This is a very interesting article about TomorrowNow, the SAP subsidiary that offers users of Oracle's ERP and CRM products technical support and product maintenance for about half the price Oracle charges.
Now, they are offering support to Baan customers in Europe...
TomorrowNow Expanding Third-Party Maintenance Business
Published: November 21, 2006
by Alex Woodie, IT Jungle
These are heady times for TomorrowNow, the SAP subsidiary that offers users of Oracle's ERP and CRM products technical support and product maintenance for about half the price Oracle charges. Yesterday, the company announced its user base grew by more than 50 J.D. Edwards, PeopleSoft, and Siebel users over the summer, and now its CEO, Andrew Nelson, is considering expanding TomorrowNow's coverage into other ERP markets where consolidation has irked some users, notably Infor's growing collection of ERP products.
Things have come a long way for TomorrowNow, the company Nelson founded in 1998 to provide maintenance, technical support, and tax and regulatory updates to PeopleSoft Enterprise users that didn't want to pay full price to PeopleSoft. Following the acquisition of the PeopleSoft-J.D. Edwards company by Oracle in late 2004, TomorrowNow launched a service for J.D. Edwards and OneWorld products, and has since added Siebel CRM, which Oracle bought last year, to the list.
"Several people thought we were crazy when we launched," Nelson says. "A couple of years ago, people stopped laughing. Now with hundreds of customers, SAP's support, blue chip customers, and a proven track record, we're in different game."
That game increasingly is siphoning bigger and bigger maintenance revenue streams away from Oracle, the second largest business application maker next to SAP, and adding them to SAP's coffers. Nelson says customers are rebelling from Oracle, which typically charges its customers 22 percent of the original cost of the software per year for support and maintenance, for several reasons.
One of the most repeated motives is the aversion to "pre-pay for Fusion," Oracle's next-generation ERP architecture, which is supposed to unite Oracle's disparate ERP product line, Nelson says. "Customers are not sold that Fusion is really their solution," he says. "The market is coming to realize that analysts are saying that Fusion is going to be a reimplementation. That's the traditional barrier to entry."
With Fusion hanging like a dark cloud over Oracle and billions of dollars in maintenance dollars suddenly up in the air, third-party maintenance providers like TomorrowNow are jumping at the chance to exploit the opportunity. This has resulted in several new start-ups to compete with the likes of TomorrowNow and the other established companies in this field.
One of these is Rimini Street, which was formed earlier this year by former TomorrowNow salesman Seth Ravin, who also convinced two key TomorrowNow workers, including George and Elizabeth Lester, to join Rimini Street.
Nelson downplayed the loss of the employees, and says TomorrowNow commands 95 percent of the third-party support market. "It's flattering that they're after our folks," he says. "This is a serious business and while we're pleased to see others get into the market, we're seeing customer short-listing to Oracle and TomorrowNow. We think we're the only two."
The personnel losses were softened somewhat by the addition of former Oracle employee Mel Gadd, who is TomorrowNow's new vice president of quality. Gadd has 26 years of experience in the PeopleSoft-Oracle business, and was instrumental in turning around the quality of PeopleSoft Enterprise between version 5 and 7, Nelson says. "While the company's growth rate has been incredible, our customer response times have remained the same--about eight minutes. Mel will be in charge of making sure we maintain that high level of service while we recruit more members to our team to help customers around the world," Nelson says.
Yesterday TomorrowNow announced it picked up more than 50 customers during the third quarter, which ended September 30, including 47 new customers and several renewals. "It was a fantastic quarter for us," Nelson says. "We closed over 50 deals in Q3, which is typically the slowest season of the year." While TomorrowNow is owned by a publicly traded company, hard revenue figures for the 150-person TomorrowNow operation are not available because SAP does not list them separately.
PeopleSoft Enterprise customers continue to dominate TomorrowNow's business and account for 60 percent of its customers. J.D. Edwards OneWorld and World customers account for about 30 percent of its business, while Siebel accounts for the remaining 10 percent, but is growing fast, Nelson says. Additionally, TomorrowNow's reach is becoming global, as the company offers support in about a dozen languages, and supports at least one JDE customer in 35 countries, at least one PeopleSoft customer in 37 countries, and at least one Siebel customer in 10 countries.
TomorrowNow is considering launching another third-party maintenance service for users of the Baan ERP product located in Europe, Nelson says. While the initial roll-out will target the large Baan installed base in Europe, it isn't entirely ignoring the 800 or so Baan users in the U.S. "It wouldn't shock me if we expand our services to include Baan" in the U.S., Nelson says. "We've built this global infrastructure that allows us to plug in new ERP solutions much faster."
TomorrowNow has received requests from users of other Infor products and is considering them, Nelson says. "The M&A activity is turning a lot of this software into legacy software with an uncertain future, so people should not be surprised" if TomorrowNow offers a maintenance solution for them. "But we don't want to move too fast. We want to make sure we can support them and be profitable."