May 17, 2018

May 17, 2018 | Karen Blazek | Director, Product Marketing

Merichem Company is a recognized global enterprise serving the oil and gas industries with focused technology, chemical, and service solutions. Headquartered in Houston, Texas, their relationship with the oil refining industry dates back to 1945.

Merichem runs Oracle E-Business Suite (EBS) applications and completed their latest upgrade to R12.1.3 in 2012. Since then, their EBS environment has become highly productive and stable, and Merichem sees no business value in the incremental updates rolled out by Oracle. Rather than continuing to pay high maintenance fees for a diminishing level of support, Merichem replaced Oracle-provided support with Spinnaker Support in May 2016.

Why Merichem Made the Move to Third-Party Support

Due to falling oil prices, Merichem senior management was forced to implement a cost reduction program. The business placed constraints on the IT organization to immediately and drastically reduce the overall IT spend. Comprising more than half of total IT spend, EBS application maintenance was identified as a primary cost savings opportunity for Merichem.

Merichem engaged Oracle to discuss the matter. Oracle was unwilling to negotiate a lower cost contract and offered no concessions for unused software licenses and shelfware. Merichem expressed deep dissatisfaction with Oracle’s support regarding the lengthy process of logging tickets, lack of fast response or adequate issue resolution, and the lack of ownership for critical, severity one issues. Rather than step up, Oracle pushed for an upgrade, but Merichem saw limited to zero future return-on-investment based on Oracle’s EBS roadmap.

The business environment challenges were not easing, and it was time to right-size the EBS support predicament. In 2016 at the Collaborate conference (Oracle user conference), Merichem had their initial discussions with the two leading third-party Oracle support providers.

Why Merichem Chose Spinnaker Support

Merichem identified four primary criteria for selecting a third-party EBS support provider: (1) Cost, (2) Risk Profile, (3) Timing, and (4) Intangibles.

Cost

Spinnaker Support delivered the lowest cost option for Merichem, providing an immediate 55% reduction in maintenance fees. Spinnaker Support remains the only third-party support provider to give concessions for unused licenses and shelfware – which contributed to the lower pricing level.

Risk Profile

Like many companies, Merichem is risk-adverse. Selecting the right business partner to maintain mission-critical enterprise applications was imperative and several risk factors were considered. Merichem went through an exhaustive legal review of the third-party support contenders and learned of the longstanding litigation battle between Oracle and Spinnaker Support’s main competitor. Spinnaker Support has maintained a clean track record, always delivering support while respecting the intellectual property rights of others. Merichem also found that Spinnaker Support ran a healthier business from a financial perspective; growing the top line rapidly while maintaining a strong balance sheet. Finally, from a risk profile standpoint, Spinnaker Support’s customer references expressed high satisfaction regarding the delivery of EBS support and found the service provider very easy and flexible with which to work.

Timing

Merichem found themselves on a tight deadline for switching away from Oracle support. Spinnaker Support was able to successfully archive all legally-entitled updates and files for future availability based on Merichem’s list of licensed products in less than 30 days.

Intangibles

Merichem examined some intangibles and once again gave Spinnaker Support the nod. Merichem appreciated Spinnaker Support’s consultative sales approach, designed to understand the unique business and IT objectives and challenges. The comprehensive pricing model that aligned support fees with actual software usage drove more cost savings. Finally, Merichem felt they might benefit in the future from Spinnaker Support’s unique blend of services including managed services and consulting.

For more details, read the Merichem case study.

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