Software

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.

How did you get interested in mainframes at such a young age?

I always tell people that it's not my fault. Both my parents were mainframe software developers. It's sort of in my blood. My senior year in high school, I took an independent study course from my dad to learn all the basics. Each summer during college, after graduating from high school, I had an internship with NESI. That's where I learned the majority of what I know now.
Why aren't you administering Linux and Windows boxes like most people of your generation?

When you see the power of how the mainframe can have so much control over things, you get over a little Java program that you can use to run a game or something. I felt like this was more challenging, and I could go further with this type of job. With the mainframe there's so much to learn. There are so many things going on. It's like you can play this game forever and never reach the highest level. That aspect of a mainframe career got to me, and I never looked back.
What does IBM have to do to get young people interested in mainframes?

That's definitely the question of the year. IBM has already been working to address this problem through the Academic Initiative program. We have to get past the stigma that the mainframe seems to have with the younger generation. Most people don't know the mainframe very well. My peers told me I was crazy for going into this career. IBM is trying to get schools to teach this curriculum. It is a problem being worked on, but it's one of those that can't be solved in a week or a day or a year.
How did you get involved in zNextGen?

It sort of began at Share in Boston, which was in August of 2005. They held a little get-together for younger people at a tavern, and that went so much better than people expected it to go. I got involved in it by participating in that. The next thing I knew they decided to make zNextGen a full-fledged project this year. They designated me as project manager, and I was happy to take on the job.
Tell my why zNextGen is such a good thing.

As I'm sure you're aware, there's not exactly a flood of new mainframers coming into the business. The goal isn't to get people interested in mainframes necessarily, but for those getting into the mainframe, there wasn't a community for them to speak and reach out to. We're sort of there to encourage people to come to Share, to branch out in the mainframe community, use your resources out there, build a network of friends and mentors. We sort of have this goal to be the gateway for newcomers to the mainframe.
What are some new, upcoming plans for the group?

We have plans to really work with projects to make sessions more beneficial to members. We also do have some things hopefully planned outside of the Share conference. I was just up in Poughkeepsie, [New York], for an IBM course, and we had a dinner event up there. Hopefully we'll do more of those.

Let us know what you think about the story; e-mail: Mark Fontecchio, News Writer. This article originally appeared on SearchDataCenter.com.
Kristine Harper is not your normal mainframe developer. First, she's a woman. Second, she's 23. So how did she get interested in the mainframe?

How do you pick a channel partner?

We have very specific guidelines that we follow when selecting channel partners. Those guidelines typically revolve around how quickly they can deliver, the breadth of their offering and pricing.
What do you buy and from whom?

Because of the big differential between what we spend on storage versus the rest of our IT needs, we typically look to vendors that handle the largest breadth of gear as possible. For EMC gear, for example, we work very closely with Dell. EMC has one of the largest networks of resellers and VAR [value added reseller] partners out there but we have found that we still get better service from a firm like Dell because of the fact that we buy so much other nonstorage-related equipment, servers, etc.

For smaller purchases or purchases we need in a faster delivery window, we work with a variety of local and national VARs and in many cases buy direct. In the case of software, we will, whenever possible, buy direct if the firm offers direct download. Even when a VAR can offer better pricing, the convenience of a direct download or automatic license purchase is far more important.
In your opinion, what are the advantages of working with a channel partner?

As an organization, we find that we need to be able to have established relationships with a variety of vendors and resellers to meet all of our needs. This is especially true when we are on a tight delivery timetable. A local reseller may charge a premium versus a larger national reseller or the vendor themselves, but they are able to add value and justify that price with a quicker turnaround.

The second key issue is that when we work with the larger resellers, we are able to get a lot better service because of our larger purchase volume. For example, we recently purchased an entry-level EMC SAN for a specific project, and had the scope of our project change overnight. We needed a SAN that could scale much larger and had to go with a higher end model that would scale further. EMC has a policy that once a PO [purchase order] is signed, they will not take a unit back unless it is due to a technical problem. Because of our relationship with Dell, they were more than willing to work with us, and did so in as painless a way as possible. If I was working direct or with a VAR that only handled storage or that I did not have the same dollar volume with, I am not confident we would have had the same experience.

Third, in theory, channel partners can introduce us to new products that we were otherwise unaware of, but in practice that is pretty rare in the current business climate.
What are the downsides to working with resellers?

This depends largely on the specific reseller and the way in which the manufacturer themselves has setup the reseller program. We have seen some nightmare scenarios when resellers are responsible for first tier support or sales engineering and the resellers are not equipped with the necessary technical resources to meet our needs. This is especially true when the reseller does not have the right number of specific subject matter experts and tries to utilize more generalists.

We also have a hard time with resellers that do not stock product. In the current climate, we typically make final purchasing decisions a week or two before we need the product installed in our data center. In some cases, due to project scope changes or emergency capacity upgrades, we need to be able to have a product the next day. Most resellers today, and for that matter, many vendors themselves, are not prepared to meet that kind of delivery timetable. For organizations with static needs or even static rates of change, that may be fine, but for a rapidly growing Internet-centric business it causes a lot of problems. To resolve this issue, we typically have three or four key resellers that can source any one product we use, so with a little legwork we are able to meet our timetable.
Are channel partners really independent?

Absolutely not. In my experience, channel partners are sales organizations and we treat them as such. We have had countless interactions with technology resellers that pitch either the product they have the highest margin on, or a product they need to move for internal purposes. We address this by doing as much homework as possible ahead of time and then utilize their subject-matter experts for specific implementation or integration questions.
Do you think you can get a better price working with a channel partner versus dealing with vendors directly?

My experience with pricing has been that it is directly related to the size of the manufacturer. We find that vendors with a large, diverse, mature product line, like EMC or Sun, offer their best pricing through the channel. Newer players or vendors rolling out a new product and looking for early adopters will inevitably offer better pricing and terms directly, than through their partners. With the competitive VAR landscape, there are fewer firms willing to distribute products on a loss-leader basis, but that still remains a vital strategy for vendors attempting to push a new product into the market place. Like any savvy buyer, we try to exert our pricing pressure and take advantage of such situations.
Buying storage gear from the channel needn't be as dicey as you might imagine as long as you know what to look out for. Aaron D. Sawchuk, co-founder and chief technology officer of managed services provider ColoSpace Inc., in Rockland, Mass., talked with SearchStorage.com about his experiences buying from the channel and some of the advantages this has brought him in dealing with key suppliers.

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