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Was there debate within PeopleSoft that it might be a bit shortsighted not to give steady-as-you-go maintenance?
Other than from me? You had development lining up on the side of, 'Absolutely hold to these support polices.' The consulting group wants to sell upgrade services. The development organization only wants to support a limited number of product lines, and there are practical reasons for that. They can't technically support 10 lines forever. In general, they were just incensed it accreted life to releases that they wanted to see retired. Isn't this a problem for all software? Everyone has to carry forward their baggage, and a backwards compatibility. Very rarely do you come out with a brand new release that has no connection, in technology, to what you had before, because then you open up the whole competitive realm. 'Well, hell, if your new product isn't really an upgrade, it's a migration, then I might as well look at everybody's else's if I am going to move to a migration.' How have companies managed this problem before your software maintenance businesses existed? They thought they could basically use the stick to beat customers forward by threatening them. You've seen that with Oracle. Siebel is the same way -- basically, if you don't upgrade, we're going to pull your support, you'll rue the day, you'll get nothing from us, and we'll still charge you the full amount. What are the reasons your customers opt for third-party software maintenance? They do it for different reasons. The small customers were making the move, because it was right after the dot-com meltdown. Prior to that, people were very optimistic, thinking they would be growing 10 times their size. They went in and bought PeopleSoft; it was the Rolls-Royce of HR systems and finance. So now they're stuck with the Rolls-Royce. They love it; they don't want to get rid of it. But they can't afford to keep it. So, a lot of those people, by switching to third-party maintenance, actually were able to keep the software they loved at price points they could afford. Why did you leave TomorrowNow after the acquisition by SAP? I left three months after the SAP acquisition; as an entrepreneur I needed to be on to my next thing. I actually was going to go build a software company, but after looking at it, I couldn't stay away from the maintenance stream. When you've got a 90% profit margin, it's just too hard to resist. And TomorrowNow didn't even take 1% of the market. As soon as Oracle announced its acquisition of Siebel, I decided to launch Rimini Street and offer the first third-party alternative into Siebel space. Oracle must love you, especially given its suit against SAP -- targeted at TomorrowNow. Oh yeah. I announced Rimini Street at OracleWorld 2005 and I think the words were, 'He's back.' As soon as my noncompetes expired with PeopleSoft and J.D. Edwards products, we introduced those at Rimini Street, too. So now you have two companies -- the captured, SAP-TomorrowNow and our independent Rimini Street -- and we are the only two really credible companies in the industry. The Oracle lawsuit against TomorrowNow is notable for its strong language -- "corporate theft on a grand scale." Some analysts said that one of the aims of the lawsuit was to scare companies off using third-party maintenance. Just to give you that color from the lawsuit -- it hasn't deterred the business. The lawsuit actually opened up business -- because some people didn't even know there was a choice. A lot of people read the lawsuit and said, 'My God, Merck and Honeywell, and all these large companies using third-party support.' And instead of saying, 'Wow, look what happened here!' The issue really is, 'Holy gee, am I the only guy paying full price?' What about maintenance of SAP software at Rimini? I have a noncompete that expires in January. Let's just say, we're looking with interest at the SAP market. With 30,000 customers, who wouldn't be? They recognize what is good for the goose is good for the gander. You can't complain and say you want Oracle to open up and allow third parties more access and think that is not going to boomerang back on you. They know this is about open access. AMR analyst Jim Shepherd makes the argument that because everything is changing -- the software platform, the underlying components, your company's business -- that the software needs to be continuously updated. That's not what we're hearing from clients. They have incredibly stable platforms that they feel like they can run their business on for 10 years. And, in fact, if you look at the recent enhancements from the PeopleSoft product line, it is akin to heated and cooling cup holders -- they're really cool, but it doesn't help me pay my employee any faster. Who do you go to when you make your pitch? The CEO, the CIO -- who is most receptive to your message? It's gotta be the CIO and the CFO. The reason is, this is a lot like outsourcing. You're not going to go pitch the IT team how great it is to send your jobs to Infosys. When we come in, how much excitement is there to tell a team, 'Hey, we've got some great news for you -- you guys are going to drive the same car for the next five to seven years instead of that new one you were hoping to play with.' A lot of IT folks do want the excitement of getting new tools and new technology to play with -- and that is part of the fun of it. Our decision is very much a cost-driven decision, so it is very often the CFO or the CIO who says, 'I'm the guy who has to go before the board and justify we need to spend $2 million on an upgrade when we did it just three years ago, and I can't put down on paper how that money is going to be returned to us in benefits.' What about people who have just upgraded to the newest version of software -- are they off-limits? We used to work primarily with more retired or retiring-level versions of the software. Today, 30% to 40% of our business is on the latest versions of the software, so it is people who literally go and do the next upgrade and say, 'You know what, we are done for the next decade. And all that money we bank over the next decade? We will then do a capital expense because a whole new version of software is coming.' In 2015, '17, as late as 2018, you'll see a mature Fusion product against a mature NetWeaver product from SAP, hell Microsoft will probably be offering a full enterprise-level product at the rate they are investing. Rather than play the upgrade game every two or three years that doesn't necessarily yield results but ties up the entire IT team, costs a fortune, instead we're going to make a generational change. How long should a company hold on to a software product? We have more customers than ever looking for five- and 10-year guarantees for support. No one makes this change for a six-month change; it is not worth it. Let us know what you think about the story; email: Linda Tucci, Senior News Writer It doesn't take much to get Seth Ravin badmouthing big software companies. Ravin co-founded TomorrowNow, which he sold to SAP, and eventually went on to found Rimini Street Inc., an independent provider of enterprise software support services for Siebel Systems Inc., PeopleSoft Inc. and J.D. Edwards & Co. licensees. The companies share the same aim: make software last longer. Ravin's idea of software maintenance evolved from his work at PeopleSoft in the late 1990s. He was in charge of getting 4,000-plus customers through Y2K. The board authorized Ravin to quietly sell customers a Y2K package of support -- on top of their regular maintenance support -- so they could stay on their older releases. Indeed, as word of the special program spread, enthusiasm reached fever pitch. By 1999, Ravin had customers left and right willing to pay him more than regular maintenance fees, so they wouldn't have to upgrade. Not long after, he left PeopleSoft to join former colleague Andrew Nelson, who had a little consulting business, TomorrowNow. Why did you decide to add the CIO track to this year's show?
Instead of just having the vendors up there, talking about their strategies in a vacuum, when we involve the CIOs, we are able to add some reality into the mix. They are able to give feedback, saying 'You know what? That iteration of a dual-license model really wouldn't work in our case and here's why,' or 'The reason why we're not using open source applications is x, y and z, but if you solved those problems, then we would be happy to buy them.' So it made the conversation that much richer.
We are now on the cusp of the third wave and this is probably the biggest trend that'll be covered at this year's event, and that is the rise of open source applications. What's interesting about this third wave is we're no longer in the realm of successful open source projects that grow up to be enterprises, like Red Hat and Novell. Instead, what we're having is commercial entities, from the beginning, creating excellent code and choosing to release it as open source. It's just changing the way enterprises think about software and think about buying software, and I think that's a huge trend that will just continue and affect every single vendor in the world. There just won't be any vendor that can withstand the pricing and distribution pressure that open source will have going forward. I think they need to be able to address TCO. It's shocking. Forrester [Research] did a report on TCO studies and found that most enterprises don't actually have any clear idea of how much any of their software costs them. They don't have the ability to compare what open source would cost them vis-À-vis their closed source counterparts because they don't really know what their close sourced counterparts are currently costing them in terms of manpower, etc. So I think the other thing that they need to be able to intelligently discuss is personalized TCO for their enterprise, have a grip on how much it actually costs them to deploy the software they have now. The third thing would be migration costs. What would it cost to move from what they're currently on? As open source becomes more and more of an issue that the Wall Street Journal and The New York Times, etc., cover, the CIO needs to be able to answer the TCO and legal issues that surround it. [Because] the CEO is going to be reading about it all the time, going back to the CIO asking, 'Hey, I've heard about this. It looks big, JP Morgan is behind it, Putnam [Investments] is behind it, what are we doing with it and why aren't we doing more?' For more information on OSBC and this year's show, visit their Web site.
How many of you went into Office Depot?
Me, the chief of police, one of my guys and three other cops. We actually fought with looters while we were there. It was wild. It was wild. It really was. Tell us what got you there. At this point we knew there was one Internet connection working, even though it was three inches away from water -- and we had emergency power. So we had literally one outlet and one Internet cord. One hot jack. So there's that Vonage account but we don't have a soft phone. So it's like, what do you do? And we thought well, we can just go to get the routers. You just think very linearly. Very mechanically. And if I was not a believer, by the way, in Maslow's hierarchy before this, I am clearly a believer now. That concept says 'The first thing is whether or not I'm fed. If I'm still hungry, all I can think about is food. And then once I got food, then I can think about whether I'm hot or cold and all these other things.' That's the way it felt. And so the reason we looked at the Vonage thing -- we had this one Internet connection. We had a laptop with about one hour's worth of power. So we go out there and we say 'Where's the nearest retailer of Vonage equipment? Office Depot. Hey, OK, there's one on St. Charles.' And we go there. And there's all these looters in there -- and they took all the high-end stuff, the laptops and all that -- all the fun stuff. But they left all the geeky stuff. So eventually we still needed a major Cisco router, which we ended up ripping out of the back office. I hate to be dramatic, but one of those cops who was with us -- he ended up shooting himself in the head. People don't realize...but it was really Wild West down here. It really was. When you signed on with Mayor Nagin's administration in 2002, did you ever imagine this kind of scenario? Last week, he looked over at me and said, 'Did you ever think that you'd ever be doing this?' He must have said that a half dozen times. And I'm like, 'No.' I was acting mayor, for instance , for five days. Actually two stints, for five days and another four days, when he was away. So, as acting mayor, you're usually just kind of sitting back doing paperwork. This wasn't like that. It sounds terrible...I was telling my wife; she asked 'What was the first thing you had to decide for the city?' I said 'Well, I sat down and said, 'OK, guys what's the major problem today?' Problem one: corpses are clogging up the sewer and water drains. Well, who in the hell ever prepares for that? There's no degree in that. We have snipers shooting at the helicopters. What do you want to do about that? Just incredible stuff for a tech guy. A lot of your work now has to do with land lots. Is that data still available? Did you lose data? It was kind of a point of honor for us. The Web site and all the data -- actually the Web site stayed up even when the tornado went over things. We did not lose any of that data. It's just that the data is 70% irrelevant now. I can go and see the assessed value of a house is $200,000. Well, that house probably isn't worth $20,000 right now. So we've really moved more into kind of being less about the back office. We had to kind of and move away from that because it's not really relevant -- and move into pictometry and getting satellite photos and being much more about that. That's one thing -- in the midst of this tragedy you're getting a lot of things that never would have happened before. Right now, (one thing we're working on) -- and it's going to the point of one of the major things that we're going to announce here -- is Internet voting. Once again, if I told you, 'Hey, we're going to do Internet voting for real, in a real election, and you're going vote and use kiosks', you'd think I was smoking something. But I have to do that now. Because what am I going to do? Open poll stations where there's three people in an entire city block? So out of this tragedy you're getting an opportunity to do a lot of common sense things. And without that pushback of people saying 'Hey, look, the old system works. Well, no, it doesn't. It's gone. The old system is completely gone. Check out SearchCIO.com tomorrow for Day 2, where Meffert drills down into emergency IT operations. RELATED TIPS
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