Oracle faces competition for Siebel support fees
Rimini Street, a company launched by a former PeopleSoft exec, plans to offer inexpensive support and bug fixes.
Seth Ravin, a former PeopleSoft executive, announced Monday that his new company, Rimini Street, will offer technical support and software-bug fixes to Siebel customers at about half the cost Oracle is expected to charge. Such software maintenance fees accounted for $469 million in revenue last year, or more than one-third of Siebel's total sales, The Wall Street Journal reported.
Oracle last week agreed to buy Siebel for $5.85 billion in stock and cash.
"Siebel software licensees now face additional uncertainties as a result of Oracle's pending acquisition," said Ravin, Rimini Street's president and chief executive. "Continually updating software is expensive and fails to yield tangible benefits for many organizations.
"Rimini Street will offer Siebel software licensees a credible choice of maintenance and support programs that provide significant savings of 50 percent or more compared to current vendor annual maintenance fees, reduce the frequency and cost of upgrades and meet the unique business objectives of each client," Ravin said in a statement.
Until March, he was president and a large shareholder of TomorrowNow, which offers product support for PeopleSoft products. Oracle, of Redwood City, Calif., acquired PeopleSoft in January, and TomorrowNow was acquired by Oracle rival SAP of Germany several weeks later as part of an effort to woo PeopleSoft customers from Oracle.
Rimini Street, based in Las Vegas, will be wooing Siebel customers in a hotel suite down the street from Oracle's annual OpenWorld trade show, which opens later Monday in San Francisco, the Journal said. Ravin plans to offer services early next year and is looking to hire former or current Siebel engineers to develop the products.
Across the software industry, customers have resisted increases in annual maintenance fees, which have risen to 20 percent or more of the original price of the software, the Journal said.
For software vendors, maintenance contracts carry operating profit margins of 70 percent or more, funding development of new versions of the software.
The Journal quoted Oracle spokesman Bob Wynne as saying the company "welcomes a wide range of choices" for customers. Oracle has said it will include Siebel's customer relationship management software in a new integrated software suite, dubbed Project Fusion, the first features of which are scheduled for 2007.