There are customers who see SAP support as the price to pay for keeping systems running and the upgrades coming.
And then there are guys like Eric Robinson.
Robinson, the IT director for Color Spot Nurseries Inc., a nationwide distributor of plants, herbs and flowers, said his company switched to Rimini Street for supporting its SAP system nearly a year ago after concluding it didn’t need to upgrade SAP ERP from 4.7 to ECC 6.0. While the reasons for switching came down mostly to lower support costs, Robinson also admits that he never thought the support the company was getting from SAP was all that great.
“SAP’s support in general was poor,” he said. Resolving problems often required numerous back-and-forth emails. Tech support personnel also had to spend time learning about Color Spot’s system’s configuration before they could move on to fixing the bug, he said.
There were other times, he said, that he needed help with a configuration issue. But because it wasn’t necessarily an issue with the ERP itself, SAP would pass the buck.
“SAP would point me to the [support] notes or say it was an issue for consultants,” he said.
Others, like Pioneer Electronics (USA) Inc., a subsidiary of the well-known Japanese manufacturer of car stereos and home theater entertainment systems, still have a role for SAP, even if it’s not the one SAP would prefer.
“Rimini Street is our maintenance partner. SAP is our licensing partner and for upgrades and purchases,” said Payal Shah, Pioneer USA’s director of IT. “I don’t think it’s an ‘either-or’ situation.”
‘SAP was not willing’
The issue of support has been a source of irritation for some SAP customers. In addition to complaints over the hefty support costs that SAP demands, SAP customers revolted over SAP’s decision a few years ago to begin charging a higher level of “enterprise support” that entailed more bells and whistles, but with a higher price tag. In the end, SAP decided to retain its Standard Support plan in addition to its Enterprise Support.
Rimini Street has courted many of those same customers, citing growing profits as proof that its approach has appeal for companies that don’t need to upgrade their SAP systems in the near future but still need help. The company says it did $7.5 million in the first quarter of 2011, a new record. Rimini Street says it now has 50 SAP customers. Rimini Street also provides support for Oracle and JD Edwards software.
Color Spot’s move to Rimini Street began by first concluding it had everything it needed in SAP ERP 4.7. But at the same time, Robinson said he was frustrated that a portion of the company's support fees were paying for research and development of future upgrade features, which the Fallbrook, Calif.-based company would never use.
Robinson said he called SAP, looking for a lower level of support at a lower cost.
“SAP was not willing to do that, as you might expect,” Robinson said.
He then looked at value-added resellers, which sell SAP licenses and also provide level-one support. He spoke to two -- including itelligence and RJT Compuquest -- but found they were beholden to the same SAP support structure Color Spot was looking to leave.
“I wanted to at least give it a shot and see if that was the case, and indeed it was,” he said.
After that, Color Spot found Rimini Street. Rimini Street is more of a support “partner” in a way that SAP never was, according to Robinson.
For one, Rimini Street works with customized modifications, which Robinson said SAP was unwilling to do. “The users are much happier,” Robinson said about his co-workers. “They get what they want.”
On one occasion, Rimini Street recommended a Basis outsourcing firm for Robinson. Color Spot ended up hiring the firm to do its in-house Basis administration. “That’s something that software vendors don’t do,” Robinson said. Rimini Street has since formed a partnership with the firm, Robinson said.
Although Color Spot Nurseries is only nine months into a 15-year contract it inked with Rimini Street, Robinson said the company has been able to cut its support costs roughly in half. SAP support costs will represent 9% of its total budget this year, down from about 20% last year, Robinson said.
Color Spot is looking to outsource support for some of its other software as well. The third-party support model works in part because the days of major differences between upgrades are over.
“I really anticipate that there is going to be big, big changes happening across software,” he said. “That’s because [software as a whole] has become so stable.”
‘Space for SAP and Rimini Street both’
The decision to go with Rimini Street came down to money for Pioneer.
Like Color Spot, Pioneer was running an older version of ERP, according to IT director Shah. “It’s an old release, but it’s very stable,” Shah said of the SAP ERP 4.6c system Pioneer runs. “We [aren’t] heavy on tickets.”
Figuring it was spending money for maintenance issues that were few and far between, Pioneer decided to look into Rimini Street. The company signed on in January 2010 after it reached a greater comfort level by piloting Rimini Street for three months, while still having SAP support to fall back on.
“So we got a chance to try out the program, submit some tickets. That went very well -- I think it’s a very innovative solution,” Shah said of the trial period. Fears that Rimini Street would not be able to fix some of the problems have so far not materialized, Shah said.
Pioneer has been able to cut its SAP support costs by about 75%, she said, and that has prompted Shah to promote third-party support to her European and Japanese counterparts.
Pioneer hasn’t burned its bridges with SAP, Shah insists, but merely sees the two companies as different partners, each with a different role. After all, Pioneer is considering upgrading its system in another five years, and that would entail going back on SAP support.
According to the agreement with SAP, Pioneer is entitled to upgrade to ECC 6.0, the version prior to when it terminated its maintenance contract, she said. Upgrading to anything beyond that will require Pioneer to pay back maintenance fees as well as some reinstatement fees. Or, the company can relicense as a new customer, she said. Even so, she said, Pioneer still thinks the savings will have been worth it after an initial five years with Rimini Street, Shah said. Just how much it will have saved depends on things like the price of the SAP upgrade, and how much those reinstatement or relicensing fees turn out to be, she said. At this point, it’s like “reading a crystal ball.”
Shah also disagreed with the perception that SAP’s policies regarding ending support and maintenance were unfair, or that SAP would make it unduly hard on Pioneer once they need to go back on support.
“I definitely don’t consider them to be evil,” Shah said about SAP. Besides, she added, “the current market has space for SAP and Rimini Street both.”
Neither company said it was worried about Oracle’s lawsuit against Rimini Street, which alleges that Rimini Street's downloading of certain privileged support materials from the Oracle support website constituted theft. Rimini counters that it is authorized to access the materials on its clients' behalf and has countersued Oracle.
Oracle also sued SAP for its long-defunct third-party maintenance provider TomorrowNow, also over alleged copyright infringement. Seth Ravin, founder of Rimini Street, also founded TomorrowNow. The jury awarded Oracle $1.3 billion last November, but SAP has contested the decision.
Color Spot asked Rimini Street about the Oracle lawsuit and about legal challenges in general, Robinson said, but only to confirm that the company had enough financial resources on hand to cover damages should it ever come to that.
Color Spot doesn’t have any problems or concerns with Rimini Street’s business model, either.
“The model is ideal,” Robinson said. “I wish I had thought of it.”