Rimini Street, the leading third-party maintenance and support provider for enterprise software, including SAP AG (NYSE: SAP) software and Oracle's (NASDAQ: ORCL) Siebel, PeopleSoft, JD Edwards, E-Business Suite, Oracle Database and Hyperion software, today announced that a tipping point has finally been reached in the market for annual maintenance.
Newly released industry analyst research shows that savvy customers are no longer paying Oracle or SAP full price for annual maintenance. Instead, some market leaders and fast followers are negotiating maintenance discounts from Oracle and SAP, or switching to value-based third-party software support for more savings, innovative features and responsive service.
Widespread adoption of third-party support disrupting Oracle and SAP maintenance market
Third-party support is experiencing widespread adoption and has a long track record of client satisfaction and success. With Rimini Street achieving 11 consecutive record quarters of growth, more than half a billion dollars in sales bookings backlog and nearly 600 government and commercial clients around the world - including 69 of the Fortune 500 and 15 of the Global 100 largest companies - the company believes the move to third-party support has reached a tipping point in the marketplace.
Consolidation in the enterprise software market previously allowed Oracle and SAP to dictate maintenance policies and pricing, according to a recent report published by independent industry analyst firm Constellation Research, "The Positive Pricing Impact of Third Party Maintenance for Oracle and SAP Customers." [1] As a result, the majority of customers surveyed for the study are now using competitive third-party support proposals to successfully gain leverage in their annual maintenance negotiations with Oracle and SAP, as reported in Constellation Research's survey results. [2]
"Every CFO, CIO and procurement officer must apply due diligence in exploring these third-party maintenance options when initiating contract negotiations or planning applications strategy. At a minimum, organisations should seek a competitive proposal from a third-party maintenance provider," said Constellation Research principal analyst and CEO R "Ray" Wang. "Failure to explore this strategic option may result in higher costs for less value with existing vendors."
In response to the accelerating interest in third-party support options, Rimini Street has made it easier than ever for Oracle and SAP customers to obtain a competitive proposal. By filling out a simple online form at www.riministreet.com/proposal, or calling the company, Oracle and SAP customers can receive a competitive proposal in two business days or less. Even if a customer evaluates Rimini Street's award-winning support and determines it is not right for them today, the customer can still use the Rimini Street proposal as leverage to get the best price and service terms from Oracle and SAP. Either way, the customer wins.
Wang added: "Based on the survey results and Constellation Research's hands-on experience in assisting clients with vendor support contract negotiations, we believe third-party maintenance plays a key role in providing pricing leverage and options in overall applications and contract negotiations strategy."
Oracle and SAP are discounting maintenance fees
The Constellation Research study also found that customers of Oracle and SAP are receiving discounts in maintenance fees [3], according to survey responses from nearly 200 licensees. The study found that customers who use a competitive proposal as leverage in their annual maintenance contract negotiations with Oracle or SAP secure an average 13.7% discount. [4]
In addition, Cowen and Company, a respected investment bank and research advisory firm, similarly reported that it found evidence of discounting in its SAP research: "We recently spent time talking with a handful of large SAP customers that have received roughly 50% discounts on maintenance renewals." [5]
Competitive proposals help customers negotiate best deal
A competitive proposal for annual support can provide customers with leverage to negotiate a better maintenance deal from Oracle and SAP. The Constellation Research report found that more than 60% of surveyed customers believe a competitive third-party support proposal improves negotiation leverage with Oracle and SAP [6]. Additionally, 72% of companies that obtained and used a third-party support proposal reported gaining an advantage in contract negotiations with Oracle or SAP. [7]
Rimini Street helps customers win either way
Vendor support and maintenance fees continue to increase despite the fact that the cost to maintain software releases drops as a release matures. [8, 9] By providing an easy way to obtain a competitive proposal, Rimini Street ensures customers have a variety of support program choices to meet different needs. Oracle and SAP software licensees can use Rimini Street's support proposal to negotiate their best pricing, support features and service level commitments from Oracle and SAP. The company believes that, when customers compare its annual support against Oracle and SAP support, many will select Rimini Street's award-winning program that delivers 50% annual fee savings, more responsive service and innovative support features.
"Rimini Street believes competition is good for any industry, and we want Oracle and SAP customers to have a wide variety of service choices. Today, a customer can request a Rimini Street support proposal on our Web site or over the phone, then use the proposal to negotiate their best pricing, support features and service level commitments from Oracle and SAP," said Seth Ravin, Rimini Street CEO. "The customer can then compare Oracle and SAP's offers with Rimini Street's award-winning support service and choose the right program for them. The customer wins, either way."
* Note to editors: The Constellation Research report is available for download online on Rimini Street's Web site, or at the following link: www.riministreet.com/leverage.
