Oracle lawsuit not slowing support provider's momentum
- 12 January, 2011 05:19
Oracle's lawsuit against Rimini Street is not slowing the smaller company's momentum, as it logged its best-ever performance in the fourth quarter, according to an announcement Tuesday.
Rimini Street provides third-party support for Oracle and SAP applications. Oracle sued the company last January, alleging it essentially recreated the business model of TomorrowNow, a former SAP subsidiary. In November, a jury awarded Oracle a landmark US$1.3 billion judgment in a corporate-theft lawsuit the company had brought against SAP and TomorrowNow.
SAP accepted liability for illegal downloads made by TomorrowNow workers. But Rimini Street, which is led by TomorrowNow co-founder Seth Ravin, has vigorously denied any wrongdoing and filed a countersuit against Oracle.
While Oracle's case against SAP has garnered bigger headlines lately, the vendor has been going after Rimini Street with gusto.
For one, Oracle has subpoenaed about 25 of the Las Vegas company's customers, a court filing made late last year in U.S. District Court for the District of Nevada shows.
The subpoenas "seek documents concerning several subjects related to Oracle's claims, such as: how Rimini provides software and support materials to that customer, whether Rimini uses unauthorized crawlers or scrapers to obtain Oracle software for that customer, agreements between the customer and Rimini that Rimini contends in its answer authorize some or all of its conduct, customer login credentials that Rimini used to access Oracle's computer systems, and whether the customer provided Rimini with Oracle source code or installation media," according to the filing.
Oracle has also filed "sunshine act" requests with "44 public entities that may have had significant contact with Rimini," it adds.
Rimini Street investors have also been subpoenaed, according to the filing.
But those actions have appeared to have little chilling effect on Rimini Street's business, with the company logging roughly US$7 million in fourth-quarter revenue, a 37 percent increase year over year and the best quarter in the company's history, according to a statement. Still, the privately held company remains tiny in comparison to Oracle, which recorded $26.8 billion in revenue in its last fiscal year.
Rimini Street's "sales booking backlog" stood at $220 million by the end of the year, and the average contract term grew from nine to 11 years.
Rimini Street also retained more than 95 percent of its clients, and customer satisfaction rates were 99 percent, according to the announcement. It reports having more than 400 customers, including 25 members of the Fortune 500.
Plans remain for the company to deliver previously announced new services, including support for Oracle's E-Business Suite, it adds. Rimini Street is also mulling a potential IPO (initial public offering) in 2012.
Rimini Street pledges that customers will save at least 50 percent on their support bills. However, its customers do not receive all the benefits of vendor-provided support, such as product upgrades. It caters to customers with older, stable systems and little desire for new features.
Each Rimini Street client, in authorizing the company to act on its behalf, "warrants to Rimini Street that it has the rights to access Oracle's support web sites and take possession of the requested Oracle Software and Support Materials," a Rimini Street court filing states.
The materials are kept in separate data "silos" for each customer, with no commingling of downloads, it adds. "Rimini Street then maintains downloaded material only on behalf of the client for whom the download was performed."
These downloads are only done for a customer that "represents they are presently an Oracle Annual Support customer whose Oracle Annual Support period has not expired," the filing states.
But Oracle contends that Rimini Street "typically logs on to Oracle's password protected Technical Support websites using a customer credential, then downloads Software and Support Materials in excess of the customer's authorization under its license agreement," according to its complaint. "Sometimes Rimini Street will download hundreds or even thousands of Software and Support Materials at a time, relating to entire families of software (e.g., PeopleSoft, JDE, or Siebel) that the customer does not license and for which it has no use."
The Oracle suit's outcome is likely to have a significant effect on Rimini Street's business, one way or the other. The company's future would be uncertain if its current business model is found to be illegal. But if Rimini Street is exonerated, it could spur a much larger ecosystem of third-party support providers.
Software vendors undoubtedly would not want that to happen, given their heavy dependence on highly profitable support fees.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com