Rimini Street CEO Seth Ravin Talks Innovation Strategy on CNBC’s Squawk Box
Video summary
Speaking on CNBC’s Squawk Box, Rimini Street CEO Seth Ravin shared why organizations need a pragmatic AI modernization approach to avoid surprise costs, vendor lock-in and delays in time to market. Ravin challenged the notion that AI will replace the core systems that run businesses, governments and critical infrastructure, explaining instead how organizations can accelerate innovation by deploying AI over existing enterprise systems. He advocated a practical approach to AI adoption: fix processes and automate workflows, then selectively apply AI. “It’s not AI first, it’s AI last,” he noted, emphasizing that every technology investment should lower operating costs, improve profitability or strengthen competitive advantage.
Video transcript
00:00: Bringing in Seth Ravin now, CEO of software company Rimini Street. Seth, welcome to the program. Great to see you. IBM, as we reported, taken out to the woodshed earlier this week. Was that an overreaction or is that telling us that AI agents and native products do present an existential risk for businesses like yours?
00:30: Well, I think that we’ve seen that these prices are awfully high relative to the value of the companies. And I think we’re watching some adjustment. I think the biggest problem we’re watching is nobody understands what customers are going to be paying these companies for five years from now, and that is driving the downward pressure in the in the stock itself.
00:55: And we’re watching that across all the older traditional names. We did this before we called them legacy companies, but you’re really watching it across the big companies.
01:06: So, we are seeing an evolution, a shakeout, an adjustment. How would you characterize demand and, importantly, the enterprise pipeline for Rimini heading into 2027? And is there any evidence to tell us that software spending is being disrupted from your perspective in your business by AI?
01:24: Well, I think overall IT spending will go up. I think that what we’re spending on is changing. This is a very disrupted time. Some of the over-rotation away from SaaS or traditional stocks, I think, is an over-rotation because of the fact that people think that somehow AI is going to replace all this software in a short period of time; it’s just not going to happen.
01:51: We’re running banks. We’re running military. You have to have very clear code. It takes a while to get through that — thousands of processes. And I think investors are just running scared right now because they don’t understand all of this.
02:07: Can you define what you meant, Seth, when you said that ERP, enterprise resource planning software, is dead, because that is your core platform product, isn’t it? So, what, then, does that mean in this AI Era? And how is Rimini Street reconfiguring to meet that competitive competition?
02:27: Well, what we’re saying is that the software is dead because the tools that we are going to use to run businesses and government agencies is going to change. We’re changing to an AI-based technology, but we still have to do the same processes.
02:45: We still have to pay people. We build things, we invoice customers. The AI technology that we are proposing goes over the top of the existing systems, does not replace them. And that drives down a lot of demand for changing out these systems. The big SIs that you’re talking about make money by changing out the systems. We are not seeing that happen. We are now able to put technology right over the top of it.
03:14: Is it concerning for you when Sam Altman says OpenAI is increasingly going to focus on enterprise growth? Isn’t there a risk that they’re going to end up stealing your lunch?
03:28: Well, imagine what it takes to develop thousands of processes that run a business.
03:34: OpenAI is doing some amazing things, and they can come up with small, simple packages. But you are not going to replace thousands of core systems and processes that run big enterprises. That will take years. It takes decades to come up with these processes, have them certified, especially if you’re doing regulated businesses or military.
03:57: So, no, I don’t worry about that. I think it’s going to add to the choices that customers will have over time.
04:05: Seth, thanks. Sheri has a question.
04:07: Yeah. Down the road — say, three years from now, Seth — what percentage of your revenue do you think will come from the legacy business, the traditional business or/and versus AI-driven business? We’re talking about, of course, innovation services that you are thinking about pivoting to?
04:29: Well, we run these systems. We support these big, which you would call legacy systems, that run these enterprises, thousands of them globally. That is a core amount of revenue for us. But we expect that we will see a very significant amount coming from the the innovation from the AI that we put across the top that solves the business issues without ripping and replacing these core systems.
04:57: And that is a different strategy that companies are embracing versus the traditional upgrades, migrations, huge costs that don’t make sense in the age and era of AI.
05:13: You know, I think the market is really punishing companies like Oracle in the stock markets right now. But what if the vendors, like Oracle or SAP, they use AI to their benefit to really justify higher cost and really tighter lock-ups or lock-ins of the customers — really trying to get to retain their customers from going to you, Seth, and Rimini Street for upgrades.
05:44: Are you seeing any of that happening right now, or are you seeing any of the customers delaying perhaps upgrading with Rimini Street?
05:55: Well, we’re not upgrading. We’re putting AI over the top and we are seeing strong, strong customer demand. I think SAP has different challenges. I think that their product is 15 to 20 years old in technology that they’re trying to sell as new.
06:13: The biggest companies in the world that use their products are looking at this saying, “We don’t see the value, in many cases, to make the move and migration.” And instead, we’re taking them down a different path. We’re bringing them innovation under their existing budgets because we’re stopping upgrades, migrations that are no longer needed.
06:34: And they’re in a very difficult spot. They’re trying to figure out how to get customers to move forward to something that we believe is completely outdated platform.
06:46: What about Agentic AI? Does that move the needle? And I know that you’re talking about the timeline and how long it’s going to take, and it’s not going to be happening next year or next month. I get that. But you know, the conversation now is that these AI models are upgrading themselves basically. So, do you get ready for a major rethinking of your business because of Agentic AI-related conversations?
07:14: Well, we are installing Agentic AI in big business processes, and that’s very different than what you’ve seen before — where a lot of companies are going in, and they’re going in, and they are trying to replace these systems. So, I think we’re in a different place now. We’re actually deploying — we’re solving business issues with AI.
07:36: So that’s happening. But we’re coming in and telling customers, “Look, solve your business process first. Fix your process, automate your process and only then selectively use AI, because AI can be an expense. And if you went around and put AI into all these different areas of your business, you might wind up increasing your operating costs.”
07:59: Companies need to do three things: lower their total cost of operations, improve profitability and drive enhanced competitive advantage. If a project does not do one of those, at least, you should not be doing that project.
08:15: Seth, you chaps have a massive global footprint, and you’re active in this part of the world. Where does the risk/reward opportunity lie? Is it in India with an emerging AI opportunity? And we’ve been seeing how the IT services sector there — Wipro is a case in point — have been struggling somewhat to meet this competitive challenge. Or is it China where we’re seeing this massive state-mandated push to develop an AI economy?
08:43: Well, I think you’re watching these billion-dollar big AI projects — big digital transformation projects — aren’t happening. That’s why you’re watching these stocks drop from the big SIs. But at the same time, I come to this part of the world because we have so much opportunity between Malaysia and Indonesia.
09:04: We have labor force, we have people, which is very different than Japan, China and Korea, where we’re watching labor disappear, and they’re going to have to automate, or they will not have enough people to run their business. Here, it’s a matter of getting the workforce trained. So we committed we’re putting a thousand engineers in Kuala Lumpur.
09:26: We’re expanding throughout the region because we’re very excited by the workforce, the ability to build a digital hub in this part of the world.
09:36: Are you as excited about the demographic opportunity and top tech talent in India, and how would you characterize the risk/reward there?
09:45: Well, we have nearly a thousand people in India, but we find it to be very competitive now, right? The world is changing in India. They can no longer send as many people to the United States to work because of visa challenges. And so, you’re watching them have to do more remote work, which is different than they’ve done in the past of putting people on-site. It’s changing their business model. We have always been 100% remote.
10:11: And so for us, it’s a very, very easy transition. We can service customers anywhere in the world from our Command Centers. So, I think you’re going to watch a lot of changes, and AI is going to change business, but we’re doing it in a more thoughtful way. It’s not AI first, it’s AI last — after you do other facts and fix your business.
10:33: Thanks for that, Seth. At a top-down level, your own guidance — and just correct me here — it’s calling for 4 to 6% growth this year, even with new AI products in the pipeline. When does the value proposition of layering AI on top of what you already do really start moving the needle for you?
10:56: Oh, I think in 27 we’re going to see a lot more of that work. In 26, you’re helping companies really understand how to use their current technology, how to add new technology, not replace their existing. And then you’re going to see something take off, I believe extensively, in 27, because companies need to learn how to use the technology. And the same is true in governments.
11:22: So we must be thoughtful. There’s a reason why we’re watching companies get their bills from all these tokens, and they’re suddenly realizing, this AI costs money, and that is changing the dynamic. We’re now we’re saying, okay, it’s time to mature. Let’s think about governance. Let’s think about how we’re spending on AI.
11:44: It is not a free-for-all. Too many failed projects from that.
11:48: Two questions, Seth: how would you describe the Rimini Street value proposition when it comes to cybersecurity services for your clients? And what is it that the Street is missing about the entire SaaS story and moving towards an AI era?
12:05: Well, I think what they’re missing on the SaaS story is they’re just running scared. Investors don’t understand, again, what are companies going to be paying these big software firms for in five years? They think maybe people will write their own software. They’re thinking that people will buy less from them.
12:25: That will affect their maintenance, that will affect what they’re buying and license, and they just don’t understand with all the turbulence in the market. And that’s why we’re watching those prices drop.
12:38: Seth, it’s great to have you join us. Thanks for coming in, and I hope you have a great trip here in Asia. Seth Ravin from Rimini Street joining us live from our SGX studio.
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