​Rimini Street rattles vendor loyalty in Australia

Vendor loyalty for maintenance and support in Australia is declining, Rimini Street managing director for Asia-Pacific and Middle East has said.

While Australian organisations have taken to cloud at a more aggressive pace than their Asia-Pacific peers, they have also been more active in purchasing a suite of products centred on an ERP solution from a single vendor, buying maintenance and support, and upgrading when told to.

According to Rimini Street managing director for Asia-Pacific and Middle East Andrew Powell, vendor loyalty and purchasing extras is not a trend Australia's geographic neighbours have shared.

Special Feature

Enterprise software: The big trends and why they matter

The applications that run businesses are undergoing profound changes, although there's also a lot of inertia in the system. We examine some of the key trends — including cloud adoption, mobility, consumerisation and business analytics — that are shaping tomorrow's enterprise software landscape.

Read More

"From an ERP perspective, Australians ... have had a longstanding relationship with the SAPs, they've had a longstanding relationship with Oracle -- they know that journey," Powell told ZDNet.

"So it's not like they're in the honeymoon phase with these vendors, they've had a 10, 15, 20 year relationship and that creates certain characteristics."

But with such long-standing relationships, Powell said the needle is starting to shift and both private and government customers of the likes of Oracle and SAP are realising they have other options.

"Most Australians realise that there is no such thing as a one-stop-shop and this idea of having an end-to-end SAP or end-to-end Oracle doesn't really work, so they're retracting on that model," he explained.

Rimini Street, which provides third party enterprise software support, created a presence in Australia six years ago, and around two years ago, it started taking government maintenance and support contracts from the big end of tech town.

"What vendors are doing now is very specifically pushing you in directions that are slowly locking you in. If you look at SAP, they used to have a strategy where you could basically run it on any database. Now it's any database as long as it's HANA," he said.

The hesitation for companies to hand support over to Rimini Street, he said, is change.

"You're talking about organisations that have paid maintenance every year and all of a sudden this idea is presented to them which is different. And it just takes some organisations time to process that. But the rate of adoption is accelerating," he continued.

"We're hitting 12-13 of the ASX top 50; we've got our 10th Australian government organisation now in the Australian Bureau of Statistics (ABS) -- the adoption rates are definitely accelerating."

In addition to the ABS, Rimini Street has Air Services, the New South Wales Department of Family and Community Services, two Victorian state departments, three federal-owned universities in Australia, New Zealand telco Spark, and Blue Scope Steel on its books.

"It's become a domino effect," Powell said.

What's helping the local client list, he said, is the attitude of vendors, specifically when it comes to support.

"Organisations have dropped having maintenance and come to us and then they receive aggressive, win-back offers by the vendor," he explained.

Pointing to NSW-based electricity transmission network provider TransGrid, which previously said it has leveraged the "colourful" relationship between Oracle and Rimini Street in regards to pricing, Powell said long-term customers are being punished by vendors for their loyalty.

"If you're a loyal long term customer of a vendor, you just keep paying too much, but if you walk away, you're a target again. And that's when you get the great treatment," he continued.

"20 years ago when you partnered with an SAP or an Oracle you really were looking at a long term partnership and I think it started with all the best intentions on both sides. But what's happened now is the balance of power has shifted dramatically to the vendor. They realise they had a lock in and they started exploiting that in terms of high margins, low value maintenance ... and now the push to further lock-in."

Powell also believes the traditional revenue streams SAP and Oracle once relied on have "dried up".

"Everyone's basically bought software so they've had to resort to other means of pushing sales," Powell said. "One of the ways that they've done that is through compliance. What that's done is it's like a sugar hit, it's given them short-term revenue gains. But on the other hand it's burnt relationship Capital."

"They're trading relationship capital for short-term sales and what that's done is created a customer base that's less loyal."

RELATED COVERAGE