Barron’s sees emerging threat to Oracle, SAP

NEW YORK, USA: Large enterprise software companies Oracle Corp and SAP AG face a small but potentially dangerous threat from smaller companies competing in very-profitable area of maintenance, an article in Barron’s on Sunday said.

Barron’s said small start-ups, such as privately held Rimini Street, are moving in on the steady business the giants have in fixing and upgrading clients’ computing systems.

Maintenance fees account for roughly half of total revenue for Oracle and SAP, Barron’s said, adding that Oracle’s fees boast gross margins north of 90 percent.

The problem for Oracle and SAP is that Rimini charges roughly half what they do, and is a long-term threat, Barron’s said.

Rimini’s sales more than quadrupled in the first half of 2009 and the Las Vegas-based company now employs 140 people with plans to hire another 60 by year-end, Barron’s said. It added that Rimini now provides third-party maintenance and support for Siebel, PeopleSoft and JD Edwards business software, all of which were acquired by Oracle in recent years.