RiminiStreet opens up a new line of attack - support for SAP HANA database

Profile picture for user gonzodaddy By Den Howlett May 15, 2016
Summary:
RiminiStreet is on the offensive as it offers SAP HANA database support at a 50% reduced sticker price from SAP's price list.

Fotolia service concept
You've got to love scrappy startups that nibble at the heels of elephants. They bring much needed fresh air to certain segments of the market. Third party enterprise software maintenance is one of them. RiminiStreet has been at the forefront of this assault for years; first on Oracle and more recently on SAP, the two elephants in the enterprise software room. Today, RiminiStreet announced support for SAP HANA database at its now familiar 50% of SAP's maintenance sticker price. I took a briefing from the company at the end of last week.

Timed to be of greatest nuisance to SAP, (this week is SAPHIRE Now) the RiminiStreet offering is more interesting for what it implies than what it says. From the announcement:

In addition to 30% trailing 12 month revenue growth for its global SAP support business, the number of Rimini Street SAP clients signed to date increased by 35% over the past year to more than 200 clients with operations in more than 75 countries.

More interesting is where RiminiStreet highlights SAP's planned discontinuance of direct support for Oracle databases licensed through SAP on 31st December 2019. This was announced back in 2014 and has not changed.

To be clear, SAP could reverse that course and offer extended support for Oracle DB. I would not be surprised if SAP put that on the table nearer the time. Right now, SAP is banking on the majority of its Business Suite and ECC customers moving over to HANA and S/4 HANA in the next few years. But as we have seen to date, the vast majority are sticking with what they already have and waiting to see how the business case for a switch firms up. This announcement then makes clear that whichever way SAP chooses to move, RiminiStreet has a suitable offering.

RiminiStreet offering database support makes sense for those who are using HANA for Business Warehouse operations now and the fact the company says all its engineers are HANA certified with at least 15 years' SAP experience could well be attractive.

Field reports and conversations with those who have been close to customers suggest that while the sticker price savings are attractive, it is the service that makes the difference. From what we understand, customers that switch accelerate the number of support tickets they push by a factor of more than 10x and in some case 15x. Why?

RiminiStreet has reversed the support model. In most enterprise support structures you have L1,2 and 3 where L1 is the person on the end of the primary inbound email or phone call who has a cursory knowledge of the system and is likely to point the customer to a support note. L2 is a more detailed review, while L3 is where the most experienced and senior engineers are engaged on deep level support and bug fixes. RiminiStreet customers get the equivalent of direct access to L3 support at the first call, often directly to a named individual on a dedicated line.

The result is that customers say they are now solving problems in hours that would otherwise take days and weeks of working through the L1 to L3 systems. Based upon those experiences, customers are more than happy to push as many tickets at RiminiStreet engineers as they can handle. I asked Dave Rowe, CMO RiminiStreet about this because surely there must come a point when that level of service is unprofitable? We already know that the level of margin from original vendor maintenance is in the 90-95% range so while there is plenty of financial breathing room for a third party provider, isn't the model counter productive from the RiminiStreet business model standpoint?

Actually that's not true. We don't rate limit customers, in fact we want them to call the heck out of us. We want customers to use the service as much as they can because that's how they see value. Funny enough, if the economy really does turn bad as some predict then this is counter cyclical and good news for us because savings come to the front of mind.

As we have said before, customers should have choice in the marketplace but it is surprising that RiminiStreet is prepared to offer SAP HANA database support at this point in the cycle. If nothing else, it is a demonstration of confidence in the RiminiStreet model.

In the meantime, we have asked for access to a fresh round of RiminiStreet customers to learn more about the impact these services are having on their customers' ability to manage the business applications' portfolio and that all important IT budget in the context of 'doing more for less.'

Endnote: Last year, RiminiStreet broke the $100 million revenue barrier with $118 million in revenue. In Q1 FY 2016, it announced revenue of $35.4 million, up 37% year over year. Based upon the numbers it is showing and assuming the pattern continues, I anticipate 2016 revenue of approx $161-169 million.

Image credit - Service Concept with Gears © Sondem via Fotolia

Disclosure - SAP, Oracle and RiminiStreet are premier partners at time of writing.