There are far more vampires in the software industry than you’ll find in one of the Twilight novels or films.
Much like the undead, who continue to wander the streets when they should be resting at peace in their graves, these software firms are seeing little to no growth in major product categories, as customers grow frustrated with technology road maps that go unfulfilled or feature sets that fail to provide value. Instead of feeding off human blood, these particular vampires sustain themselves through maintenance revenues – supporting deteriorating deployments of their software at an ever-increasing price. All of which makes a company like Rimini Street the equivalent of a stake in a vampire’s heart.
Oracle on Tuesday announced it would be suing Rimini Street, which has been boasting about its abilities to serve customers of companies like Oracle at 50 per cent of the regular vendor’s prices. Who wouldn’t look for that kind of price differential in the current market, especially when you could also avoid the pressure to upgrade that inevitably comes with working through the original vendor of an application? Oracle claims the company has stolen its intellectual property, including support materials, and even claimed Rimini Street is operating under an “illegal business model.”
This is all somewhat rich, coming from a company which not too many years ago claimed it could offer “unbreakable Linux” support that is better than what Red Hat Software can provide. It’s also an interesting follow-up lawsuit to the one launched against SAP subsidiary and support services firm TomorrowNow, which Rimini CEO Seth Ravin also co-founded. That case also claimed illegal downloads of support-related information.
Firms like Rimini Street represent the biggest competitive threat to Oracle, SAP and pretty much any mature provider of business applications. New customers are simply the gravy for such industry giants. Maintenance revenue is the meat and potatoes that make survival possible during an event such as the most recent recession. Unlike the sleepy aftermarket for commodity items like PCs, a really successful support firm – which Rimini Street, based on its most recent reports of tripling revenue last year, appears to be – could change the dynamics of how IT departments manage the lifecycle of their application portfolio. Instead of signing up for product updates they know they won’t need, and fending off passive-aggressive upsells every time they need some help, a Rimini Street can simply respond to their needs and leave well enough alone.
I have no doubt that there are scores of software sales reps who are getting told by various customer that they are moving their maintenance business to a company like Rimini Street. I also have no doubt that those customers are warned, overtly or otherwise, that no third party will ever be able to stand behind a software product the way the original vendor can. That’s what Oracle’s suit alleges, and it’s similar to the kind of fear that surrounded open source support in the early years. It will likely prove equally groundless. If there’s such a thing as good enough computing, there’s such a thing as good enough maintenance.
There is a trade-off, of course, in sticking with good enough maintenance. It could make it harder to effectively plan an upgrade later. It could make future investments more expensive. And a company like Rimini Street won’t be able to grow based purely on price-cutting forever. It will need to prove it can establish a better overall relationship with its clients than the original vendor. It will need to provide deep integration expertise to assist with not only maintenance but richer interoperability across legacy systems.
There is also a question, which these lawsuits submit to the industry, around how freely available product support information should be. If Rimini Street or TomorrowNow stole something proprietary, so be it. But if I as an IT manager learned enough about working with an older version of an Oracle or SAP ERP system, shouldn’t I be able to market that expertise to others? Vampires are notorious for preferring to keep things dark. Rimini Street may be a landmark case in demonstrating whether the software vendors can survive their maintenance-related information being dragged into the light.
