Impressive results from Rimini Street may worry some CRM software vendors

Rimini Street is an interesting company. Not just because of the odd name, but because it offers a service that represents many software vendor’s worst nightmare. Rimini Street is a third party support and maintenance provider for enterprise software suites such as Siebel, PeopleSoft, JD Edwards, Oracle E-Business and SAP.

So instead of getting support from the software vendor themselves, enterprise software users opt to go to suppliers like Rimini Street instead, often significantly reducing costs in the process. This is potentially a big issue for the vendors because these support and maintenance contracts represent a major recurring income stream.

Worryingly for the enterprise vendors, Rimini Street released an impressive set of results yesterday – sales were up 37% year on year, and the number of customers has increased to 400 including 11 of the global 100. Perhaps more worryingly, client retention rates were at 95%, so it’s clear that Rimini Street is offering a lot more than just cost reduction.

Just how worried the vendors are is witnessed by litigation launched by Oracle. The outcome of this will be very interesting. If Rimini Street wins then the third party support and maintenance market could accelerate rapidly. With Rimini Street working towards a potential IPO in 2012, and new suppliers emboldened to enter the market, software vendors could see their cash cow support and maintenance revenues under extreme pressure.  Since the impact would likely be felt by all software vendors, not just the enterprise ones, perhaps it’s time for CRM companies to be validating they’re offering their customer real value in this area.

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