Nine months after hiring 30 former employees of SAP's shelved TomorrowNow subsidiary and entering the third-party ERP software support business, Spinnaker Management Group LLC has signed on 70 customers, most of them manufacturers and all of them users of Oracle Corp.'s JD Edwards applications.
"The JD Edwards support business has been a good fit for us," says Mathew Stava, co-founder and managing principal at Spinnaker in Denver. "We saw it as an opportunity, and something that many of our clients were asking for."
Privately owned Spinnaker started seven years ago as a strategic consulting firm focusing primarily on manufacturing, distribution, and supply chain processes. In January 2007, the company expanded into supply chain execution software and logistics outsourcing services through the acquisition of Atlanta-based Prosero.
Last fall, the company jumped into the third-party ERP support market after SAP AG announced its plans to wind down TomorrowNow, which has been embroiled in a trade secrets lawsuit filed by rival Oracle. Spinnaker hired 30 former TomorrowNow employees in Denver, the United Kingdom, and Singapore who had been providing third-party support to JD Edwards users.
So far, Stava says, Spinnaker has signed up 55 to 60 of the estimated 90 TomorrowNow customers running JD Edwards applications. The company also has signed up 10 to 15 JD Edwards users that had not previously been TomorrowNow customers.
Stava expects the company to have about 125 third-party support customers by the end of 2009.
Spinnaker is the latest entry in what many experts believe is a growing market for third-party enterprise software maintenance and support. Many small- and medium-sized manufacturers looking to reduce enterprise software expenses are forgoing upgrades and seeking lower-cost support deals. Third-party support providers, such as Rimini Street, netCustomer Inc., and now Spinnaker, offer basic, 24x7 support, plus tax and regulatory upgrades, for around 50% of what software vendors charge for maintenance.
Stava says Spinnaker has protected itself from legal action such as Oracle's suit against SAP by ensuring the company is not using any Oracle intellectual property to provide support services to its JD Edwards customers.
"We spent a lot of time understanding what the legal issues were," Stava says. "When we decided to make the move, we felt we would face little or no risk if we did it in a manner which respected the intellectual property that Oracle has."
This article originally appeared in the May 2009 issue of Managing Automation.