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Third-party app maintenance provider claims huge growth
- — 17 July, 2009 04:07
Rimini Street, provider of third-party maintenance for SAP and Oracle applications, said this week that business bookings have quadrupled during the first six months of this year.
Bookings don't equate to revenue and privately held Rimini Street is still tiny compared to those vendors' traditional support operations, but the reported growth indicates more enterprise software customers are looking to save costs and hold off on upgrades due to the global recession.
Rimini Street CEO Seth Ravin declined to provide specific, current numbers, but pointed to the company's earlier statement that sales bookings totaled more than US$86 million last year.
"The general gist is that we're continuing to see the strongest pipelines we've ever had," Ravin said.
Rimini Street promises that customers will save 50 percent or more on their annual maintenance costs, which vendors typically charge as a double-digit percentage of license revenues.
The company promises customers a named point of contact, tax and regulatory updates, 24-7 coverage with inquiry response times of 30 minutes or less, and other features, according to its Web site.
The trade-off is that customers who drop traditional vendor support don't get access to upgrades, patches or the product's underlying source code.
Nonetheless, customer interest is particularly strong these days, especially outside the U.S. and Canada, Ravin said.
Rimini Street has even landed some SAP agreements within the vendor's home turf of Germany for both earlier platforms like 4.6 and 4.7 as well as the modern ECC 6.0, according to Ravin. User groups there were among the most vocal opponents of SAP's move to a fuller-featured but pricier Enterprise Support service.
Rimini Street's target customers are "looking to drive more out of what they've got" and aren't interested in upgrading, Ravin said.
"The reality is that the software they're running today is the core software they're going to be running for the next 10 to 15 years."
Still, the third-party maintenance market remains small, with just Rimini Street and a handful of other players, such as netCustomer. But industry observers say there's some substance behind Rimini Street's hype.
"With almost every other SAP inquiry we get, customers are asking about alternatives for cost savings with SAP. Maintenance always comes up," said Forrester Research analyst Ray Wang.
Big vendors, for whom high-margin support revenue is becoming increasingly important as new license sales slow, have not let the third-party maintenance market grow unchecked.
SAP and Oracle are embroiled in a lawsuit over SAP's now-defunct TomorrowNow subsidiary, which supported Oracle's Siebel, PeopleSoft and JD Edwards products.
SAP bought the company, which Ravin co-founded, in 2005. Oracle sued SAP in 2007, charging that workers at TomorrowNow employees illegally downloaded material from its support systems and used it to court Oracle customers.
That case may have had a temporary chilling effect on companies interested in providing third-party maintenance, but all signs indicate that the market will rebound, Wang predicted.
"There are so many [customers] looking at this option right now," he said. "This is about to go mainstream."