deal, he says.

Big vendors won’t be happy. Software companies depend on maintenance income and don’t like seeing those dollars go elsewhere. Oracle has filed intellectual property lawsuits, including one against Rimini Street. Rishel says the litigation will only concern him if it drags on. “I’ll be worried if Rimini spends more time fighting the battles [than] on me.” He also wonders what would happen if the outcome forced a return to vendor support.

There’s life beyond litigation. Rimini Street’s business continues to grow despite ongoing litigation, and it now serves 23 Fortune 500 companies, according to Ravin. He maintains Rimini has done nothing wrong and expects the market to expand rapidly once lawsuits have been settled and bigger players in the system integration market feel ground rules have been established.