Many customers of SAP enterprise applications can be expected at least to evaluate the notion of third-party support, experts said, following recent news that Rimini Street Inc. is extending its offerings to SAP users.
"This is something that many people in the SAP base have been waiting for, especially those running older versions that are being moved to individual maintenance contracts," said Ray Wang, an analyst at Forrester Research.
Rimini Street, a 3-year-old provider of third-party support services to enterprise software users, said it would extend its offerings to users of SAP's R/3 applications beginning in January 2009. Until now, Rimini Street has offered support services to users of Oracle's PeopleSoft, JD Edwards, and Siebel products. Currently, it has 175 users of those products under contract.
According to Rimini Street President and CEO Seth Ravin, the company will offer the same set of services to SAP R/3 customers that it offers to Oracle customers, and at similar prices. Those services include named, local support engineers; 24-hour, seven-day-per-week support; 30-minute response times; application fixes; tax and regulatory updates; and support for client customizations. Rimini Street offers those support services at prices that are about 50% below what software vendors typically charge for standard maintenance contracts, Ravin said.
Rimini Street will initially offer its services to SAP customers in the United States during a six-month rollout beginning in January, said Ravin, who founded third-party maintenance provider TomorrowNow before selling it to SAP in 2005. Rimini Street's entry into the SAP market follows the expiration of a non-compete contract Ravin signed at the time of the TomorrowNow sale.
The anticipated interest in third-party maintenance from within the SAP's installed base is driven by rising maintenance rates and the fact that many users of older versions of SAP applications face the phaseout of standard maintenance offerings. Earlier this year, for example, SAP introduced a new Enterprise Support plan that, among other things, raised maintenance rates for new customers to 22% of net license fees per year from 17%.
Users of older SAP applications also face the phaseout of standard support offerings. Support for extended maintenance on SAP R/3 4.6C, for example, is scheduled to expire at the end of 2009. Users of R/3 4.7 will be offered extended maintenance only through March 2010. After that, R/3 4.6C and 4.7 customers that want to remain on those releases and receive support from SAP would be offered individual or customer-specific maintenance deals that, Wang said, are often priced at 23% to 25% of net license fees per year.
Despite those pending increases, "We don't think there will be a big demand for Rimini Street's services" in the SAP installed base, said Bill Wohl, an SAP spokesman. Third-party maintenance services, he said, have historically been accepted by customers running legacy or end-of-life ERP products.
"I don't know of anyone who describes R/3 as a legacy product or a product without a future," Wohl said. He predicted that R/3 customers would continue to seek out SAP support as a proven, safer alternative.
Observers, however, predicted that some R/3 users will at least review the Rimini Street offering. "R/3 users will have to ask themselves whether what SAP is providing is enough to justify the increased costs," Wang said. "Or do they want to turn to somebody else, at least until they upgrade or move to another platform?"