SAP support dilemma highlighted at Sapphire

SAP said it added nearly 200 new customers to its new Enterprise Support offering, just as Rimini Street said it will add SAP products to its third-party support alternative.

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ORLANDO -- SAP said yesterday it is gaining momentum with its new support structure, just one day after Rimini Street, a third-party support provider for JD Edwards, Oracle and Siebel products, announced plans to begin offering an SAP alternative.

If you're going to run the application for 10 years anyway and there are no new features coming, why not sit in the bleachers and watch the SOA battle play out?
Seth Ravin
President and CEORimini Street

SAP has signed nearly 200 customers to Enterprise Support since it was launched in February, the company announced yesterday at its Sapphire conference. Enterprise Support effectively eliminates SAP's low-cost Basic Support option, which charged 17% of license fees, and its Premium Support at 22%. SAP replaced both plans with the new structure, a flat 22% of license fees with some added services. The new support structure applies only to new customers, SAP said.

Enterprise Support includes 24/7 access to SAP's support advisory center and the use of SAP Solution Manager for application management run on SAP's operations methodology.

Meanwhile, on Monday, Rimini Street said it will begin offering a third-party support option for SAP products -- owing in part to users' reported bad experiences with an Oracle support plan that's similar to the new SAP model.

"Customers from SAP are saying, 'We saw the model on the Oracle side, and we have the same problem,' " said Seth Ravin, president and CEO of Rimini Street. "At the end of the day, it really came out to be the same."

Ravin helped start TomorrowNow, a company that provided third-party support to PeopleSoft and JD Edwards software. TomorrowNow was subsequently acquired by SAP as part of a program to lure customers away from Oracle, its chief competitor, which had recently acquired PeopleSoft and JD Edwards.

But SAP's entry into the third-party support market has proven costly. It now faces a legal battle with Oracle, which is suing TomorrowNow for illegally accessing proprietary information. SAP has said it plans to sell off TomorrowNow, but has not announced a buyer.

That buyer will not be Rimini Street. Ravin said he has no interest in TomorrowNow, and in fact, many of those customers are already moving to Rimini Street.

"Most TomorrowNow customers are very happy," he said. "They're coming to us because we offer added services for the same price. They're just looking for stability. Not knowing who your support provider is long-term is untenable. The SAP message is not leading to any sort of confidence."

Rimini Street's SAP offering will include: a named, primary support person assigned to each client; support through 2020 and beyond for existing SAP releases; 24/7 support coverage with a 30-minute or less guaranteed response by a senior manager; application fixes for serious issues and tax and regulatory updates as needed; support for client customization; flexible contract costs; and more than 50% support savings over SAP.

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That's a compelling argument, according to Ray Wang, principal analyst with Cambridge, Mass.-based Forrester Research, and the TomorrowNow lawsuit does not appear to be stalling interest in third-party support.

"Customers are still moving over; the cost differential is practically half," Wang said. "If you're spending $2 million on maintenance, and someone says [he] can save you $1 million, that's worth listening to."

Rimini Street, which sells mainly to CFOs and CIOs, said it has already seen TomorrowNow customers defecting and expects to have picked off all TomorrowNow customers within the next 18 months, Ravin said.

With SAP eliminating its lower-cost support option for net new customers, Ravin expects to see a migration of SAP users to Rimini Street as well.

"They've said [Enterprise Support] is only for new customers, but everyone can read the writing on the wall," Ravin said. "It puts SAP in the most expensive maintenance pool."

Also, SAP is generally more expensive than Oracle, according to Ravin, so existing SAP customers spending 17% on maintenance (with the "basic" plan) may have higher support costs than those on Oracle, which charges 22%.

"Fusion and NetWeaver are all about the next generation of software," Ravin said. "There's really nothing to move to. If you're going to run the application for 10 years anyway and there are no new features coming, why not sit in the bleachers and watch the SOA battle play out?"

Ravin predicts no problems with staffing the new Rimini Street program, despite what's widely regarded as a global shortage of skilled SAP professionals. The service is expected to launch next January or February.

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