Rimini Street CEO Seth Ravin: Competition drives real innovation and that's what we do

Q&A with Rimini Street CEO on customers, competition, and litigation.

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Rimini Street CEO Seth Ravin: "Everybody used to see us as the, 'Hey, we're half price guys', right? But over the years it has become a lot more sophisticated than that."

Image: Rimini Street

Rimini Street offers third-party support for SAP and Oracle applications. But while such services have been gaining popularity among large enterprises, Rimini Street has been involved with a long-running lawsuit with Oracle: in September a court awarded Oracle $124m, although Rimini Street said it intends to appeal.

Rimini Street CEO Seth Ravin says that his company continues to go from strength to strength, despite the litigation hurdles. Clients include Pioneer, the American Cancer Society, Bausch+Lomb, Embraer, United Biscuits, and ATS.

ZDNet recently caught up with Ravin to discuss his company's secret to dealing with customers and why third-party support is the wave of the future.

Q: You started your career at PeopleSoft. How did you like that?

Ravin: I learned a lot about the culture. I learned a lot about the importance of putting client service first. We built our company off our focus on clients.

We didn't always have the best product, but we had a lot of goodwill built up with the customer base and we told them the truth. If we screwed up, we held our hands up. We did that and people said: "My god, how refreshing. You made a mistake, you owned up about it - how refreshing."

This all shaped my thoughts on how you come after a market.

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Rimini Street CEO Ravin:"When Oracle call us scoundrels, we say, 'Check the facts'."

Image: Colin Barker

Now Oracle approaches things differently. I have a lot of respect for Larry Ellison as an entrepreneur, look what he's built.

He did that through a lot of smarts. But I don't agree with their customer philosophy. I don't agree with the way they approach and work with customers. I don't agree with SAP's approach to how they work with customers.

I think they should have a much deeper relationship with their customers than they do.

We take a different approach. Rimini Street was build off a foundation and a culture that we have with our clients. We get 4.8 out of 5 on our client satisfaction surveys across the board. We have 1,600 clients today.

They are our biggest sales tool. It's not how good your sales people are. It's about them talking to other customers and to analysts. And that's why we have 38 percent per year growth -- that's through 43 consecutive quarters, through all the ups and downs of the outside world.

So it is the good old competitive proposition: half the price, better service, and we are going to work for that business harder than the competition does.

As consumers we all have these rights and we take them for granted, but in the enterprise software world, this is big news. You know, this is really nothing special; it is just the consumerisation of what used to be a monopoly.

As you see it, this is across the board with the major suppliers?

That's always been the model. They drive the profit margins -- and we are talking about margins of 90 percent-plus. No competitive industry in the world has a 90-percent profit margin.

How do you sell the same products at a lower rate?

Well, we don't. We have a different service model. There are some things that we offer that Oracle and SAP don't offer. There are things that they can do that we can't do because we are not the manufacturer.

When we come in on large projects, even here in the UK under the Framework Agreement, they look at our wares, they look at our products and they say, 'OK, you can do X, Y and Z and over there, they can do A, B and C so you can do both of these things' -- and then they look at the model and the price. And remember it is never just about price.

For example, we don't require upgrades for 15 years minimum. With Oracle and SAP you are going to be upgrading pretty regularly because it's required underneath their maintenance contract. We provide support for all add-ons and customizations with no additional charge. They provide no support for that.

So your sales pitch is that there are things that we offer and at up to half the price of the major suppliers?

Yes, but that's not all. For example, there are services that we provide that are far more valuable than some of the services provided by the vendor, and the customers can weigh that out.

You know, the shame of this is that it shouldn't be such a big story just because we offer competition. The real story should be that competition drives real innovation and that's what we do. Our services provide things that theirs don't.

We have to compete, so the real story is that opening up competition leads to choice.

You are a private company. Are you considering going public?

Yes, we have filed with the SEC so we are on the road to becoming a public company.

You think that is important for you to do?

I think so. Some people do IPOs to raise money, but we don't need to raise money for the operation. What we do like is the credibility and the transparency that we were talking about before.

If you look at our website, you will see that we are the only private company out there that publishes quarterly results. That's all about our belief in transparency.

Why do you think this market is so dysfunctional?

It is all about the mentality around the proprietary nature of the software and the misconceptions like, 'Nobody can fix things better than the supplier'. This would not happen in other markets. If your car needs fixing, you can go to the official dealers or you can take your pick from the independents. What's so different about software? Why can't you do the same?

So is your sales pitch, we can do the same thing but cheaper or is it more sophisticated than that?

OK, everybody used to see us as the, 'Hey, we're half price guys', right? But over the years it has become a lot more sophisticated than that. Now it's, 'Hey, let us help you rebalance the portfolio. Let us free up excess capital your spending on things that you don't have to'.

The game has changed for CIOs dramatically. They aren't out there running datacenters, they are coming to the table and being asked, 'How you are going to contribute to growth?'. The number one objective for every company is growth.

How do you get over the disbelief factor?

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Well, 1,600 customers, 11 years is one way. It's a hell of a lot easier than customer one. People wanted to know who we were but now, with so many case studies [31 on the site], so much track record, and so many analysts having done their reports, we don't have that problem.

But if you look at what is happening in companies now, when you sit down with the board it is all about ROI and cost benefit. Look at the UK government.

Three years ago they were saying, 'We're spending so much money on Oracle and SAP with no competition'. So the cabinet drove the Framework Agreement that allows independent maintenance to be bid for on all government contracts. We've picked up many different customers there as a result. It took three years to go through the bidding process for Crown Services, but this was a big success story -- the government is actually breeding competition.

But then, there should be 20 Rimini Streets, all selling different products at different price points.

One of your biggest costs must be lawyers' fees?

Oh, yeah. We probably have more lawyers than anyone outside of a law firm. But that's the nature of the stage of the business, you go through this stage. You start with consumer demand, then you go through the litigation phase because of all the people who want to keep things the way they are.

You know, telecoms tried try to stop choice. They lost. New rules are defined and new players emerge. And they are good markets to get into. Large scale markets with 70 to 80 percent profit margins.

But look at the system integration business where the profit margins are 18 to 20 percent. They would love to be in this market but they can't.

It all comes down to that ongoing maintenance. The Oracle and the SAPs tell them that they can sell all the software they want, but do not try and replace our maintenance business because that is the golden goose. And then along comes Rimini Street and we can do that at a fraction of the cost.

Are you basically going after the big companies by beating them on the cost of maintenance?

That is all we do. That is our main area of expertise. Twenty years ago when you bought a system, there was an installation, implementation, training, all these phases, customization and then go live. All of these used to be owned by the vendors and then each one was individually bid out to competition. Now you can put out to 20 different companies and choose from there.

The only area of their business that they have protected for themselves, that has been a fortress, has been the maintenance business. That's why they see us as such a threat.

But, for you, there is still the issue of litigation?

That is the nature of the business but we will run out of things to litigate! You know if you look at the recent court result, we said [Oracle] claimed it would be high noon a year ago but here we are.

The court decided we had to pay them a big chunk of money. We had to write them a cheques for $124m. That's not a small amount of money, but we are going to seek $88m back. They told us we had to pay $34m for a one-time license to Oracle for innocent infringement where we didn't know we were infringing and nor should we have known, according to the court. OK, if that's what it is and we need to pay it, we will pay it. But the $88m [for Oracle's legal costs] we completely disagree with and we're not going to pay it.

We pay the money and move on. We're in a multi-billion business.

You have just announced your latest results.

We did really well with another record quarter. We had 149 transactions, which was up 40 over the highest in our history. And we've talked to 450 new clients just since the trial. That goes to my theory that once you work your way through the litigation, more and more people will come off the sidelines.

You know, there are some people who say, 'I don't want to get in the middle of the Oracle and Rimini Street action', and that's OK. But as litigation fades and, in any case, this will be in court for years -- this is American litigation we're talking about! But people understand that. We live in a world of Silicon Valley where everybody is suing everybody of copyright and patents.

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