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Rimini Street: The End of Full-price Software Maintenance Is Here!

Written By: Predrag Jakovljevic
Published On: March 25 2013

In a recent press release, Rimini Street boldly declared the end of full-price software maintenance. The vocal and upbeat third-party software maintenance provider for various popular SAP and Oracle enterprise systems believes that a tipping point has finally been reached in the market for annual maintenance (certainly, the public cloud enterprise software providers have long been preaching even the outright elimination of maintenance expenses in their deployment model, but the focus here is on on-premises software).



According to survey findings recently published by Constellation Research, increasingly savvy enterprise resource planning (ERP) customers are negotiating maintenance discounts from Oracle and SAP, previously allowed to dictate maintenance policies and pricing,  by leveraging a competitive third-party support proposal, or switching to third-party support for more savings, new features, and responsive service. Owing to the increasing adoption of third-party support and Rimini Street's leading position in this cottage industry with 11 consecutive record quarters of growth, and nearly 600 clients around the world—including 69 Fortune 500 and 15 Global 100 companies—the move to third-party support has reportedly reached a tipping point in the industry.

A Win-Win for Customers

To support this major trend, Rimini Street has made it easier for customers to negotiate their best pricing, support features, and service contract terms from Oracle and SAP by providing customers with a competitive proposal available online. Rimini Street believes competition is important in the marketplace—so even if a customer evaluates Rimini Street’s third-party support option and determines that it is not right for the company today, the customer can still use the Rimini Street proposal as leverage to get the best price and service terms from Oracle and SAP.

Even if this is a mere gimmick by Rimini Street, it cannot hurt a prospective support and maintenance customer to use the proposal to its advantage. It will be interesting to watch what Oracle and SAP do now, perhaps in a more creative way, as they've been rather tone-deaf thus far. Oracle and Rimini Street have been engaged in counter-lawsuits about alleged intellectual property theft, and it is hard to predict the outcome of these. While some prospective Rimini Street customers might have been deterred by this, the lawsuit has not really stopped Rimini Street’s momentum (based on its upbeat results).

For its part, SAP’s recent price increase for its annual standard support and maintenance customers (to 19 percent from 18 percent) has raised many eyebrows. SAP claims that the increase is warranted by a number of recent value-add features, but some market observers’ believe that SAP is deliberately trying to alienate customers, or that it's part of the goal to achieve a lofty 35 percent profit margin by 2015.

In any case, I would not say that we have necessarily reached a tipping point across the board. For laggard and conservative companies on older releases that do not necessarily need the “latest and greatest” technology bells and whistles but do need regulatory updates, the third-party support by Rimini Street or Spinnaker Support makes sense (and there the tipping point might have been reached). But for the innovative companies that upgrade regularly and keep abreast of the latest technology developments, the vendor service and maintenance is still often a better option. To that end, SAP has lately made lots of astute moves and value-add offerings.
 
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