The ascendancy of cloud, particularly as its use has spread from ‘satellite’ applications into the core, has some important implications for the future of enterprise support. Andrew Powell, APAC managing director, Rimini Street spoke to Freya Purnell about what these trends mean for the company.
While cloud solutions have undoubtedly brought benefits to the way enterprises approach their IT landscapes, the hype around cloud has created some market dynamics that are disconnected from the interests of customers, according to Powell.
“One element of cloud that can’t be ignored is that if you’re building an IT company and it has a cloud element to it, you’re going to get a better valuation on the stock exchange. So the vendors are gravitating towards cloud because it’s going to be seen as favourable by analysts who value organisations,” said Powell.
“The other consequence of this trend is that it’s become very, very clear that the vendors are not investing in on-premise [solutions]. That opens up the whole conversation of whether that’s again meeting the needs of companies or not, because the vast majority of any medium and large organisation’s application footprint is currently still planted firmly on the ground.”
If customers don’t wish to go down the cloud route for certain aspects of their solution landscape, then they are left with a conundrum about what to do with their core systems, especially as vendors begin to reduce or eliminate support for older on-premise systems.
“What the customer base really wants, what the users really want, is they want speed, and they want value at an acceptable risk,” said Powell.
While they might be more interested in using cloud to innovate in other areas, often there’s no compelling business case for a wholesale move to cloud – particularly when it means undergoing a reimplementation simply to get virtually the same system customers already have, and losing their perpetual license rights in the process.
“Effectively what the reality I believe for the next five to 10 years is hybrid, where you are still going to have a fairly substantial core [on-premise]. Certain pieces will slice off, and yes, you will innovate around the edges. Some of this innovation will be cloud, and some of it won’t be cloud,” Powell said.
Looking across the region, Australia has been a strong adopter of cloud technologies compared with other countries in Asia, which Powell believes has been partly driven by the cost of labour here.
“I think we’ve been forced to do things quicker than other countries, and that’s often been to our detriment. If you look at the early adopters of virtually any technology, a lot of it has under-delivered and it has cost a lot more than expected. [Australians] are at the bleeding edge of technology too much, whereas the mentalities as you move up though Asia are a little more conservative and sceptical,” he said. “As you go further north, conversations of cloud diminish greatly.”
Japan, for example, is pursuing a lot of open source, on-premise development, so they can have more control over their licensing.
So what does this mean for enterprise support providers such as Rimini Street? Confusion around the roadmap and the need for certainty around supporting existing environments is providing additional impetus for their services, according to Powell. SAP, for instance, has so far committed to support SAP Business Suite 7 with mainstream maintenance only until the end of 2025.
“People are looking at all this, and they’re thinking 2025 is not that far away. If you’re a larger organisation, you’re going to have to start doing something in 2022. What we’re offering customers is a 15-year period where they can continue to run their own system for as long as it makes sense for them without any forced upgrades, and to let the next version play out,” said Powell.
Cost, how much IT management can squeeze out of limited budgets, and perhaps more importantly, the question of value, also come up as common factors for customers who are choosing to switch to third-party support.
“It’s the same story everywhere. If they can lower that total cost of ownership, they could use that money for better shareholder value. The problem with maintenance is that it’s quite material. If it was a small amount of money, people wouldn’t worry about it, but because it’s such a big piece of budget, it actually can have a material impact on spending patterns,” Powell said.
These factors have helped Rimini Street achieve compound growth of 30-plus per cent over the last year, with 42 new customers added in the APAC and Middle East regions in 2015. Some of these customers include China’s ChemChina, Japan’s Orix and Pioneer Corporation, and Indonesia’s XL Axiata, which is the country’s second largest SAP site.
Recognising that companies also often have multiple databases in use, Rimini Street has recently added support for SAP HANA to its offering, and expects that this will add more opportunities across the region.