Rimini Street landing big reference customers: Maintenance tipping point near?

Summary:Rimini Street may be nearing a tipping point as some big enterprises are signing up and becoming reference clients for its third party support services.

Rimini Street may be nearing a tipping point as some big enterprises are signing up for its third party support services.

In an interview, Rimini Street CEO Seth Ravin (right)---who was camped out with his merry band of executives across the street from the SAP Sapphire conference in Orlando---named a few reference clients.

Dennis Howlett and I sat down with Ravin for about an hour. Our big questions revolved around Rimini Street's momentum, Ravin's model to hire experienced engineers, the timing of a third party support tipping point, a move to offer core payroll software on a licensed basis and the Oracle lawsuit against the company.

Related: Experience trumps youth at Rimini Street

Howlett covered Rimini Street's approach to talent, but the key item for my purposes was the company's move to name its heavy hitters. Let's face it: Large enterprises are tired of paying hefty support and maintenance fees to Oracle and SAP. The big question revolves around the tipping point to third party support. My working theory is that some Rimini customers aren't likely to talk publicly because they are worried about software audits as well as taking a hit on licensing elsewhere. Many enterprises license multiple products from both SAP and Oracle.

Ravin didn't debunk that theory and he wasn't sure the IT industry is at a tipping point on third party support. However, Rimini Street's move to name some larger clients will give other enterprises confidence. "I don't think we're at the tipping point (to third party support) yet, but at some point you can't bully your customer forever," said Ravin.

Also: Rimini Street fires back at Oracle; Alleges 'anticompetitive tactics'

Among the large public customers using Rimini Street for third party support: Yum Brands, Deutsche Post/DHL, Petco, PetSmart, Dick's Sporting Goods, Arbys, Alcatel-Lucent, National Grid and EDF Plc. Most of these companies have Oracle applications and are using Rimini Street for support. "These companies are very large, conservative and don't want to do upgrades 3 times a decade because it's expensive," said Ravin.

Ravin's hunch is that that downturn has permanently changed the role of IT. In short, the CFO and CIO are wary of big-bang projects given the expense. The game is to cut the budget for maintenance and then leapfrog to something new, say PeopleSoft to Oracle Fusion, at some point in the future. In the meantime, these customers will milk their existing apps for 7 to 10 years. "There's a hard question about software ROI," said Ravin. "Our model customers don't have huge implementations in progress."

Add it up and Rimini now has 23 clients for third party support in the Fortune 500. It's not a groundswell yet, but it's a worrisome sign to large enterprise companies that have 92 percent profit margins on maintenance.

Simply put, you can see the threat Rimini would pose to Oracle. The threat to SAP is a little lower for now since Rimini's focus on those customers has just begun.

The elephant in the room was the Oracle lawsuit. Ravin said the lawsuit is currently in the "tennis phase" where the two sides are volleying paperwork. Ravin said Rimini and Oracle are disputing the allegations and evidence. There's a possibility that 10 of Oracle's 13 allegations could be dismissed. We'll know more about Rimini's motion to dismiss Oracle allegations in about six weeks or so.

The Oracle-Rimini lawsuit is critical. If Oracle can't derail Rimini in court, the third party maintenance model will be established and more big customers will follow. Bottom line: Oracle and Rimini are already at war over the third party maintenance scenario. That war will just escalate as Rimini rolls out more support services. Don't be surprised if Rimini targets Oracle E-Business Suite for third party support.

Topics: Oracle

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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