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Third Parties Eager To Offer Alternative To Oracle Lifetime Support

Service competitors argue that Oracle's real goal is to move owners of PeopleSoft, J.D. Edwards, and Siebel apps to Oracle software.
"Lifetime support" for J. D. Edwards, PeopleSoft, and probably Siebel applications has a nice, reassuring ring to it, say the heads of two third-party support companies aiming to compete with Oracle. But by the end of Oracle OpenWorld last month, they said the provisions of "lifetime support" appear to them to offer their young companies a bright future.

"Enabling people to extend the life of those old releases is at direct odds with Oracle's most pressing business need—to get people off those old releases," claimed Andrew Nelson, founder and president of TomorrowNow Inc., the SAP subsidiary that supplies third-party technical support to J. D. Edwards and PeopleSoft customers. Nelson was interviewed during Oracle OpenWorld in the Palomar Hotel just around the corner from the conference where he said he faced a stream of 60 executives from prospective customers.

Oracle's lifetime support comes in three segments: Premium, Extended, and Sustaining. "'Sustaining' is very passive support," says Rimini Street Inc. President Seth Ravin, a company being organized to provide support for Siebel applications. Sustaining support doesn't supply legal, regulatory, or accounting updates or other forms of active technical support. Customers instead are given access to Oracle and PeopleSoft self-service Web sites.

When Oracle announced Lifetime support at Oracle OpenWorld, it was intended to reassure users of Seibel, PeopleSoft, and J. D. Edwards applications, although customers will pay more to keep their old applications running.

Many Siebel customers will stay with Oracle, hoping for an upgrade. But that will still "leave plenty of people who will say they would like a rebate for the reduced level of support," Ravin says.

Premium support covers the first five years of ownership of any Oracle product, Extended for the next three years, and then Sustaining for as many years as the customer chooses to continue using the software. Premium support annually costs 22% of an application's original purchase price. After that, the price of Extended support increases 10% in the first year, then 20% in the second year, and stays at that level in the final year.

For example, a support contract that costs $11,000 per year in its Premium phase would go to $12,100 in the first year of Extended, then to $13,200 in the second year, and stay at $13,200 in the final year. After eight years Sustaining support kicks in, returning the price to the Premium level, or $11,000, according to Jacqueline Woods, Oracle VP of licensing strategy.

But Sustaining support doesn't include updates that keep an application in line with tax, legal, or regulatory changes. Such changes can affect applications such as payroll or general ledger software. It also doesn't include updates, fixes, and security alerts; certification to work with new third-party products; or even certification to work with new Oracle products.

Sustaining support does include "major product and technology releases" and "pre-existing fixes for your solutions," according to an Oracle document given to Oracle OpenWorld attendees. Woods says most firms are not interested in using a 9- or 10-year-old payroll system. Customers who do will be given access to Oracle's MetaLink and Customer Connection self-service sites. And, of course, they have the right to upgrade to a new Oracle application, she says.

MetaLink is Oracle's online support service where customers are given resources for self service on technical issues. Customer Connection is the online support offered by PeopleSoft, which Oracle is continuing for PeopleSoft applications.

Both Ravin and Nelson argue that Lifetime support will prove a disappointment to application customers and they will be looking for a third-party alternative. TomorrowNow will offer its services to J. D. Edwards and PeopleSoft customers and is considering supporting Siebel applications.

Ravin says Rimini Street was founded a few months ago to support Siebel applications and doesn't yet have its data center up and running in San Mateo, Calif. He hadn't planned to start talking about third-party support for Siebel so soon, but Oracle's move to acquire Siebel brought him out into the open. He is a former partner of Nelson's at TomorrowNow and a former PeopleSoft support executive.

"It's good that Oracle came out with Lifetime support. It reassures customers. But they need to look at the details," Ravin says.

Still, some IT managers are hopeful. "We bought J. D. Edwards Enterprise One two-and-a-half years ago," recalled Jim Proctor, supervisor of application development at Alticor Inc., owner of the Amway cosmetic and household products. "We need more performance out of it. We're looking at things from the perspective that maybe Oracle can put a little more database performance into that J. D. Edwards application in the future."