Like many TomorrowNow customers, the City of Huntsville, Ala. saved a lot of money with the third-party support provider, cutting its $150,000 PeopleSoft support costs by 75%.
With SAP set to close the company in October, Huntsville is
"We're going to continue down our current path to other vendors who provide a similar service," said Jahazy Rooks, head of the city's Information Technology Services department.
Huntsville, a city of 170,000 people, with an annual IT budget of $6 million, isn't alone in not wanting to return to Oracle's higher support costs -- 22% of net licensing fees. Nor is it alone in its search for cheaper support through a third-party support provider.
Rimini Street , a Las Vegas-based third-party support provider, has been "unbelievably busy," company CEO Seth Ravin said. They've begun the process of migrating dozens of TomorrowNow customers to Rimini Street support, he said. Rimini Street provides support for PeopleSoft, JD Edwards and Siebel -- and soon some SAP -- applications.
"It's not quite the iPhone, but there's a lot of interest," Ravin said.
San Jose, Calif.-based netCustomer , which has been providing third-party support for PeopleSoft products since 2001 and also provides support for Siebel and JD Edwards applications, has seen scores of TomorrowNow customers as well. Recently, it appointed former Oracle executive David Hare as chairman of its board of advisers. (Hare was Oracle's senior vice president of product support.)
SAP said last month that it would close its troubled third-party support provider TomorrowNow, a little more than three years after it purchased the Bryan, Texas-based company. More than 200 customers will have to return to Oracle or move to another third-party support provider.
Analysts blamed a costly lawsuit filed by Oracle for SAP's decision to get out of the support business. Oracle claims that TomorrowNow stole its intellectual property while SAP executives knowingly looked on, in a quest to win market share from their Redwood City, Calif., competitor.
But the lawsuit hasn't made customers skittish of third-party support, the CEOs said. Ravin, also TomorrowNow's co-creator, is referred to in Oracle's amended complaint as one of the architects of what Oracle claims was TomorrowNow's illegal business model.
Ravin wouldn't comment on that charge but said: "People need to be very cautious about … mistaking wild allegations for facts. The courtroom is where we'll see the fact and the fiction. It reads like a nice Tom Clancy novel, but this is one side of the story."
Customers certainly aren't concerned, Ravin said.
"They have a choice of going back to Oracle, and they're not going to Oracle," he said. "They're coming to us."
Rather than giving third-party support a bad name, the TomorrowNow affair has made people more aware of third-party support as a viable option, according to netCustomer CEO Punita Pandey.
"It has given a whole lot of awareness to third-party support and to the market as to what are the boundaries, what are the things you can and cannot do," she said. "It's good. Customers are going to benefit."
The lawsuit certainly hasn't caused the City of Huntsville to reconsider third-party support. Officials there stressed repeatedly that they were pleased with the support and service they received from TomorrowNow and were looking forward to receiving that support from another provider.
"From the very beginning, they have provided us good support and good services," Rooks said. "We don't have anything negative to say about the service they've provided to us. It's unfortunate that the lawsuit has caused them to take this path."
SAP's recent announcement that it will increase support fees from 17% to 22% of net licensing fees is also affecting demand, the two CEOs said. SAP Enterprise Support is an enhanced service offering necessitated by the increasingly complex technology landscape of its customers, according to the company.
Rimini Street will start providing support for R/3 customers later this year, and Ravin said the company is already putting SAP customers on a list for that service.
"We have been amazingly pulled forward by the demand. We have been pretty close to overwhelmed," Ravin said. "SAP shouldn't be surprised, but I think they will be, at the size and breadth of the customer base from SAP who are absolutely dead serious about a third-party maintenance program."
Others, like netCustomer, could follow. Pandey said it is receiving calls for help from SAP customers, even though it doesn't support SAP products -- yet.
"We're exploring at the moment providing support for SAP products," Pandey said. "But that's still in the exploration phase."