Kurt Moydell, SVP of Spinnaker Support, was recently interviewed by TechCompanyNews. Here is an excerpt or you can read the full interview here.
Q: Kurt, can you give us more insight into the third-party SAP and Oracle Support model?
A: For years, organizations that run Oracle and SAP have searched for an alternative application support model that improves service quality, reduces maintenance fees, and allows users to remain on their current software version until they’re ready to upgrade or migrate to something else.
Oracle and SAP have increasingly developed a self-support model, pushing their customers to use online sites to diagnose and resolve their own issues. Yet, maintenance fees are still on the rise. Support revenues yield about 90% gross margin for the mega-vendors, which is largely being used to innovate cloud applications. The forced march to immature offerings, and the relicensing fees assessed in such change, is a key driver behind consideration and adoption of third-party support. Our business is growing at a rapid pace (more than 40% per year). Gartner, the leading authority on the third-party support market, estimates that up to 10% of enterprises with more than $1 billion in revenue will leverage a third-party for their on-premises ERP technical maintenance and support by 2020. It’s a high-demand driven market to say the least.
Q: What type of enterprises are adopting third-party SAP and Oracle support?
A: We are signing companies of all sizes, mostly Fortune 500 and mid-market. These enterprises span the gamut of industries from private to public sector. Active clients are segmented as follows: manufacturing (57%), services (23%), consumer and retail (12%), and public sector (8%). Our geographic reach is steadily expanding. North America remains our largest market but Europe and Asia-Pacific are growing fast. This year we formally launched into Korea, Russia, and the Middle East. We hold a leadership position in these emerging markets and are anticipating significant on-going growth.
Q: Why do companies switch to third-party support?