"ERP upgrades don't equal modernization" - Rimini Street makes a surprising case for composable ERP suites
- Did you expect a third party maintenance vendor to provoke a conversation on composable ERP? Neither did I - but if Rimini Street wants to press this concept, I'm all ears.
Big ERP vendors may not like third party maintenance providers - that's probably an understatement.
But I believe third party support vendors are an important presence. They put a welcome price pressure on ERP support - and give customers different options besides forced march upgrades.
However, I've always felt that the strength in third party maintenance was also a weakness. Cost savings is important, but I don't believe that "ring fencing" ERP systems is the ideal long term strategy.
Well, you can't say those things about Rimini Street anymore: their business model has expanded so dramatically we must reassess their approach entirely (see updated solutions slide). Yes, the ERP third party support options are still there, but did you know that Rimini Street:
- Supports systems ranging from Salesforce to IBM to Microsoft?
- Provides support for open source components?
- Offers SaaS, perpetual, and open source license models - and on-prem, hybrid, or cloud deployment options?
- Has, as of March 3, 2023, launched Rimini Consult, a new "professional services suite" for Salesforce, SAP and Oracle systems?
- Has also launched Rimini Watch, a new "suite of observability solutions."
Does that sound like your grandpappy's ERP support offering? Rimini Street's fourth quarter numbers, announced March 1, reinforce this direction:
- Quarterly revenue of $108.6 million, up 9.4% year over year
- Fiscal year revenue of $409.7 million, up 9.4% year over year
Even with all these changes, I was surprised to get an interview pitch for Rimini Street on emergence of "composable ERP suites." Now, I'm not a huge fan of the composable ERP suite concept, which hails from Gartner (I have a different view of transformation and how ERP fits in).
Composable ERP suites - the future?
Nor do I get the impression that Rimini Street has religiously signed up for the composable ERP suite concept either. Still, this phrase presents meaty debate fodder. A couple weeks later, I did just that, with Rimini Street CPO David Rowe, who has a storied history at Rimini Street, going back to when they just had six customers in 2006. So what about composable ERP - and why is Rimini Street a fan of this concept? As Rowe told me:
There's a lot folks aren't aware of about us - and they relate very much to composable, and strategies for composable. There's not one single strategy for composable. That's the whole point of it - flexibility and modularity. That's a that's a huge tenet of our strategy, from a service and product and solution standpoint.
We're excited to be well over a $400 million company, providing service over time to over 5,000 signed clients... This is thousands of organizations who are using us as part of their strategy, that's becoming far more composable over time. It was composable before Gartner made it one of their terms.
Rowe traces "composable" back to other formerly-trendy analyst concepts of decades past, like "innovation around the edges." But he believes that we are moving ahead, thanks to more advanced technologies:
Our belief is you don't have to throw the baby out with the bathwater. When you're doing your strategy and moving forward from an enterprise software perspective, with modernization and dealing with technical debt, you're often the sheep's clothing for a pack of wolves who want to have you do upgrades left and right. Replatforming, right? The SIs and the software vendors, everybody wins when there's a big fat upgrade or replatform.
Then Rowe dropped one of the best lines of the day:
The reality is: upgrades don't equal modernizations. There's a lot of ways to move forward, we think more effectively, by leveraging what you have, and being more modular, composable and making thoughtful decisions about what components you keep, and which ones you add.
There's a lot of really innovative cloud options, automation options, RPA - there's so many different, great technologies that you can layer into your strategy. We think you can do that on top of your robust enterprise software that you're running today.
Technology may be different today, but the strategy is time-tested:
There's been a lot of different names for strategies like this - "composable" just happens to be Gartner's current phrase. Our clients have been executing strategies that rhyme with this for over a decade.
Green Cargo, over in Sweden; Ingo Pass is their CIO [author's note: Paas recently won a CIO award]. They run SAP ECC 6; I think they're enhancement pack seven, if I remember correctly. They had a big decision in front of them. They said, 'Right, we're going to move forward in our strategy.' They had a bunch of trading partners to better integrate; they had a bunch of mobility and digital solutions they wanted to roll out. How do they make that happen most quickly?
So their assessment and decision was to come up with a modular approach. Use the pieces of SAP that makes sense, swap out components that make sense to swap out, add in new pieces and components that are modern, and can help accelerate their move to the future.
Gartner today calls that 'composable.' Green Cargo is using integration technology, RPA technology; they're rolling out new mobile devices, to their staff; they're doing supply chain integration with their trading partners, for visibility into their transportation and cargo company. So they're trading on all kinds of different schedules, and different sorts of other logistics information, event-driven alerts. They have some workflow technology that they've layered on as well.
I said that "composable ERP suites" is not my framework of choice - but I have no problem with what Rowe is describing. Customers need a variety of transformation models. I believe there is such a thing as an ERP-driven transformation - as long as you have the end customer firmly in mind. But I've also seen supplier-driven transformations, analytics-driven transformations, and of course customer-driven transformations (CX). I believe we'll also see employee-driven transformations, with an eye towards talent and labor as the greatest competitive asset.
It's up to the customer to decide which framework to pursue - on their terms. Rimini Street has an edge here, because they don't have a dog in the fight. A big software/services vendor wants their products at the center of things. Rimini Street's model allows them to go where their customers want - be it robotics or, via Rimini Consult, cloud migrations - or even custom development. That doesn't ensure Rimini Street will always deliver value; we all have to earn it. But I like to see firms that don't have a vested interest in a particular technology or application suite. Customers need those voices at the table.
Rowe's line, "upgrades don't lead to modernization," is a provocative point. Upgrades don't necessarily lead to transformations either. Savvy customers decide on their own transformation strategy, independent of any software decisions. Upgrades can absolutely aid in transformation - or they cannot. That is up to the customer and their industry priorities. Nothing out-of-the-box guarantees outcomes.
So what is my beef with "composable ERP suites"? The "composable" part seems promising, if a tad visionary, even today. But as I told Rowe, "composable ERP" implies that customers would mix and match different ERP components, whereas I don't see the demand for that. Instead, I meet plenty of customers wanting to combine their ERP infrastructure with all kinds of automations and cloud services. I don't care for the "suites" term either. I believe the future of enterprise software is the platform play, not the suite.
"Composable" implies that the customer will mix and match many different vendors, without "one throat to choke" when things go awry. I don't see much of a desire for that. I see customers wanting to commit to one or two platforms, and then looking to those platform partners for interoperability as they plug in cloud services. Can modern ERP be a platform? Yes, but so can many other types of vendors. I'd argue that Rimini Street could evolve into such a platform as well. Rowe puts it a bit differently:
We're not the company that's going to help you build your 100 million dollar digital platform. Accenture and Capgemini and Infosys and they have a real desire to do that for you. And by the way, maybe even throw out everything you've got to go do that. That is not our mentality. Our mentality is much more practical, around how can we leverage what you have, to smartly extend the lifespan and the value
While Rowe is careful not to position Rimini Street as a transformation partner - I believe they want to avoid being perceived as pitching the latest and greatest - I actually like them heading in that direction. Transformation needs to be reclaimed by customers as the impetus to change, on their own terms, not software vendors'. I believe Rimini Street could fit right into such a framework, and be of special value to the customer, precisely because they aren't pitching a shiny new toy.
Perhaps the middle ground between Rowe's views and mine is that Rimini Street, with its latest offerings, can definitely be a strategic partner, not just a support provider. And yes, I think they could also be that "one throat to choke" I believe most large companies still want - even if companies have several crucial vendors in play. Maybe it's a couple of throats. The point is: customers don't want total freedom to "compose." Ultimately, I think customers want a brave vendor to assume some responsibility for making the pieces fit. In an enterprise context, "composability" is desirable - but it's not the same as an artist noodling on a white board. Customers still want vendor accountability for what they (co)create.