No recession for Rimini Street third-party maintenance business

Rimini Street, which offers alternative maintenance and support contracts for Oracle and SAP customers, reports today that its books in the first half of 2009 increased four-fold over the same period last year. It gets better: second quarter bookings increased six-fold over the same quarter last year.

In further evidence of a surging business, Rimini Street reports:

• A four-fold increase over last year in its J.D. Edwards client base
• US-based staff growth of almost 25%, while expanding its support operations into Europe and Asia-Pacific
• Signing up its first SAP clients, complementing its support for Oracle JDE and Siebel customers
• Delivery of tax and regulatory updates ahead of the "primary software vendor’s planned release date for similar updates"

It's remarkable to do all this in a time of economic recession. But the recession may in fact be helping Rimini Street's business as Oracle and SAP customers are pressed to look for alternatives to inflated maintenance fees from these two vendors.

I also note Rimini Street's report of a strategic investment from private equity firm Adams Street Partners. The money will be used to fund Rimini Street's global expansion. Apart from this, however, to me this is a serious endorsment of the third-party maintenance model in general, and Rimini Street in particular. No doubt, Adam Street did their due diligence. If they came to the conclusion that third-party maintenance is a worth investment target, will others be far behind?

I hope not. I would like to see other private equity firms funding other third-party maintenance providers as well. The more the better.

Rimini Street's press release has details.

Update, July 31: Bob Evans at Information Week has an excellent article on the excessive nature of Oracle's and SAP's 22% maintenance fee practices and the door that this has opened for Rimini Street, and hopefully others. One tidbit:

Some CIOs object, usually in language most charitably described as "colorful," that because the world's two largest enterprise software companies have built such wildly successful cash cows out of their support and maintenance businesses, SAP and Oracle have completely lost sight of the customer connection in that context. Most grating of all to these CIOs have been public comments made separately by top-level executives at the two companies indicating quite explicitly that whatever customers might or might not think about the 22% fees, that revenue is indispensable to the stock valuation of each company and so cannot be changed.

This article should be required reading for any enterprise software buyer or CIO.

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