Rimini Street, a key third party enterprise support player, is expected to deliver revenue of about $24.5 million in 2010, but its long-term impact to the enterprise software industry could eclipse its sales tally.
With the TomorrowNow trial between Oracle and SAP over---except for haggling over interest being tacked onto $1.3 billion in damages and a potential appeal---Rimini Street will be closely watched.
Macquarie analyst Marco Zeidler last week penned an interesting research note following a meeting with Rimini CEO Seth Ravin. Among the key takeaways:
- Rimini Street will deliver revenue of about $24.5 million in 2010 and grow 30 percent to 40 percent the next two years.
- For perspective, maintenance revenue at SAP pushes $8.5 billion a year, according to Zeidler.
- 80 percent of Rimini's revenue comes from Oracle customers, but Ravin hinted that SAP may offer discounts to customers seriously pondering third party support. Rimini has grown its SAP customer base from 12 to 40 in the last year.
- Oracle's lawsuit vs. Rimini is expected to hit the courtroom in March 2012 as of now.
- Zeidler's take was that Rimini Street isn't a huge threat to Oracle or SAP yet, but that can change. Oracle charges 21 percent maintenance fees and SAP checks in at 18 percent for standards support. Rimini Street does it for 9 percent.
Given that maintenance fee spread, you see why Wall Street types like to visit Ravin. They're trying to figure out if and when the Oracle and SAP gravy train ends.
Zeidler's conclusion is that it's still early to gauge how disruptive Rimini will be, but third party maintenance should be watched closely. "Third party maintenance holds the potential to keep margins in check, which is good for consumers of software packages. It might force vendors to focus more on innovation to drive sales. If this development were to gain steam, some might start to see an analogy to what generics did to big pharma," said Zeidler.
Will the SAP user groups re-ignite the maintenance topic?