Spinnaker expands third-party support for Oracle software, aims at Rimini Street

The company is acquiring a number of customer contracts for JD Edwards World support

A company that has been providing third-party support for Oracle's JD Edwards ERP (enterprise resource planning) software is undergoing a significant expansion of its efforts, despite the ongoing cloud of litigation over the market.

Spinnaker Support of Denver has acquired customer contracts from Versytec, a Nashua, New Hampshire, company that has offered JD Edwards support since 2004, said Matt Stava, co-founder and managing principal at Spinnaker.

Now Spinnaker will be handling support for about 160 JD Edwards customers on various versions of the software, according to the company.

"We are very aggressively going after this market, and we want to own this market," he said. Spinnaker is also planning to start serving other applications, but Stava declined to name them.

Third-party support customers no longer gain access to product updates and patches from Oracle, but generally have stable systems and aren't interested in upgrades. Spinnaker and competitor Rimini Street provide ongoing tech support as well as services that keep the systems up to date, such as tax and regulatory updates for running payroll in accordance with current law.

Like Rimini Street, Spinnaker says customers can save significantly on their support bills. In Spinnaker's case, it usually works out to about 50 percent, according to Stava.

Privately held Spinnaker is profitable and has experienced year-over-year growth of 40 to 50 percent, a number that should grow this year, according to Stava.

Now it's hoping to break out further into the third-party support market, which has been best known in recent times for the lawsuits Oracle filed against former SAP subsidiary TomorrowNow and Rimini Street. TomorrowNow provided support at a lower cost for Oracle applications. SAP admitted liability for illegal downloads by TomorrowNow workers from Oracle's support site, resulting in a US$1.3 billion jury award in November 2010. That award was thrown out by a judge and now Oracle is seeking a new trial on damages.

Rimini Street's CEO, Seth Ravin, was a TomorrowNow co-founder. While Oracle alleges Rimini Street uses the same "corrupt business model" as TomorrowNow, Ravin and the company have maintained no wrongdoing, saying they act within the boundaries of their customers' license agreement with Oracle.

"Our process difference with Rimini is very stark," Stava said. Spinnaker has managed to win several large deals lately not only because of the Oracle lawsuit, but these differences in methodology, he said.

"We do not on behalf of customers download anything," Stava said of Spinnaker's practices. "We let the customers know what we need. We don't take their log-in and go on [to Oracle's support site]. Most customers look at that as a highly ethical drawing of the line."

"We will not share any code from one customer to another," Stava added. "We effectively custom-fit the customer."

Last year, Oracle and Rimini Street subpoenaed Spinnaker and other third-party support providers in connection with the lawsuit. Stava declined to discuss the matter. However, "I can tell you we're under no litigation risk," he said.

A Rimini Street executive downplayed the importance of Spinnaker's announcement.

"I think it's great to have competition," said David Rowe, senior vice president of global marketing and alliances for Rimini Street. "It validates the market."

However, Rimini Street, which has about 450 clients, also offers support for SAP ERP, Oracle's E-Business Suite and Oracle Siebel CRM as well as JD Edwards, "is the clear industry leader," Rowe said. "Spinnaker's a nice tier-two provider for smaller companies."

Rimini Street has done deals worth $1 million annually for every product line it covers, including one last quarter for JD Edwards with a Fortune 500 company, Rowe said. "That's the kind of deal Spinnaker wouldn't be considered in."

The companies' process differences are key, but not in the way Spinnaker suggests, Rowe added. "As the industry leader, we are providing the industry best practices. Part of that is that we will, on [customers'] behalf, help them make the appropriate downloads. We're willing to do that, and it's perfectly legal. They're the follower. The fact they're more timid about that is not surprising."

Overall, "it's good to see the players beef up" in third-party support, said analyst Ray Wang, CEO of Constellation Research and a frequent advocate for third-party support rights. "We need more providers in the space and more competition so that customers have choice."

The third-party support market could really explode if a number of the industry's large systems integrators get into the game, Wang said.

That probably will happen, but not until after the Rimini Street lawsuit concludes, Stava predicted. "We've spoken to several of the big ones, and the interest is there."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Chris Kanaracus

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