江苏|体彩网|官网电脑版

                                    Monday, May 11, 2009

                                    Rimini Street, SAP, and the future of third-party maintenance

                                    At last year's SAP SAPPHIRE conference, Rimini Street indicated its intention to expand into third-party maintenance for SAP customers. Now, right on schedule, at this year's SAPPHIRE event, Rimini Street is announcing the availability of its support services for SAP customers, building on its similar offerings for Oracle's J.D. Edwards, PeopleSoft, and Siebel customers. It's a good move for Rimini Street and hopefully provides further validation for the third-party maintenance model.

                                    I spoke with Rimini Street's CEO, Seth Ravin this morning about the launch. Seth indicated that his firm already has several SAP customers on board, with strong interest from many others driven by SAP's increasing prices for its own maintenance program. SAP has since backtracked on its forced march to Enterprise Support, but its original stated intention to increase maintenance fees to 22% of original license cost appears to have been enough to start SAP customers looking for alternatives.

                                    The mood is nowhere better evidenced than by the response of German SAP users. Until now, few competitors dared challenge SAP on its home turf. But that changed when 30 CIOs invited Rimini Street to present to them in Berlin, according to Ravin. Rimini Street already has several of them as early adopters of its SAP support services.

                                    Spread Thin?
                                    Seth assured me that his resources are adequate to support multiple ERP vendors. Each product is supported by a separate leader and dedicated resources. In the case of Rimini Street's SAP unit, the leader is Shawn du Plessis, a "16 year SAP veteran who has held leadership roles across more than 15 major SAP full life cycle implementations with global companies such as Nestle, Sebastian International and Siemens," according to Rimini Street's press release.

                                    But the launch of its SAP offerings has forced Rimini Street to go global. It has put up a German version of its website, and it plans to hire local resources in Europe and the Far East, complementing its workforce that until now has been limited to North America. Contrary to the practice of SAP and Oracle, it does not believe in an offshore service delivery model.

                                    Flexible Contract Options
                                    Seth indicated that the phrase "flexible contract options" in his press release does not refer to tiered pricing options. Rather it indicates flexibility in the contracting period. Most customers sign up for a five year term, but others buy into ten or even 15 year periods. Others adopt shorter periods, for "gap coverage," while they migrate from one system to another. Flexibility refers to the ability to tailor the contract length to the actual need. I also note that Rimini Street provides support for customer modifications or extensions to the base system, something that goes beyond what SAP or Oracle offer to their own customers. Generally, modifying base code "voids the warranty" with SAP or Oracle, as so to speak.

                                    Why Not More Third-Party Maintenance Providers?
                                    Why haven't there been more players like Rimini Street rising up to meet the market demand for third-party maintenance? Seth believes there are significant barriers to entry. In the case of SAP or Oracle, a potential service provider has to be willing to take on two powerful multinational organizations. Existing business partners of SAP and Oracle, those that are best qualified to offer third-party maintenance, are reluctant to offer services that compete with the parties that they rely on for sales leads, training, product access, and general good will. Finally, it takes significant resources, including funding, to build a 24/7 support organization, much of which must be built before the first customer is brought on board.

                                    My Take
                                    I agree with Seth that the barriers to entry are significant, though not insurmountable. The Tier I enterprise software market is ripe for disruption by third-party maintenance providers. With SAP and Oracle realizing gross margins in the neighborhood of 90% on their maintenance business, the economics are simply too strong for third party maintenance providers not to rise up.

                                    Rumor has it that there are smaller, niche players besides Rimini Street already offering third-party maintenance contracts "under the radar," on a case-by-case basis. But they are reluctant to publicize their offerings out of fear of incurring the wrath of their business partners. Oracle's lawsuit against SAP and its former TomorrowNow unit, which provided third-party maintenance for Oracle products, only heightened these fears.

                                    As I've written before, it may take one or two antitrust lawsuits before larger service providers feel comfortable venturing into meeting this market need. Interestingly, today's Wall Street Journal notes that the U.S. Department of Justice plans to step up antitrust actions against illegal monopoly conduct. One can only hope that one of the first markets they explore is enterprise software maintenance and support.

                                    Related posts
                                    Rimini Street to provide third-party support for SAP
                                    Legal basis for third-party ERP support industry

                                    Sunday, May 03, 2009

                                    i2 doubles up on patent litigation, sues Oracle

                                    i2 is in a litigious mood these days. In 2007, i2 sued SAP for infringement of seven U.S. patents awarded to i2 between 1998 and 2006. SAP settled that case in 2008 for $83.3 million.

                                    Now a Spectator reader calls my attention to i2's lawsuit against Oracle for allegedly infringing on 11 of its supply chain management patents.

                                    i2's civil complaint against Oracle is on i2's website. The complaint was filed in the US District Court for the Eastern District of Texas, the same court that i2 chose for its SAP litigation and one that is generally regarded as friendly to patent litigants.

                                    i2's complaint against Oracle does not indicate which Oracle products i2 believes infringe on i2's intellectual property. The 11 i2 patents are listed below, and some of these appear to be the same patents that were the subject of i2's lawsuit against SAP:
                                    • Extensible Model Network Representation System for Process Planning (two patents)
                                    • Planning Coordination Systems for Coordinating Separate Factory Planning Systems and a Method of Operation
                                    • System and Method for Allocating Manufactured Products to Sellers (two patents)
                                    • Computer Security System
                                    • System and Method for Remotely Monitoring and Managing Applications Across Multiple Domains
                                    • Intelligent Order Promising
                                    • Generating, Updating, and Managing Multi-Taxonomy Environments
                                    • Value Chain Management
                                    • Extreme Capacity Management in an Electronic Marketplace Environment
                                    I have no idea whether i2's case against Oracle has merit. But it's not a good sign that the only area where i2 appears to be growing these days is in patent litigation. My source notes that in the first quarter i2 layoffs hit sales, marketing, and services pretty hard. Layoffs may continue in Q2 and affect the R&D group as well. It would seem, therefore, that the one area where i2 is allocating additional budget and headcount is in the legal group.

                                    Update, May 4: Vinnie Mirchandani follows up with his view, which is pretty funny, about the state of software industry today. Must read his short post.

                                    Related posts
                                    i2 layoffs underway, March 2009
                                    JDA calls off merger with i2
                                    SAP: If you can't beat 'em, sue 'em

                                                                      Super League

                                                                      Variety show

                                                                      Buddhism

                                                                      image

                                                                      Real estate

                                                                      Buddhism

                                                                      car

                                                                      Application Essentials

                                                                      Buy a car