For more than 15 years, Rimini Street has continually set the bar for what SAP licensees should expect from their support experience. Guided by a client-focused, outcome-based approach, Rimini Street clients are able to save money on SAP support and maintenance while focusing funds on strategic initiatives.
Hari Candadai GVP, Global Thought Leadership and Research at Rimini Street, is a chief evangelist for independent support with decades of IT management and consulting experience under his belt.
In this conversation, Rimini Street Senior Product Marketing Director Scott Hays chats with Hari about the role of third-party support for SAP in driving innovation; where S/4HANA fits in; considerations for choosing an independent, third-party SAP support provider; and how Rimini Street helps clients face SAP challenges.
Scott Hays: What aspect of a client’s journey with Rimini Street truly excites you?
Hari Candadai: Empowering innovation.
I’m excited about Rimini Street empowering client CIOs to be change agents in transforming their organizations. They are not only helping their companies survive through the crisis but also helping them emerge stronger for the next normal. Rimini Street independent, third-party support for SAP gives them the ability to take control of their roadmap and avoid unnecessary upgrades and excessive support and maintenance fees. As a result, they can focus budget and resources on digital transformation and innovation projects that impact the bottom line and earn them a seat at the executive table. In my opinion, there’s never been a better time to be a CIO!
SH: What are Rimini Street clients doing to drive innovation and what role does their SAP systems play?
HC: Freeing funds from support and maintenance fees for stable SAP systems funds transformation.
Rimini Street clients are maximizing the value of their current stable and mature SAP software investments without forced upgrades, migrations, or enhancements—which consume time, drain budgets, and create business disruption. Rimini Street clients have saved more than $5 billion in total ERP software maintenance costs, and they’ve used the liberated funds to reinvest in the future. Many Rimini Street clients are adopting hybrid IT strategies to innovate around their core SAP system with best-in-class technologies that can drive transformation faster.
Rather than waiting for S/4HANA to finally fit their business cases, Rimini Street clients can take the savings from independent, third-party SAP software support and redirect that budget to transformation projects aligned with today’s most important business priorities. Doing so can create a higher ROI for existing SAP systems while accelerating adoption of transformative technology initiatives, such as IoT, AI, and machine learning.
SH: How are Rimini Street SAP clients approaching S/4HANA?
HC: Clients are approaching S/4HANA with caution.
Migration to S/4HANA is not an ordinary upgrade. It’s an all-new implementation of the enterprise platform and database. According to a report from analyst firm Valoir, the estimated price tag for licensees currently spending $1 million for annual SAP support and maintenance fees could find S/4HANA migration and operation costs run up to $30 million. The S/4HANA implementation price tag alone represents a major expense, not to mention managing the disruption of a major migration and implementation.
The report explains that migration to S/4HANA now is “not just a significant undertaking, but a bet on SAP’s delivery of the evolving S/4HANA roadmap.” It is no small decision because S/4HANA is still relatively new and does not appear to have the breadth of capabilities of the existing SAP system. Valoir’s report also notes the limited availability of S/4HANA-skilled services and resources as a concern for CIOs.
Rimini Street clients have the freedom to run their core SAP ECC systems without the pressure of the impending end of mainstream support for ECC or being forced to migrate to S/4HANA now simply to maintain full support. As S/4HANA matures and a business case emerges, clients can make their own decisions on when to make the transition. In the meantime, they can still drive SAP innovation, establish a competitive advantage, and generate growth by using Rimini Street independent, third-party support for SAP to reduce maintenance costs and free resources to work on strategic initiatives.
SH: What do you see as the major hurdles standing in the way of transformation?
HC: The biggest transformation challenge is the budget.
CIOs are typically spending as much as 90% of their IT budget on ongoing operations and enhancements. That leaves just 10% of the budget to allocate to investments in new technologies and innovations that support competitive advantage and growth. This budget model is not sustainable.
Every line item of the budget must be reviewed and must be prioritized. If it doesn’t increase revenue, decrease costs, or gain market share, don’t waste resources on it. Be prepared to push back on vendors promising an instant elixir for pandemic-induced woes that may relieve a short-term hurt but cause long-term pain.
Another major barrier to transformation is having your best and brightest people tied up in back-office projects such as an ERP refresh or wasting their time and talent maintaining existing systems to compensate for inefficient and limited vendor support models.
SH: A recent Gartner report calls third-party support a safe haven for companies. Based on your experience with Rimini Street clients, how is third-party support viewed as a safe haven?
HC: Third-party support gives IT leaders more control.
An increasing number of organizations believe they are not receiving a fair value in return for their annual support and maintenance fees. With today’s more than 90% profit margin on support operations1, software vendors pocket $10 for every dollar they spend on actual support and maintenance. Customers are coming to the conclusion that the software vendor support model is at best dated—and at worst, obsolete and seemingly unfair.
Rimini Street clients enjoy more control over their SAP roadmap and strategy without the pressure of impending support deadlines, such as SAP’s 2027 end date for mainstream maintenance for Business Suite. They don’t have to upgrade or migrate to a new platform or version simply because mainstream support is ending. Rimini Street is a safe haven for SAP and Oracle licensees who want to follow their own business-driven roadmaps based on a solid business case and ROI, not vendor-dictated mandates. Rimini Street helps them dramatically cut SAP support and maintenance costs while saving up to 90% on their total support costs, improving support quality, and funding strategic initiatives that drive revenue and growth.
SH: What questions should licensees ask when assessing third-party support?
To ensure you select the strategic partner of your choice, ask both your vendor and potential third-party support providers these questions to evaluate who offers the highest quality of service for the best price:
- Cost: “How much savings should we expect during the course of our existing vendor maintenance contract? How much will we save by switching to your third-party support model?” Ask for client ROI case studies.
- Features: “What do the service packages cover and what types of support will incur surcharges? Is performance-tuning support provided at no additional cost? Is interoperability support provided at no additional cost?”
- Security: “Is vendor-neutral security guidance provided at no additional cost? Does your security support extend beyond following and responding to vendor patches and announced vulnerabilities? How will we stay ahead of the curve in security?”
- SLAs: “What is your guaranteed response time for P1/Critical issues? What is the SLA for that 24/7/365 across time zones? What is the average time for a senior engineer to begin working an urgent issue?”
- Compliance: “Will we receive timely tax, legal, and regulatory updates? Do you have a dedicated team of experts to ensure we remain compliant?”
- Staffing: “What is the total number of full-time support engineers (not subcontractors or outsourced resources) available to support our application?”
SH: And how do you recommend that SAP licensees use the third-party support model to develop their ERP roadmaps?
HC: First and foremost, maximize the life and value of your core and stable SAP ECC system as the foundation of your roadmap. Keep it running smoothly and in compliance for as long as it continues to meet your business needs. Don’t migrate to S/4HANA now if there is no business case or ROI. Give that product time to mature and a business case to emerge.
In the meantime, leverage independent, third-party support from Rimini Street to dramatically cut your support and maintenance costs and receive relevant, responsive, and strategic services so you can continue to innovate and grow around your core ECC system. Gain the flexibility to continually evaluate and develop your roadmap based on your business needs and ROI, whether it is S/4HANA…or other next-generation platform of your choice.
Learn more about Rimini Street third-party support for SAP ERP.
1 Gartner, Inc. “IT Key Metrics Data 2021 — Executive Summary,”18 December 2020