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Rimini Street | Research Report

Assessing the Business Casefor Independent Oracle® Software Support

Research Findings Based on 27 In-Depth Rimini Street Client ROI Interviews with Detailed Oracle Client Case Studies

Foreword by Rebecca Wettemann, Vice President, Nucleus Research

Published: October 2014


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ForewordBy Rebecca Wettemann, Vice President,Nucleus Research

Is there a compelling business case for switching from Oracle software support to independent software support?

A lot has changed in the enterprise software business in the last couple of decades. When ERP platforms fi rst came on the scene more than

20 years ago, they were often unstable and not fully featured, so companies saw a signifi cant return from their maintenance dollars in terms of regular patches and vital enhancements that were needed for complete, end-to-end business processes. Yet as ERP platforms matured with robust capabilities, the ROI for maintenance and support plans has been steadily declining. Most leading ERP platforms will reliably support tens of thousands of users and billions of dollars in transactions, so the need for regular updates to stabilize the environment is no longer a concern.

Beyond the lack of innovation within current ERP platforms is the “forced upgrade march” that ERP vendors require their customers to endure as part of their regular upgrade cycle which can be costly, disruptive and labor-intensive, for both small and large enterprises. As a result, many customers are more than two major releases behind the latest version, or are in production on a release that was made GA (generally available) more than seven years ago. However, they’re still paying software license maintenance fees on those applications, even if they’re getting no clear return on their investment.

Further eroding the ROI on vendor maintenance is the fact that many of the valuable new features, for Oracle applications including E-Business Suite, JD Edwards, PeopleSoft and Siebel, are being packaged as new products such as Oracle Fusion and Oracle cloud applications that customers do not get for paying maintenance to Oracle. These are new products that require new licenses and are not covered under existing maintenance agreements.

Since Rimini Street started defi ning the space, Nucleus has been evaluating independent support (also known in the industry as third-party support, third-party maintenance, etc.) as an alternative for customers who want to reinvest what they are spending on that annual vendor “tax” in areas that can deliver a clear and compelling return on investment (ROI). We found that initially customers could cut their application support fees by at least half — but that was just the tip of the iceberg. Our conversations with Rimini Street clients confi rmed a better, more responsive support program than previously provided by the software vendor, with dedicated support engineers assigned to each client armed with knowledge of their specifi c environment and confi gurations; in addition, tax compliance and other expertise enabled customers of Rimini Street to experience other savings in internal support resources.

Nucleus verifi ed the methodology, data, results and interpretation of this study for accuracy and credibility.

In looking at the four main savings areas presented in the following pages, we found Rimini Street’s client data and estimates were reasonable and representative of the savings Nucleus has assessed in numerous conversations with Rimini Street clients. Although all customers are different, we’re confi dent that customers considering independent support can expect similar benefi ts.

Customers seeking to do more with fewer resources are looking at their overall IT operations budget to identify underperforming investments. They’re fi nding that moving to independent support frees up vendor tax dollars to invest in technology that drives growth and greater innovation, enabling them to deliver what the business needs now.

In short, yes, we believe many organizations will have little diffi culty formulating a solid, persuasive business case for switching from vendor support to independent support of their enterprise software, as validated by the fi ndings of this study.

Rebecca Wettemann

Vice PresidentNucleus Research


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Annual Maintenance Fees

Paying $1,000,000 Annual Maintenance Fees

$500,000

$1,515,091

50% savings on $1,000,000

Total savings of 1.5 x $1,000,000

22%Customization Support $333,000 2.22 FTEs*

$1

p $

18%Maintenance Resources $273,000 1.82 FTEs*

33%

Upgrades $409,091

Annualized savings by avoiding upgrades and/or enhancement packs

nce Feesese

2%22%%2%port

ssss 33%3333%333 %333%

27%

Executive SummaryRimini Street provides independent support for users of enterprise applications such as Oracle that are seeking to reduce their annual software license maintenance spending. While customers save 50% on annual maintenance fees, those savings are just the “tip of the iceberg” in savings. This in-depth ROI study of 27 Rimini Street clients validated and confi rmed savings in three other categories that are hidden “beneath the waterline.”

Independent analyst fi rms including Nucleus Research, Constellation Research, and others have identifi ed areas of signifi cant savings customers experience as a result of switching to independent support, including:

Upgrades — The cost avoidance of not having to undertake forced upgrades simply to retain full vendor support, and not having to undertake upgrades that lack a sound ROI.

Customization Support — The cost avoidance of not having to use in-house or external resources to fi x customizations that break.

Maintenance Effi ciencies — The cost avoidance of not having to budget for the additional resources and headcount that are required to deal with the extra burden and ineffi ciencies of traditional vendor support processes.

To help customers understand the overall business case for moving to independent support, Rimini Street recently conducted a set of 27 in-depth client ROI studies to examine the total maintenance savings enterprises are realizing by switching from vendor support to Rimini Street and the impact and value to their organizations as a whole.

These detailed client ROI studies and subsequent fi nancial analysis confi rmed that clients who adopted Rimini Street independent support typically saved 1.5 times their annual Oracle maintenance or SAP fees each and every year.

This Research Report outlines the types, ranges, and underlying components of savings in each area. It also includes key recommendations and best practices recommended by Rimini Street clients.

According to the IT executives interviewed for this study, CIOs should:

Evaluate their current total maintenance costs under vendor support and compare those costs with the potential savings of switching to independent support.

Reassess any planned upgrades. Demand a real business case and avoid upgrades entirely if they are required primarily just to maintain vendor support.

Take advantage of the enhanced service levels that are available at no extra cost from an independent support provider such as Rimini Street — services such as a named, regional Primary Support Engineer for each client and guaranteed 30-minute-or-less response time for serious issues.

*$150,000 fully loaded FTE cost


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Making the Business Case for Independent SupportMost of your IT budget is probably spent just “keeping the lights on”: a recent Gartner report states that 87% of IT budgets is spent on ongoing operations and enhancements, leaving only 13% for new initiatives that will transform the business. If you are like most organizations, you have very little time or budget left over to focus on strategic priorities that will help you stay ahead of business demands. The CIOs who do manage to stay ahead of business demands are the ones who are able to budget for innovation and focus on strategically adopting new technologies.

IT SPENDING CATEGORIES

Source: Gartner, “Gartner IT Key Metrics Data, 2014 IT Enterprise Summary Report” January 31, 2014

Nucleus Research found that many companies are successfully using independent support to free up funds and resources for strategic initiatives and ensure the continued growth and success of their organizations.1 Independent support replaces Oracle’s support program with more responsive service levels and includes a number of premium features not available in Oracle’s annual support and maintenance program. With independent support, in addition to the higher quality and level of service, IT organizations benefi t from annual maintenance fee savings of 50% or more, freeing up funds that can be reinvested in IT projects and innovation that help deliver what the business needs now.

“ Independent support is an effective strategy to free up funding for innovation and strategic initiatives. Rimini Street clients, on average, save 1.5 times their annual vendor maintenance fees each and every year. These are real savings that can be diverted to growth projects and innovation.”

— Rebecca Wettemann, Vice President, Nucleus Research

In addition to the annual maintenance fee savings of 50%, Nucleus also found that some clients, depending on the extent of their customizations and upgrade philosophy, saved as much as three times their annual vendor maintenance fees each and every year. (On the low end, other clients reported saving approximately the equivalent of their annual vendor maintenance fees every year.)

13%Business Transformation Initiatives

87%Ongoing Operations and Enhancements

1 Nucleus Research, “Research Note: Benefi ts from Third-Party Support: Rimini Street,” Document K26, June 2010; Nucleus Research, “Research Note: Saving on SAP with Rimini Street,” Document L83, October 2011.


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Total Maintenance Savings — Clients Snapshot The table on the following page is a snapshot of the total maintenance savings that 27 Rimini Street clients have reported as part of this research. For each client, the table shows:

Annual Savings in the categories of Maintenance Fees, Upgrade Avoidance, Customization Support and Maintenance Effi ciencies.

Total Annual Savings (derived by summing the savings from Maintenance Fees, Upgrade Avoidance, Customization Support and Maintenance Effi ciencies). This represents the amount of spend the client can redirect to other strategic projects as a result of switching to independent support.

The ratio of Annual Savings to Annual Vendor Maintenance Fees.

The Estimated Savings that will accrue to the client over a 10-year time period. This calculation is useful in estimating the long-term return on investment (ROI) from switching to independent support.


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Average Annual Savings Reported by 27 Oracle and SAP Clients Under Rimini Street Support —

1.5 Times Annual Vendor Maintenance Fees

Rimini Street Client Product

Savings Categories

Total

Annual

Savings

Ratio of

Annual

Savings

to Vendor

Maintenance

Fees

Estimated

10-Year Total

Maintenance

Savings

“Above theWaterline” “Beneath the Waterline”

50%

Maintenance

Fees Annual

Savings

Upgrade

Avoidance

Annual

Savings

Customization

Support

Annual

Savings

Maintenance

Effi ciencies

Annual

Savings

$4B Paint Manufacturer Oracle $1,706,455 $1,000,000 $330,000 $220,000 $4,256,455 1.5 $42,564,550

$4.2B Chemical Manufacturer SAP $ 2,843,901 $517, 500 $300,000 $375,000 $4,036,401 1.0 $40,364,010

$11B Energy Company Oracle $948,000 $1,500,000 $500,000 $350,000 $3,298,000 1.7 $32,980,000

$700M Chemical Manufacturer Oracle $523,684 $1,000,000 $332,800 $20,800 $1,969,965 1.9 $19,699,650

$400M Canadian City Hall Oracle $208,328 $255,675 $825,000 $450,000 $1,739,003 4 .0 $17, 390,0301

$2B Snack Manufacturer SAP $467,175 $450,800 $435,000 $150,000 $1,502,975 1.6 $15,029,750

$1B Healthcare Company SAP $263,847 $431,750 $274,500 $274,500 $1,244,597 2.4 $12,445,970

$3B Building ProductsCompany

Oracle $191,889 $500,000 $135,000 $135,000 $961,889 2.9 $9,618,890

$1.4B Energy & ServicesCompany

SAP $486,287 $300,000 $37,500 $75,000 $898,787 1.0 $8,987,878

$12B Financial Services Company

Oracle $87,262 $400,000 $300,000 $75,000 $862,262 2.5 $8,622,620

$ 300M Educational Institution Oracle $440,271 $260,000 $55,000 $55,000 $810,271 1.5 $8,102,710

$1.3B Retail BrandsManufacturer

Oracle $347,016 $187,336 $75,000 $75,000 $684,352 1.5 $6,843,520

$125M ManufacturingCompany

Oracle $240,517 $100,000 $49,000 $49,500 $439,517 1.0 $6,426,6502

$40M Lighting & Electronics Company

Oracle $215,000 $175,909 $75,000 $75,000 $610,416 1.4 $6,104,164

$120M County Water Authority SAP $210,961 $126,577 $135,000 $135,000 $607,538 1.4 $ 6,075,380

$300M Distribution Company SAP $208,596 $225,000 N/A $75,000 $508,596 1.0 $5,085,960

$900M Automotive Services Distributor

Oracle $223,004 $160,000 $50,000 $75,000 $508,004 1.5 $5,080,040

$9B Electronics Manufacturer SAP $169,463 $315,000 N/A N/A $474,463 1.3 $4,744,464

$240M Semiconductor Company

Oracle $207,449 $97,500 $55,000 $55,000 $414, 949 1.0 $4,453,1702

$1.2B Credit InsuranceCompany

Oracle $151,389 $200,000 N/A 37,500 $427,315 1.4 $4,279,155

$350M Pipe Manufacturer SAP $113,576 $120,000 $30,000 $37,500 $301,076 1.7 $3,010,746

$1.2B Construction Company SAP £42,276 £63,414 N/A £135,000 £247,239 2.9 £2,472,390

$350M Chemical Manufacturer SAP $138,841 100,000 N/A N/A $238,841 1.1 $2,388,411

$300M Industrial Equipment Manufacturer

Oracle £136,067 £81,818 N/A N/A £217,885 1.5 £2,178,849

$1.1B Securities Company Oracle €108,445 €102,950 N/A N/A €211,394 1.5 € 2,113,943

$40M Insurance Company Oracle $291,521 $800,000 $600,000 $150,000 $1,841,521 5.0 $1,841,5211

$3B European Manufacturer SAP €33, 521 €38,388 N/A N/A €71,909 1.4 €719,090

1Not included in average annual savings calculation.

2 Annual increase in vendor maintenance fees.


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Study Analysis — Major ThemesThe organizations interviewed for this study noted that their total cost savings stemming from their switch to independent support from Rimini Street Support is derived from four distinct sources:

A. Maintenance Fees — Rimini Street charges 50% of what the client was formerly paying to Oracle for annual support fees.

B. Upgrade Avoidance — The cost avoidance of not having to undertake forced upgrades simply to retain full vendor support, and not having to undertake upgrades that lack a sound ROI.

C. Customization Support — The cost avoidance of not having to use in-house or external resources to fi x customizations that break.

D. Maintenance Effi ciencies — The cost avoidance of not having to budget for the additional resources and headcount that are required to deal with the extra burden and ineffi ciencies of traditional vendor support processes.

In the following, we will explain each of these distinct savings categories in more detail, with examples cited from the organizations interviewed.

A. High and Increasing Oracle Support Costs

Annual software license maintenance fees make up a signifi cant portion of the average organization’s ongoing IT expenditures. Although maintenance fees, in principle, provide customers with access to the latest upgrades and fi xes as well as application support, many companies fi nd that they pay a signifi cant annual license maintenance fee with little to no return on that investment. Those who are a few releases behind the most current release, and those that are on the latest, mature releases with limited needs for new functionality or support, are increasingly looking to independent support to save on their annual maintenance fees.

In addition to the above, the rising costs of the big ERP vendors’ maintenance and support plans are taking a toll. While maintenance fees started out at 15% in the early 1980s, they have steadily increased to 19% and, in many cases, 22%.

Although Oracle’s annual support and maintenance pricing has held steady at 22% since 2005, the slow pace of new product features and innovation within traditional applications — and the continued focus on a new generation of applications like Oracle Fusion and cloud applications to bolster lackluster applications revenue growth — are raising questions on the value of maintenance from customers and industry experts alike. A 2013 Forrester report called out weaknesses in Oracle’s application revenue growth in recent quarters, a result of slowing sales of existing applications and slower-than-expected revenue generated from its next-generation Fusion line.2

Results from a recent Rimini Street survey3 found that 70% of Oracle applications customers are dissatisfi ed with the cost of Oracle annual support and maintenance. When asked to identify their biggest challenges with the vendor’s support program, the top three customer responses included “Escalating to a senior engineer,” “No support for customizations” and “Explaining the same issue multiple times.” These responses imply that the levels of service and value being delivered are not congruent with the current pricing model.

IT organizations benefi t from annual maintenance fee savings of 50% or more with independent support, immediately impacting their bottom line.

2Forrester Research, “Oracle’s Dilemma: Applications Unlimited Versus Oracle Fusion Applications,” February 11, 2013.

3Rimini Street, “Oracle Applications Strategies for 2015 and Beyond,” September 2014.


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“ Rimini Street was one of the most impactful projects for us, a chart-topping accomplishment. Even a million dollars goes a long way in saving several jobs. Moving to Rimini Street is of the best things we have done from a support perspective.”

— CIO, Corporate Services, $4.2B US Chemical Manufacturer

“ Every CIO’s challenge is doing more with less. During the move to a more centralized organization, our team was asked to deliver more services, more quickly, at a lower price point. The concept of independent support is a model that I think CIOs really need to get their head around. It offers a huge advantage in terms of effi ciency, cost savings and premium service levels.”

— Jay Ferro, CIO, American Cancer Society

“ Nucleus found Rimini Street customers were able to maintain or improve their level of Oracle application support while cutting their annual support costs by more than 50%. We found the main reason most organization initially explore third- party maintenance options is the cost of software license maintenance fees. For most organizations that are more than 2 versions behind in upgrades, paying the “vendor tax” for limited support simply doesn’t make fi nancial sense.”

—Rebecca Wettemann, Vice President, Nucleus Research

B. Expensive, Disruptive and Minimal-Value Upgrades

Based on the client interviews conducted as part of this study, it became clear that beyond the ERP vendors’ lack of innovation, an additional pain point is the “forced upgrade march” that vendors require their customers to endure as part of their regular upgrade cycle. For one thing, continuous upgrades are highly disruptive to the business, for both small and large enterprises. The median upgrade effort for organizations with more than 2,500 users is 3,350 person-days over 31 weeks at a cost of more than $1.4 million, according to a 2012 upgrade benchmark survey.4 The same survey found that extended maintenance was the clear top reason for upgrades, cited by 67% of respondents, dwarfi ng the number of customers who said they upgraded for specifi c functional requirements (29%). According to another survey conducted by the Oracle Applications User Group (OAUG),5 73% of companies cited “End of support” as the top compelling reason to upgrade.

These are additional proof points that the majority of enterprises are going through the pain and cost of a protracted upgrade cycle for all the wrong reasons. Moreover, any benefi ts from the latest software release typically aren’t valuable enough to justify the resources, costs, risks and downtime associated with a major upgrade.

Findings from the Rimini Street survey confi rmed this, with only 35% of customers surveyed saying they had plans to upgrade their Oracle applications.6 These same respondents went on further to explain why an application upgrade was not right for their business; their reasons, in order of importance: 1)“Current application meets business needs,”

4 PAP Upgrade Benchmark Study by Panaya Inc., 2012, http://go.panayainc.com/ rs/panayainc/images/SAP_ Upgrade%20Survey_2012.pdf.

5OAUG Survey, “ERP Upgrades: What’s Your Philosophy?,” February 2012.



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2) Upgrades were “Cost prohibitive,” 3) “Move to a new application later,” and perhaps most telling, 4) “Not enough new and valuable functionality.”

According to this study, one of the biggest benefi ts that customers experienced with Rimini Street independent support was avoiding the cost and disruption of upgrades. While keeping current on license maintenance fees usually entitles customers to free access to software upgrades, upgrades can still be costly and disruptive: customizations and integrations have to be rebuilt and retested, reports and interfaces have to be rewired, and data has to be converted, typically requiring a signifi cant investment in both internal and external resources.

Savings from upgrade avoidance will depend on the level of maturity of the application and the number of components deployed and integrated. Rimini Street clients interviewed for this study are saving hundreds of thousands of dollars a year in avoiding the ancillary costs associated with unnecessary upgrades. For example, a $4 billion global coatings manufacturer found it was able to save $10 million by avoiding an upgrade to Oracle E-Business Suite R12, as there were no compelling business benefi ts or ROI to do upgrade. As a result, the company is avoiding not only a huge expense but also signifi cant disruption to the business as it continues the global roll-out and implementation of its stable and mature 11.5.10 application.

Statements from organizations interviewed that clearly confi rm the lack of value of “forced” and expensive upgrades:

“ We were faced with forced upgrades which we really didn’t want to do. We avoided those upgrades, saving $4–5M in system upgrades by moving to Rimini Street.” — CIO, $4B Chemical Manufacturing Company

“ Our goal is to maintain stability and keep current. We saw no business driver or ROI for upgrading, as our Oracle E-Business suite11.5.10 instance was very stable. That is approximately $8M in upgrade costs that we avoided. In addition, there would have been signifi cant business disruption as we are in the midst of a multi-year rollout to 35+ countries worldwide.” – IT Director, $700M Chemical Manufacturer

“ We try to avoid change and associated costs that the business is not asking for. By switching to Rimini Street, we put ourselves in the driver’s seat of our investment and change schedule in the years ahead.” — Mark Wikingstad, CIO, UCI International

“ In analyzing the experiences of Rimini Street customers, we’ve found that while the cost savings associated with avoiding forced upgrades varies by size of deployment and a number of other factors, most found 6-digit or more annual savings associated with avoiding upgrades.”



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C. High Customization Support Costs

The majority of the issues in today’s mature enterprise software are not in the vanilla code delivered by the software vendor (in this case, Oracle). Most issues are in the code the client has customized to fi t its unique business requirements. However, standard software vendor programs do not cover customized code, making vendor support increasingly irrelevant as companies continue to modify their systems to meet legitimate business demands.

“No support for customizations” was the second-highest ranked selection in the Rimini Street survey, when Oracle customers were asked to identify their biggest challenges with Oracle support and maintenance.7

Independent support providers cover user-modifi ed code, at no extra charge. And in fact, nearly two-thirds of

issues that Rimini Street resolves for its clients are issues that the vendor’s support program would not

have covered.

The organizations interviewed for this study reaped substantial savings from not having to dedicate in-house or external resources to address technical issues that stem from customizations.

Statements from organizations interviewed clearly confi rm the cost avoidance of not having to use in- house or external resources to fi x customizations that break, for example:

“ We custom-designed a lot of our functionality and hence had high custom support costs. That is $500K annually — about fi ve FTEs.” — CIO, $4B Chemical Manufacturing Company

Because Rimini Street has invested in the skills and resources to provide premier support, we’ve found they can not only help customers save time on customization support, but can help them identify other ways to optimize application performance.”


“We knew that any other support or upgrade solution would jeopardize our customizations, which are critical to us, Rimini Street took the time to learn our specifi c environment and can tailor support to our unique needs. When we have an issue, we don’t have to spend hours explaining our system profi le and infrastructure or waiting for validation of the issue in a non-customized environment. Rimini Street quickly assesses every issue we bring to them within a 30-minute response time 24x7, and provides just the fi xes we need.”

— Tom O’Brien, IT Manager, City of Flint, Michigan



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D. High Costs and Time Wasted Due to Oracle Support Ineffi ciencies

1. Business impact of faster resolution of trouble tickets. Rimini Street clients consistently found they had more rapid resolution of issues, and as a result were able to deploy internal staff and consulting resources to other development projects.

As a point of comparison, Oracle applications customers pointed to process ineffi ciencies as among their largest sources of frustration with the vendor’s support program in the Oracle Applications Strategy Survey. Customers cited having to “Escalate to a senior engineer,” “Repeat issues multiple times,” and “Reproduce the issue to prove its validity” as top challenges.

For example, Rimini Street assigns each client a named, regional Primary Support Engineer, backed by a team of experts who can assess, diagnose and resolve client issues — versus the cost and time involved with the client’s support team members hunting for potential resolutions in Oracle support portals or online forums. Rimini Street Support is available 24/7/365, with a guaranteed 30-minute response time for critical issues.

As already mentioned, Rimini Street also supports the client’s customized code as part of its standard package of premium services, at no extra cost — versus justifying to Oracle and being forced to replicate the issue in a vanilla environment, which can drastically increase support costs and time to resolution.

“ By partnering with Rimini Street, Valspar was able to reallocate a portion of its total global IT budget to growth initiatives with the stroke of a pen”

— Tom Grooms, CIO, Valspar

“ We were able to hire two additional resources for strategic projects with the savings we’ve realized from Rimini Street support.“

— IT Director for Financial Applications Services, Publisher

“ We reduced outsourcing support staff by four FTEs since moving to Rimini Street and reinvested in new development initiatives.”

— IT Director, $700M Chemical Manufacturer

2. Resource savings such as tax consulting and Oracle tax maintenance costs. Customers moving to Rimini Street that were paying for separate Oracle tax maintenance were able to avoid these costs by using Rimini Street’s tax, legal and regulatory support, which is included in the support contract.

Nucleus Research also found some customers had to employ consultants to help them determine which Oracle tax updates were applicable to their business. Customers said Rimini Street support included specifi c guidance on which tax updates needed to be applied based on their particular business operations.

Rimini Street provides timely compliance updates that are tailored for the precise scope of the client’s individual business — versus burdening the client’s team to sift through Oracle-provided updates that include all jurisdictions (most unrelated to the client’s business). Rimini Street provides only the fi xes the client needs. This eliminates analysis, regression testing and managing the hundreds of irrelevant fi xes provided by Oracle.


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3. Personalized, more relevant support. Rimini Street support, in general, is found to be more proactive, responsive, and personalized than the support they had received from vendors under traditional license maintenance contracts. In many cases clients found that while the “solution” from a vendor was to hire additional professional services (on top of license maintenance fees), general inquiries, troubleshooting, and physically touching code to diagnose problems and identify solutions were part of the Rimini Street offering.

Statements from clients interviewed that clearly confi rm the cost avoidance of not having to deal with the ineffi ciencies of vendor support:

“ We tried every path possible to replicate and get help. We could never get a resolution from the vendor. Our teams spend 30% of their time fi xing the issues themselves.”

“ We ended up not having to back fi ll one support team member whose sole job was looking for solutions Very much so. That is about £60,000–£70,000 savings.”

“We paid $5–10K in consultancy fees for additional diagnosis and replicating the issue.”

“ We had sunk $180K into this project and it was nowhere near completion. We transferred all the issues to Rimini Street and we are now down to one open issue. If not for Rimini Street, that $180K would have become $360K. We are saving hundreds to thousands of hours and about 3.5 FTEs every year on support issues.”

“ Our partner TCS asked Rimini Street to help as they couldn’t resolve certain Dev IS issues. They couldn’t fi gure out what the problem was. Rimini Street gladly resolved those issues. Hard to quantify but it defi nitely freed up their time to develop new things.”

— IS Controller, $2B Global Snack Manufacturer

“ Many organizations relying on Rimini Street for patches and bug fi xes spent less time on application maintenance because they only had to install critical updates such as compliance or tax-related code, instead of the entire upgrade package typically delivered by the vendor. This resulted in reducing both installation and testing time. As one customer said, ‘Now we only have 25 percent of one person’s time to apply updates – it was defi nitely a lot more before.’”

—Rebecca Wettemann, Vice President, Nucleus Research


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CIO to CIO: Final Word

Following are specifi c insights and advice from executives interviewed as part of this client study. We asked, “What advice do you have for other CIOs based on your experience with independent support?”

Assess the Value You Receive for Your Oracle Maintenance Spend

A large global company was paying $4 million in annual vendor maintenance fees. During the course of a year, the company called the vendor with urgent support issues seven times. Five of those calls turned out to involve customized code that the vendor would not address. The vendor fi xed the two other issues. Based on this performance, the per-issue maintenance cost is essentially $2 million each. Calculate your own maintenance- spend-to-support value equation.

“ Calculate, really calculate. Get down to some real data and facts around what you’re getting from the vendor for your maintenance fees. Evaluate your current value proposition in dollar terms. And then

go from there. In our case, there was just no value in continuing to pay vendor annual support fees.”— CIO, Global Chemical Manufacturing Company

Don’t Upgrade Just to Stay Supported — And Don’t Upgrade If There Is No Business Case/ROI

One Rimini Street client who had been paying the vendor $3 million in annual support fees not only saved 50% ($1.5 million) in annual support fees, but was also able to avoid a costly $19 million upgrade that promised no relevant business value.

“ Avoid any major cost of change — when the change is simply for the sake of change. We believe the value in upgrading to stay supported is just not there. CIOs typically convince themselves of a few capabilities that will add value, and then perform a massive, expensive upgrade. The reality is that if you want those few

capabilities that will add value, you can customize at a fraction of the cost of an upgrade.”— CIO, US Automotive Parts Manufacturer

Get Your Issues Fixed, Period — Ensure the Support Process Works

Most client companies interviewed felt burdened not only with the time and money spent justifying issues at every step in Oracle’s support process, but also with the quality and level of support received from Oracle. This is a key element of the value equation that often goes unconsidered. Regardless of what you’re paying in support costs, if you’re not getting timely and effective case resolution, then continued investment in maintenance should be seriously questioned.

“ When we have an issue, we don’t have to spend hours explaining our system profi le and infrastructure ... or waiting for validation of the issue in a non-customized environment. Rimini Street quickly assesses

every issue we bring to them within a 30-minute response time 24/7, and provides just the fi xes

we need.”— CIO, Global Chemical Manufacturing Company


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Free Up Funds for Growth and Innovation

Many client companies are reinvesting their substantial savings from independent support into new and innovative IT initiatives that are creating competitive advantage and enabling business growth.

“ I was able to reallocate 10% of my budget growth initiatives with the stroke of a pen. I want to be clear about this, because this is a big deal. This is 10% of my total IT spend. We’re in a position to literally drive the number-one priority of the CEO with the resources we gained back from the decision to go with Rimini Street. It’s a new business model that is going to enable us to compete even more commercially.”

— CIO, Global Chemical Manufacturing Company


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APPENDIX

Case Study 1: $11B Unifi ed Energy Company

Total Maintenance Savings with Independent Support: $3.2 Million Annually, $32 Million in 10 YearsThis $11B energy company based in North America with over 14,000 employees will save $3,298,000 each year for the next 10 years for a Total Maintenance Savings of $32,980,000 — representing a savings of more than 1.7 times its Oracle annual support fees each year.

Background

Dissatisfi ed with High Support Costs — “Paying $2M annually”

Faced With Forced Upgrades — “Which we really didn’t want to do”

Burdened with Service Packs — “Pain associated was too great”

Heavily Customized, High Custom Support Costs — “We custom-designed a lot of our functionality.’’

Estimated Annual Total Maintenance Savings by Switching to Independent Support

Category

Annual Oracle

Support Costs

Annual Independent

Support Costs

Annual Independent

Support Savings

Annual Support Fees $1,896,000 $948,000 $948,000

Upgrades & Enhancement Packages $1,500,000 - $1,500,000

Customization Support $500,000 - $500,000

Maintenance Resources $350,000 - $350,000

Totals $4,246,000 $948,000 $3,298,000

Financial Summary

This client will cut its annual support fees by 50% and save $948,000 every year on annual maintenance fees; save $1,500,000 annually by avoiding upgrades and not applying Feature Packs over a 10- year period; save $500,000 (or the equivalent of 3.3 FTEs) annually by avoiding paying dedicated resources or external consultants to fi x customizations that break; and save $350,000 (or the equivalent of 2.3 FTEs) annually by avoiding paying additional resources and headcount required to deal with the extra burden and ineffi ciencies of vendor support.

Independent Support Results — Validation

Slashed Maintenance Fees — “Saving $1M in maintenance fees annually”

Avoided Forced Upgrades — “Saved $7–8M per system — HCM and FIN”

Custom Support Savings Potential— “That is $500K annually — about 5 FTEs”

Maintenance Resources —Hard Savings and Opportunity Costs—SAIC

n “ We are saving at least 3.5 FTEs. Just 2 issues with Rimini Street saved us 100s -1000 hours in one year.”

n “ We are saving about 300K implementing tax updates.”

n “ 30% of the time we fi xed the issues ourselves. Now Rimini Street is.”— Business Unit CIO, Corporate Services


17

Case Study 2: Valspar, $4.1B Global Coatings and Paint Company

Total Maintenance Savings with Independent Support: $4.3M Annually, $42.5M in10 YearsThis $4.1B coatings and paint company with over 10,000 employees will save $4,256,455 every year for the next 10 years for a Total Maintenance Savings of $42,564,550 — representing a savings of more than 1.1 times its Oracle annual support fees each year.

Background

Dissatisfi ed with High Support Costs — “Costs extremely high for the value we received”

No Business Driver or ROI for Upgrading — “11.5.10 instance is very stable”

High Custom Support Costs — “Highly customized environment with dedicated resources”

Continuous Global Implementation — “Ongoing deployment and rollout via acquisitions”


Category

Annual Oracle

Support Costs

Annual Independent

Support Costs

Annual Independent

Support Savings

Annual Support Fees $2,900,000 $1,706,455 $1,706,455*

Upgrades & Enhancement Packages $2,000,000 - $2,000,000



Totals $5,450,000 $1,706,455 $4,256,455

*Annual 3% increase

Financial Summary

This client will cut its annual support fees by 50% and save $1,706,455 every year on annual maintenance fees; save $2,000,000 annually by avoiding 2 upgrades and not applying Feature Packs over a 10-year period; save $330,000 (or the equivalent of 3 FTEs) annually by avoiding paying dedicated resources or external consultants to fi x customizations that break; and save $220,000 (or the equivalent of 2 FTEs) annually by avoiding paying additional resources and headcount required to deal with the extra burden and ineffi ciencies of vendor support.

Flexibility and Control — “No pressure to upgrade, buying valuable time”

Slashed Maintenance Fees — “Saving $1.7M in maintenance fees”

Support for Customizations — “So unique, so powerful for us”

More Responsive, Quality support — “’Night and day’ compared to vendor”

Invaluable, Strategic Partnership — “Multiplier effect value”— Tom Grooms, CIO, Valspar


18

Case Study 3: NCH, $700M Industrial Maintenance Solutions Provider

Total Maintenance Savings with Independent Support: $1.97M Annually, $19.7M in 5 YearsThis industrial maintenance solutions provider with over 8500 employees will save $1,969,965 every year for the next 5 years for a Total Maintenance Savings of $19,699,650 — representing a savings of more than 1.9 times its Oracle annual support fees each year.

Background

Dissatisfi ed with High Support Costs — “Oracle support costs extremely high”

No Business Driver or ROI for Upgrading — “11.5.10 instance was stable and signifi cant with $8M estimated cost to upgrade”

High Custom Support Costs — “Over 12 million lines of custom code”

Continuous Global Implementation — “In the middle of a multi-year rollout of oracle to 35+ countries around the world”


Category

Annual Oracle

Support Costs

Annual Independent

Support Costs

Annual Independent

Support Savings

Annual Support Fees $1,047,369 $523,684 $523,684

Upgrades & Feature Packs $1,600,000 - $1,600,000



Other ($507,319)* - ($507,319)*

Totals $3,000,969 $523,684 $1,969,965

*Ceridian payroll system – setup and annual cost not included in calculation

Financial Summary

This client will cut its annual support fees by 50% and save $1,969,965 every year on annual maintenance fees; save $1,600,000 annually by avoiding upgrades and not applying Feature Packs over a 5-year period; save $332,000 (or the equivalent of 4 FTEs) annually by avoiding paying dedicated resources or external consultants to fi x customizations that break; and save $20,000 on other support and maintenance effi ciencies annually by avoiding paying additional resources and headcount required to deal with the extra burden and ineffi ciencies of vendor support.

Flexibility and Control — “Eliminating the need to upgrade Oracle gave us the ability to focus on the rollout of Oracle worldwide.”

Resource Re-allocation and Effi ciencies — “Elimination of 4 FTEs for customization support allowed us to accelerate and increase spending on development projects.”

More responsive, quality support — “Better expertise on support issues allowed us to resolve issues quickly thus reducing our support backlog.”

— IT Director, Industrial Maintenance and Solutions Provider


19

About Nucleus Research

Nucleus Research is a global provider of investigative, case-based technology research and advisory services that provide real-world insight into maximizing technology value. For more information, visit NucleusResearch.com or follow us on Twitter @NucleusResearch.

About Rimini Street, Inc.

Rimini Street is the global leader in providing independent enterprise software support services. The company has redefi ned enterprise support services since 2005 with an innovative, award-winning program that enables Oracle and SAP licensees to save up to 90 percent on total support costs. Clients can remain on their current software release without any required upgrades for at least 15 years. Over 1000 global, Fortune 500, midmarket, and public sector organizations from a broad range of industries have selected Rimini Street as their trusted, independent support provider.

The contents of this document are subject to the intellectual property rights of Rimini Street, Inc. (“Rimini Street”) and may be protected by copyright, patent, trademark, trade secret, trade dress, right of privacy, right of publicity, moral rights or other intellectual property rights now known or later recognized by statute, judicial decision or regulation. This document may also contain proprietary or confi dential information intended for disclosure only to the intended recipient, and accordingly this document shall not be reproduced, posted, adapted or redistributed directly or indirectly, in whole or in part, in any medium without the express written consent of Rimini Street. If you are not the intended recipient, you are directed not to read, disclose, distribute or otherwise use this information. The information in this document is provided “as is.” Except as otherwise provided in writing by Rimini Street, Rimini Street assumes no liability whatsoever and disclaims any express, implied or statutory warranty relating to the information contained herein or to Rimini Street’s services, products, or inventions, including, without limitation, the implied warranty of merchantability, fi tness for a particular purpose, or non-infringement. In no event shall Rimini Street be liable for any direct, indirect, consequential, punitive, special, or incidental damages (including, without limitation, damages for loss of profi ts, business interruption, or loss of information) arising out of the use or inability to use this document, even if Rimini Street has been advised of the possibility of such damages. Rimini Street makes no representations or warranties with respect to the accuracy or completeness of the contents of this document, and reserves the right to make changes to the information, services, products, or inventions described herein at any time, without notice. Rimini Street makes no commitment to update the information contained herein.

Rimini Street and the Rimini Street logo are trademarks of Rimini Street, Inc. All other company and product names may be trademarks of their respective owners. Copyright ©2014-2015. All rights reserved.

www.riministreet.com

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