SAP and Oracle are 'all about locking people in', claims Rimini Street CEO

Software giants face stiff competition from newcomers, claims Seth Ravin. SAP begs to differ

There's little love lost between Rimini Street CEO Seth Ravin and his former employer SAP, and perhaps even less between Ravin and Oracle, with whom his company has been engaged in tit-for-tat litigation over alleged copyright infringement by Rimini Street for almost a decade. Rimini Street won the latest round in April, the US Supreme Court ordering Oracle to hand over $12.8 million, but overall the company is out of pocket after having to pay nearly $100 million following a ruling in Oracle's favour in 2015.

"It's a rough and tumble world when you're breaking open a monopolistic business," said Ravin, revealing that Rimini Street incurs annual legal costs of $20-30 million fighting Oracle alone. "Who else drives a profit margin of 90 per cent, and how hard do you think they're going to fight to hold onto that kind of money? These guys have a virtual monopoly."

Ravin claims that Oracle and SAP make 50 per cent of their revenues on maintenance (SAP's latest quarterly figures put "software support" at €2.84bn out of total revenues of €6.09bn, while Oracle reports its figures differently, with "cloud services and license support" accounting for $6.66bn out of $9.61bn total revenues for Q3 2019), which is where his company operates as a third-party support provider.

"They're trying to hold onto market share," he said. "It's not about developing the market at all; it's all about locking people in."

Ravin claims that SAP, with its entrenched position in very large organisations, and Oracle, with its end-to-end product suites, are the enterprise vendors with most to lose from competition from smaller, niche vendors, more so than other enterprise players like IBM. He contrasts their systems integrator-oriented approach with Salesforce which recently partnered with Rimini Street to "fill in the gaps" in their service provision. "It's a very different thing for us to work with a vendor not compete with them," Ravin said.

Ravin maintains that SAP and Oracle are engaged in "defensive posturing" because they have run out of road, with SAP struggling to migrate users to S/4HANA, Oracle failing to get enough new customers to use its applications, and both struggling with cloud. Moving an application to S/4HANA is expensive and complex, Ravin said, "but SAP doesn't like to use the term 'full migration' instead they sell it as an upgrade". He mentioned two high-profile cases of Haribo and Lidl, where migrations had not gone to plan.

"Oracle is a database company that makes a damn good product, but it's expensive and their applications aren't that good, they're not an apps company. Then you have SAP who are an apps company who build the tightest apps out there. They are expensive and hard to customise, but they are very tight compared to Oracle's, but they had to go out and buy their database. So what you have is two companies each venturing into each other's territory, where each of them is number two."

Not only that, but as more specialist cloud-based vendors are emerging to cover enterprise niches and the midmarket, the trade-off between the convenience of the end-to-end suite and the leading-edge functionality of best-of-breed does not favour the big players with their "hundred-product ERP suites", Ravin said.

"The trade-off was this. In exchange for having the same look and feel, integration, one vendor, the product didn't have to be the best, but it had to be one of the top three. But these SAP and Oracle products aren't even in the top five, so they're being replaced by best-of-breed products."

We put Ravin's claims to SAP and Oracle. Oracle declined to comment but Uwe Grigoleit, SVP and general manager, SAP S/4HANA, offered the following statement.

"With more than 10,900 customers of all sizes, industries and complexities having selected SAP S/4HANA, we see a continued demand and success for this next generation ERP system in the market. Existing SAP ECC customers can decide whether they would like to carry out a system conversion of their existing system to S/4HANA or start a new implementation migrating only the data and part of the configuration. We see both variants across all different levels of complexity regarding the customer, proving that this is less a decision driven by the software and more by the business requirements of the customer. SAP and its huge ecosystem have been building, and are continuing to build, a wide variety of tools and services helping customers to simplify the move to SAP S/4HANA."

On the Haribo and Lidl cases, an SAP spokesperson said that Lidl was not a S/4HANA migration while Haribo was an early adopter of S/4HANA and deploys many applications based on the database.

"Haribo effectively implemented SAP S/4HANA in Germany on October 1, 2018. Since this is a complete system change and many internal processes had to be adapted, we expected some start-up difficulties.

"For Haribo, the introduction of SAP S/4HANA means switching to a new system that completely replaces the company's existing IT structures. We didn't think there was any alternative but to convert all systems. We decided to opt for a future-oriented system landscape in order to continue to achieve our global growth targets. The introduction of SAP S/4HANA is a strategic project for Haribo with long-term impact and so we will continue with the implementation."