Rimini Street CEO: Oracle court case is ‘watershed moment’ for third-party support industry

Rimini Street CEO Seth Ravin believes that the conclusion of its lengthy court battle with Oracle is a “watershed moment” for the enterprise software market – opening the gates for more customers to move application support to third-party suppliers.

Rimini Street offers enterprise software maintenance and support at a lower price point than the vendors themselves, a business model that has attracted the ire of Oracle and SAP in the past.

It was forced to pay Oracle $50 million (Oracle was seeking $245.9m) in a lawsuit that lasted five years, with the software vendor alleging that Rimini Street had infringed copyright in its third-party maintenance service.

However, Ravin says he sees the case as an important moment for the industry, one that he likes to compare with the music industry post-Napster: “Once you go through the litigation process, and the rules of the road are now codified by the courts, then you get the next set of companies that want to enter the marketplace,” he told ComputerworldUK.

And Ravin is relaxed about the possibility of increased competition in the space now that Rimini Street’s business model has been justified by the courts: “Oracle and SAP offer one option, we offer one at a different price point. Some may enter at cheaper level and offer fewer services, or a different service level, but that’s all good as it helps the consumer with more choice and price points. You get a growth and expansion of the entire marketplace.”

Financial results

Rimini Street reported revenue for the year to December 31 2015 as up 37 percent to $118m. This may still be a fraction of what the application vendors themselves post (SAP posted $2.30 billion in cloud subscriptions and support revenue for 2015, Oracle $4.68 billion in software licence updates and product support), but Ravin believes Rimini Street is going to continue to eat into these profits.

“Let's be fair to Oracle,” says Ravin, “more than fifty percent of their business is its maintenance stream. It’s almost all of their profits at a ninety percent margin.

"So we understand their concern at us taking aim at a market they have always had and have always assumed they would own for their products. This represents a big threat, in that we are opening up their huge cash cows to open competition. So they look at us as a much bigger systemic threat to how they manage their business and drive revenue.”

Read next: Leaving SAP support for rival Rimini Street saved TT Electronics 'hundreds of thousands'

Rimini Street’s client base is growing at a healthy rate too, as companies look for new ways to open up IT budgets, amassing 106 new clients in Q4 last year alone. Ravin believes that he has hit “critical mass” now that the company has a proven track record over ten years. “In the end you are asking customer to do an unnatural act in walking away from the software vendors, the publisher of the software, and dislodge the status quo,” says Ravin.

Customer savings

Rimini Street claims to offer huge savings to customers, with Ravin boasting that his firm's services saved one unnamed customer $100m over five years, “just by helping them avoid a $50m Oracle upgrade that they were demanding […] There is no other way they could have found this money to reinvest on innovation.”

Ravin is seeing this sort of move by CIOs more and more, as companies are taking on more sophisticated analyses of their return on investment (ROI) when it comes to IT spending. “Companies are no longer just paying the bills that are coming to them without questioning the ROI,” says Ravin.

What next?

Ravin now wants to expand the company’s footprint outside of the USA, where he believes firms are traditionally more conservative around outsourcing their maintenance contracts. “The US has always been the leader in risk/reward innovative and disruptive moves,” says Ravin, “and conservative Europe generally follows on, and then conservative areas in Asia Pacific, such as Japan.”

This focus will land on Northern Europe, “where we have tremendous business in the Netherlands and Sweden,” according to Ravin, who is also looking into opening a French office, as well as doubling Rimini Street’s European salesforce.

One thing that won’t stagnate for Rimini Street is the number of products it can service. “The wonderful thing about Oracle is that they are alway offering more products and we can keep on offering maintenance services for those. The same with SAP to a lesser extent. We will eventually look beyond these two that we can take support on,” says Ravin.

Finally, Rimini Street will continue to explore the option of an IPO. According to Ravin the company has been ready for a while now, filing an S-1 form with the SEC and completing internal requirements last year. “The question will be an alignment with the market,” Ravin explains, “everyone wants stability with an IPO, so we are ready in 2016 if the market is in line with that.”

Copyright © 2016 IDG Communications, Inc.

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