Rimini Street inks landmark partnership deal with Salesforce - a conversation with Seth Ravin
- Summary:
- Rimini Street's partnership with Salesforce for supporting the Salesforce Sales and Service Clouds is novel, opening up exciting opportunities for customers. We have the detail.
Late last week, Rimini Street announced a partnership deal with Salesforce that sees Rimini Street offering premium services to Salesforce Sales and Service Cloud customers. This is an unusual, and interesting deal because what we're seeing is how SaaS/cloud services can be augmented by specialist providers.
It is worth unpacking what this means to better understand how service organizations like Rimini Street can deliver value to customers.
On-premise v SaaS/Cloud
Historically, Rimini Street has come in behind vendors like SAP and Oracle to help customers get better support service at fractional cost, typically 50% of the on-premises maintenance fee. In return, Rimini Street promises world-class support and the processing of many more support tickets than the software vendor owner. In these circumstances, Rimini Street is seen as a revenue threat to the software vendor.
In this case, while Rimini Street still comes in behind, it is to augment Salesforce service. That is a very different value proposition and one that Salesforce sees as valuable enough to give Rimini Street a nod in the press release:
“We are pleased to welcome Rimini Street as a new Salesforce partner, and excited to work with Rimini Street as both a substantial, long-term global Salesforce customer and now as a new support service provider in the global Salesforce services ecosystem,” said Dan Smoot, EVP of Global Partner Sales, Salesforce.
How it works
In its analysis of requirements for organizations using Salesforce, Rimini Street determined that while there are thousands of partners, very few (if any) have a track record of service support of the kind that it offers.
What's more, the manner in which Salesforce has expanded inside organizations often means there is an ad hoc tapestry of service providers who are brought in on an 'as needed' basis, mostly connected to feature implementation. Over time, this leads to a complex landscape of Salesforce instances, all of which require support. Rimini Street's internal analysis says this is costly and inefficient.
According to Seth Ravin, CEO Rimini Street:
Enterprise Salesforce customers don't have a prime contractor for that software. They play that role themselves. They go get a couple people here, they get some contractors there, and they put on some staff. They're running this whole thing themselves.
Salesforce will take up to a 30% for a premium on top of the base maintenance because the base maintenance is not really enough for enterprise clients in general. And even with the premium offering, we looked at it real closely, and we realized there's still a lot of operational gaps.
Rimini Street's in the business of optimizing money, time, and resources, providing excellent service and 15 minutes guaranteed SLAs. We're going to manage this whole thing for the customer.
Myths and legends
During our conversation, Ravin was keen to point out the contradictions between the inferred SaaS promise and its reality in the enterprise.
One of the more startling points is that the research that we saw from the analyst side is that customers will spend up to four times their monthly license fee per user on running the system. That's huge.
It points to the fact that a lot of people had these false beliefs that somehow, implementing a SaaS product, you didn't need all the kinds of support that you needed when you were doing sort of a traditional on-prem type of license implementation. And there's some truth. The vendor runs the data center and database. But I think people have highly underestimated the number of architects and the number of administrators needed. Integrations are huge and the products are constantly shifting. People are asking for customizations, and sometimes they're referred to in SaaS as configuration. But still, you're changing screens around, you're moving data. That's a lot of work. We are in the business of removing those pain points.
As a proof point, Ravin said that Rimini Street is its own customer for the new service.
We're not a huge company but we have five people on staff and we use a ton of consultants just to run our Salesforce system, and we can't even keep up with all the demands of the business. I think we're running 25 separate Force platform components as well that are integrated into the Salesforce service cloud and Sales Cloud products.
Do they know?
On its face, this sounds like a drop-dead simple to understand offering but it is not that straightforward. The scenario Rimini Street envisages is complex but there's another dimension which may prove to be a stumbling block.
Most public facing software vendor case studies are based on limited post-implementation experience. When we get hard facts that support the story, it is rare to see a comprehensive set of metrics that include time and money saved. Instead, we usually hear about a small handful of high-level wins.
I have frequently bemoaned the fact that it is almost impossible to get accurate cost estimates from companies. Neither is it possible to revisit a case study a year or two later to discover progress. I believe that's because those evaluations are never undertaken as comparative exercises that compare to the business case for the implementation.
Rimini Street's Salesforce offering forces organizations to evaluate the true operational cost of running its Salesforce Sales and Service cloud landscapes. In turn, that means Rimini Street will have to engage with multiple project 'owners' alongside technology teams. That's quite the herd of cats. To my question on the question of assessing operational cost savings, Ravin reminded me that Rimini Street has spent 13 years developing a sophisticated set of calculators it can bring to customers.
Even so, while Ravin talks about the 30% as the premium element charged by Salesforce, it will need a value enhancement model with which to convince potential buyers. Despite these issues, Ravin is confident:
There's no package you're coming in to slash the price on. You're slashing the price on an overall operating cost. And you don't know what it is, and it's not exactly 50 percent. What we're saying is, we're going to save you money and we're going get you better resource optimization allowing you to focus on things that matter to the business, not running software. But it's not necessarily going be 50 percent off, and so there's some more than subtle changes in this type of product relative to Rimini Street's traditional model for on-prem software.
The process that we take customers through opens their eyes, gives them data that's very actionable into programs that weren't actionable before.
Are the sales people ready?
Ravin acknowledges this will require a sophisticated sales process because it is not simply a cost reduction exercise but also a value play. The customer is not only saving operational cost but is also running a much more streamlined environment where the opportunity to do more is surfaced.
Rimini Street believes this is a big part of why Salesforce is keen to publicly support Rimini Street. According to Ravin, he believes this benefits the Salesforce up and cross-sell model inside the large enterprise.
My take
It's early days, a fact that Ravin readily acknowledges, knowing that both the model will require tweaking while at the same time enabling the company salesforce will not be a walk in the park. Value sales are different to cost reduction exercises with unique challenges that lengthen the sales cycle.
Even so, I'd like to observe how this shakes out. Ravin is right to note the difference in attitude of the on-premise provider and the complex SaaS offering. Despite the fact that Salesforce provides a service, it is not in the service support business but in growing the footprint of its offerings inside the enterprise. Viewing Rimini Street as complementary is refreshing.
Salesforce alone represents a significant market opportunity. Perhaps as much as $17 billion today but only getting bigger. If Rimini Street manages to cement its place at the head of the table, other service providers will surely try to pile in. But given the current climate among SIs for more of a consulting role, I would be surprised if many of those service vendors attempt to go for the Rimini Street kind of business model.
Finally, if this works out well then what's next? I'll let readers figure that one out for themselves. ;)