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Rimini Street opens up a new front with first public incursion into Salesforce territory

Stuart Lauchlan Profile picture for user slauchlan March 17, 2019
The first win of a Salesforce client and the signing of the biggest deal to date, but also increased full-year losses.

Rimini Street turned in an increased full year loss of $68 million on revenues of $252.8 million, up 19% year-on-year. But 2018 also saw the winning of the support and services provider’s largest deal to date - $26 million over three years - and its first win in the Salesforce ecosystem.

The identity of the $26 million client hasn’t been revealed, but the Salesforce win comes from EBSCO Industries, a global holding company with more than 26 business units around the world, which has chosen Rimini Street Application Management Services (AMS) for Salesforce. From the official announcement, Bryan Bee, vice president, Enterprise IT Systems, EBSCO, said:

Our company is made up of numerous business divisions that operate independently of each other, but we were looking to optimize our systems and where possible offer leveraged shared services either at a better cost, speed or quality than any business unit can provide individually. When we heard that Rimini Street could provide its premium-level service for our Salesforce system, in addition to the high quality support they already provide for our mission-critical SAP system, we were excited by the opportunity to unify our service.

When we first switched to Rimini Street in 2015, our goal was to enable EBSCO’s businesses to optimize their profit position while making IT ‘easy’ with demonstrative value. Rimini Street has helped us deliver on this goal, providing an ultra-responsive support model that allows us to maximize the investments in our SAP platform – all at half the previous cost. Leveraging Rimini Street’s Application Management Services for Salesforce was a logical next step.

For Rimini Street itself, it’s also something of a benchmark moment, representing as it does the first pubic incursion into Salesforce territory, although CEO Seth Ravin hinted that more may be going on behind-the-scenes:

Obviously, this is the first win we're announcing on Salesforce…we would walk before we jog before we run. We're going to start trickling out information on the Salesforce successes as we begin moving down this path.

It’s an expansion of the Rimini Street footprint that makes perfect sense given the size of the Salesforce customer base and one that will help shake-off any Oracle/SAP services provider public image. Ravin notes:

We currently provide support for more than 20 product lines from Oracle, SAP, Microsoft, IBM and [SIC]. We plan to continue expanding our support coverage to additional vendors and product lines.

Oracle and SAP

That said, the main competition continues to be identified as Oracle and SAP, with Ravin suggesting:

We have traditionally been sort of in that 70% Oracle, 30% SAP world, not so much because Oracle is more mature. It's just, we have a lot of Oracle products, we cover right? So, it's really more of an aggregation of all of Oracle product versus SAP, but the SAP products are doing very well.

Oracle and SAP are engaged in “substantial discounting of annual support fees” when bidding against Rimini Street, Ravin said:

While Oracle and SAP's aggressive discounting has caused some Rimini Street deal losses that we otherwise believed we would have won, the pricing of the annual support services only accounts for about a third of a client's expected savings switching to Rimini Street support and even less of the total savings, if a client utilizes the full suite of Rimini Street products and services. Therefore, even if the software vendors were to match Rimini Street's discounted annual support fees, clients still receive a better overall value with the Rimini Street's business-driven roadmap.

He added that the discounting that he’s seeing can be read as an indicator of a maturing market:

The fascinating part is [that] in the early part of our market days, we were so separated from the mainstream of customer day-to-day decisions that we weren't really part of procurement efforts. I think what you're watching is, as we move into more and more of a mainstream position - and I think this is really another proof point - we are put up, straight up against the vendors for direct fierce comp competitive bidding. And it's in that environment that we are watching the vendors raise their discounting levels over the years. I think it's a direct result for them having to compete directly against us in a pure procurement process.

Just something that we'd watched for years, for example, when Oracle and SAP are in the deal by themselves, they don't have much competitive pressure - their pricing is higher. I think that the facts have proven out over the years that when they're up against each other, there is going to be more discounting. Now Rimini Street has reached a size and threat level. I mean, you look at the size of that deal that we did in the fourth quarter coming off of a vendor's books, that's serious money and because of that, when you enter fear into the equation for the vendors, you're watching them respond with some discounting in order to try and protect their turf…They’re not feeling as confident that they can win that business just because they're the vendor anymore.

As an example of the kind of wins the firm is picking up, Ravin cited Welch’s, a Massachusetts-based maker of grape juice, jams and fruit related product:

[Welch’s] switched to Rimini Street for its Oracle E-Business Suite application and Oracle database software. By switching to Rimini Street, Welch's avoided the wasted time and expense for what they saw as an unnecessary upgrade just to continue their maintenance and support relationship with Oracle. With nearly $1 million in annual maintenance and support cost savings, Welch's was able to invest in new strategic marketing initiatives and new product development such as Welch's new Sparkling Rosé.

My take

Plenty of good news to balance out the profit drop. Whether the Salesforce client win turns out to be a significant tipping point clearly remains to be seen, but it’s a useful first base for a potential new revenue stream. It will be interesting to see where this goes with the relationship between Rimini Street and Salesforce not being the antagonistic one that it is with Oracle and SAP.

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