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Cost savings lure Oracle customers to third-party application support

Going to third-party Oracle support means saving money and possibly having customizations supported. But concerns about upgrades down the road may provide pause.

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LAS VEGAS – For Joel Gibbons, staying on Oracle Support for its PeopleSoft applications wasn’t even a real option anymore. It was either go to third-party support, or go unsupported.

Gibbons, senior team leader of IT for the Indianapolis-based National Future Farmers of America (FFA), said the value his company was getting from Oracle Support for the price just wasn’t cutting it. This was back in 2010, when the FFA was looking to cut costs in the midst of an economic downturn. Charitable donations were down and the entire organization had to tighten its belt, IT included. And aside from salaries, the annual $100,000 payment to Oracle for support and maintenance fees were the largest line item in the IT budget.

“Our last year at Oracle I think we submitted two tickets to Oracle,” he said during a session at the Collaborate Oracle users group show in Las Vegas this week. “The internal rule of thumb was that unless the system was down, we weren’t going to work with Oracle Support. It wasn’t worth the time.”

More specifically, Gibbons said it wasn’t productive to fill out a service request and chase down Oracle Support, because oftentimes they didn’t get the support they were looking for.

Upgrades a concern with third-party support
Truth be told, there are still many Oracle customers out there for whom Oracle Support is doing just fine. According to a recent reader survey, almost 60% said they were satisfied with Oracle Support services. For those disenchanted with Oracle Support, the main drivers for moving are cost savings and the ability to have customizations supported.

But going to third-party support isn’t for everyone. Being on Oracle Support means customers have access to upgrades when they come out, and that’s not the case with third-party support providers.

“My concern is whether we might want to upgrade down the road,” said one person at the session, an applications development team leader. She didn't want her name or company named used due to company policy around speaking to the media.

“We don’t want to get into an environment where we have all these customized patches,” she said. “That’s not a place we want to be either.”

We were able to get a more than 50% cost reduction, which directly saved people from losing their jobs.

Ramana Adibhatla, Rochester, N.Y. school district

Third-party support providers such as Rimini Street will work with customers to download all of the available upgrades before moving off Oracle Support – that way the customer could possibly do an upgrade down the road. But if anything new comes out after going off Oracle Support, you wouldn’t be able to upgrade to it.

Rimini Street announced today that it had tripled its bookings for Oracle application support between last year's Collaborate conference and today. It's seen bookings of $217 million for support of Oracle applications.

The applications development team leader said her company is in the beginning of a massive JD Edwards implementation, and it's reevaluating whether the company should continue to stay under Oracle Support.

“We pay them a tremendous amount in fees, and we’re looking to revalidate to see if that’s the right decision for us,” she said. “If we’re able to save money on support, then we might be able to beef up our internal support.”

Saving money could mean saving jobs
Ramana Adibhatla is another convert to third-party support. The manager of business enterprise applications at the Rochester, N.Y. school district, Adibhatla said the district was facing a 20% cut in its IT budget and had to make it happen somewhere.

Rochester was paying nearly $1 million per year in support fees to Oracle for its PeopleSoft applications, and so rather than firing employees, Adibhatla explored the idea of moving to third-party support. The city of Rochester has been using Rimini for its third-party support for about a year-and-a-half now.

“We were able to get a more than 50% cost reduction, which directly saved people from losing their jobs,” he said. “There was a real connection there.”

Because Rochester is a public organization, it had to go through a vigorous, public proposal process. It sent out RFPs to 16 companies, with Adibhatla saying only about four were really qualified to respond, and Rimini Street was the only one that met all the requirements.

According to Adibhatla, “Oracle didn’t even bother to respond.”

Some Oracle customers might be concerned about ongoing litigation between Oracle and Rimini Street. Oracle is suing Rimini Street for intellectual property theft, claiming Rimini has stolen Oracle software and support materials without authorization. Rimini denies the claims and is countersuing. The suit was filed in 2010 but has yet to go to trial.

Gibbons said his organization took that into account, but again his options were to either go third-party, or go unsupported. So if Oracle sues Rimini Street out of existence, the FFA will probably just go unsupported.

“We could survive,” he said. “It was a risk-reward decision, and for now this was the right decision.”

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