And then you end up with things like Teams or Slacks which needs a tool like Things and Notes to keep track of things discussed/agreed. I find Teams and Slacks flaky and hard to search
Fully loaded costs (health benefits, 401k matching, cost of computer, HR business partners, etc.) for an employee are roughly 2x what their salary is. So yeah, 200k is a good estimate.
That's still very high. Average salary is much lower than $100k in the US. Even among college grads with 10+ years of experience, $100k is still a high-end job paying a high-end salary. It's nowhere near the average.
In London, I'd guess the median salary for most enterprises is around £30-40K. National insurance, a desk, and a few other benefits are probably £20K on top of that.
The fully loaded cost of an employee for a business is not the employee's salary.
"The fully-loaded costs of employees are much higher than their salary: exactly how much higher depends on your locality’s laws, your benefits package, and a bunch of other HR administrivia, but a reasonable guesstimate is between 150% and 200% of their salary." -https://www.kalzumeus.com/2012/01/23/salary-negotiation/
I don't know much about jobs outside of tech, but I know most of them at the entry level to a few years of experience in accounting, finance, real estate, etc. do not pay much over $60k (if that) and pretty much all of those jobs are going to use things like Salesforce or other expensive SAAS tools and software.
Salesforce "Enterprise" is $1800/user/year [0], and presumably large enterprises are negotiating better rates than the published ones. Every single employee would need to be using five and a half packages like this at full list price to hit $10k/year.
In Sales you would have SFDC plus some kind of enablement tool like Salesloft/Outreach plus a prospecting tool like Sales Navigator or DiscoverOrg plus enterprise Gmail plus a communication tool like Zoom; and then there's the analytics stuff, the HR/finance parts, etc...10k is probably way too high an estimate but 5k is believable for a B2B startup with a scaling sales team.
I won't quibble too much with the precision of the $10k number, which will vary widely.
But it's pretty obvious that a basic "customer support" combo like Office 365 + Okta + Zendesk + Intercom + Slack + Zenefits starts to add up to a meaningful percentage of the employee's take-home compensation. (Remember these are positions where $20/hr is a good rate.) And remember, the comparison figure for managers over 50 is roughly $0, which approximates the spend on these functions as far back ago as 2008.
Valve is, by all accounts, a toxic cesspit that's ruled by various influential cabals. They still have a hierarchy, they just aren't explicit about it.
At least for Medium, "Holacracy" pretty much imploded. Zsppos switched from it to an internal marketplace - which is, oddly, controlled by excecutives.
Flat organizations beyond a certain size either move away from flatness officially, create unacknowledged hierarchy, or fail. I'm really not aware of a single large-scale example that still works.
This is much different for small orgs - there's something about org size that requires some sort of centralization. (I think it's communications overhead + complexity exceeding the limit of what a single person can keep in their mind. I'm not 100% convinced, but these are the pressure points I usually see)
The video game sector is unstable and toxic. IMO, Valve compares favorably to other video game companies as for one thing it’s still in business.
Flat organizations are unusual, but survive about as well as other similar organizations. The difference is when a giant reorganization/buyout etc hits, they more obviously change into something else.
Has Valve done anything noteworthy in the last 10 years besides milking the Steam store? Their half-baked console seemed like an attempt to do more of the former.
I know you are trying to be snarky but Valve has accomplished a hell of a lot more than most startups ever will. They are far from perfect (hell, they’re known for bugs and their famously poor timelines, and I heard their game Artifact was not good,) but it’s pretty bizarre to suggest they do nothing. Maintaining Steam alone is huge. It’s hard to find a platform with more vigorous fanboys for good reason.
But that all aside... I mean they have a new Half Life game on the near term horizon (later this month apparently) and they have done a ton of work on VR and Linux support.
Summary: the game was brilliant ("uniquely amazing") if you were really good at it but was essentially impossible to get into, and its economy was badly constructed.
Yes, it is. Keeping Steam growing and well-liked is an achievement in itself. They never really stood still with it.
Steam certainly challenged the status quo when it was released, and several times in its life.
Hell, who else is working on Linux gaming right now? They were relatively early on game streaming, VR. Steam Workshop? How cool is it that a large amount of one of their flagship games, Team Fortress 2, not only integrated a lot of third party content, but also paid creators back? How cool is it that many games like Counter Strike began as Half Life mods?
I don’t really use Steam much anymore, so it’s not that I’m personally attached much, but I will admit to being pretty impressed.
Is this sarcasm? Steam has been the only consistent video game Cloud SAAS in the past 10 years.Can you name one time that the service was down without warning/proper recourse, had a data breach, exceeded SLAs, etc?
Also, valve's ther ventures are....massively successful. The microtransaction model in gaming originated with Valve, and now the entire mobile and freemium gaming markets use that business model.
So in this case...I would say yes, everything valve has done as a company trying to make money in the last 10 years is par for other successful SAAS platforms.
The title of this thread is "Companies fret as costs soar for software subscriptions", and this comment thread delved into cloud SAAS providers with a flat org structure.
Steam/valve was brought up because they have a successful cloud SASS model with no subscriptions oand a flat org structure.
Xbox live has a subscription fee since day 1, is maintained by MS (the definition of "non-flat organizational structure"), and is vendor locked. Not even remotely comparable.
Hard to find for sure. There was a time though when we didn't pay CEO's & professional managers 500x as much as the lowest paid employee. When we did that we still managed to go to the moon, split the atom, develop computers, create antibiotics, and lots of other neat things.
Do you have evidence for your assertion? Of what significance is the ratio of highest to lowest paid employee? Shareholders of a particular company pay CEOs, not whoever "we" is.
Producing more value than you are compensated for ... hmmm what does that sound like? You could say it sounds like the human condition. Which employees in the pyramid do you think have the worst scalar here?
This may be true for CEO’s turning dysfunctional companies around on personal authority, but I find it hard to believe for companies that are already running perfectly well.
I have yet to encounter a manager who motivates me to get up and find a way to eat that day.
Just because they are there doesn’t mean the achievements are due to them.
There have been a number of attempts, tens of millions of dollars spent on one study alone, trying to quantify what technologies and people generate value.
The meta-conclusion considering all the studies I know of (traveling and not looking them up), is the math becomes so Byzantine it’s a pointless measure and we should just stick with ideology to avoid blowing up society in people’s minds (an idea that was peddled for thousands of years already, reaffirmed by math, glad we spent the time on it.)
Just because we’ve emotionally conditioned ourselves to engage our mechanical agency towards these ends does not imply it’s because of management.
Hm. Allocating credit for achievements is a tricky thing.
Management is necessary to allocate resources (including labor) efficiently at scale, but it comes with overhead.
As such, at smaller companies, startups, small businesses, the overhead of management can be outsized, the pain felt acutely when compared relatively to the actual output of ICs and such.
At larger companies, the massive cadre of management which is necessary to keep the machine running is also very obvious, as the overhead of a large organization is very large, even if the management itself is excellent and highly efficient.
As such... How does one allocate credit? An analogy would be like financing or investment. Necessary. A filtering mechanism. Sometimes helpful in an advisory mechanism. But are they the ones creating output? No. But do they deserve some credit? If something cannot be done without it, then they must deserve SOME credit, it's just a question of how much.
Why does society have to optimize at scale for assigning credit to a minority? If anything the studies show value is emotionally subjective.
A healthy society takes a village. IMO there’s plenty of literal history to show isolating a minority from the demands the rest of us face is ripe for abuse at scale.
One person did not invent languages, lay down the highways and invent computers.
All the people we hold up relied not just on the historical invention to push them forward but society giving them space and not killing them. Every individual inventor is outnumbered.
IMO that space to be and do is what we should optimize for. Not a tether to tradition of emotionally wanking off a handful over what is ultimately a linguistic twist on an idea that was discovered/defined collectively
“without” is the wrong word: you need managers but they need to have incentives which align with the actual business and accountability. Most companies have problems with at least one of the two, which is a loss but usually indirect enough that it's easy to excuse or deflect.
You mean the companies where executives use extensive corporate speak and pull deadlines out of their asses, without checking in with the experts on the ground, triggering office heroics down in the trenches. We'll do it - we all get rent to pay.
Yeah, you can fake through it more than half of the time, comfortably. Just be eloquent, tall, and loud.
>Then what happens is somebody making $100+/hour would spend several hours to do the job that would be covered by a tool that costs under $50/month.
Sure, but then there's the slightly more complicated economic calculus: do we build our own tooling now, for a significant up front cost, or do we buy the SaaS which we might use essentially forever for an unknown future TCO?
Nothing complicated about it. You start with SaaS, validate it's a good tool to have/actually used, evaluate monthly costs vs opportunity costs, build your own when/if it makes sense.
The slightly more complicated question is "do we invest in optimizing SaaS costs/utilization? Or use those resources to start building our own?". But even for this question the right answer is usually fairly obvious.
It is complicated at scale and over time though. Look at Saas infrastructure: How you do it as you grow constantly changes the results of any evaluation.
If it was so easy, why are the companies in the article "fretting"? Because putting values on "good", "opportunity" and "makes sense" (not even counting the fact you have no control over the SaaS raising prices or going out of business in the future) is harder than we can spend $400/month or $50/month.
How often do you build in house tooling or applications that have no ongoing operating commitments?
It's upfront capital investment plus generally unpredictable maintenance vs. More predictable but maybe higher operating expenses
I don't know if more predictable is all that accurate. SaaS providers change functionality and UX regularly and that often breaks workflows. Then you have the ones that shut down or get bought out and then substantially change their offerings. Then there are those services that would have been private to an intranet, but are now public, and they get compromised.
I don't think it's clear-cut. Some SaaS has worked out remarkably well for me and others I wish I had just built the thing in-house. Also, few providers give a way to actually get your data back out in a usable fashion, so you tend to get locked in without substantial cost to back out.
Then what happens is somebody making $100+/hour would spend several hours to do the job that would be covered by a tool that costs under $50/month.
It's never that simple, though, is it? Suppose that tool solves a problem that a $100/hour employee would have solved manually in a day. How long did it take the employee to identify and choose the tool, arrange the purchase, and then learn to solve the problem using it? Probably a few hours too. So that $50/month tool had better be useful for replacing that job several times in a year or it's unlikely to be a net win in terms of time and money. It's certainly possible that good tools are far better than that cost/benefit ratio and using them is easily justified, but I'm guessing that in these organisations with hundreds of different SaaS subscriptions only a few of them are in that class.
Of course the elephant in the room is that there used to be another alternative, which was buying a tool outright for say $1,000 and then using it indefinitely, which would be a financial win compared to an equivalent $50/month SaaS tool in well under two years. Yes, there are factors like CAPEX vs. OPEX to consider so this isn't so simple either, but ultimately paying much more money for the same thing is still paying much more money, however you slice it.
On the other side of that equation, what you would hope is that your $50/month is buying you a subscription to steadily increased functionality over time. That's something your $1000 up-front payment wouldn't get you, and it helps offset the initial on-boarding costs. It's also probably true that once your one employee has gone through the selection, learning, and purchasing process, getting subsequent users on-boarded is much quicker, because there's someone sat next to them to say "just do it this way".
On the other side of that equation, what you would hope is that your $50/month is buying you a subscription to steadily increased functionality over time.
Some people might hope for that. Personally, if I'm buying a tool for professional use, I want to choose my preferred one and then have it be reliable and future-proof. Things like security updates are one thing, but the last thing I want is random changes in functionality or UI being forced on me.
This worked just fine in the traditional model where you bought a version of some software, and then if there was another version released later with something more that you wanted and adequate compatibility, you bought the upgrade too. The user gets stability and new developments if they want them. The developer gets paid for new developments, though only if they are actually valuable to users. No-one gets forced into anything unexpected changing, or going missing, or breaking compatibility.
Tragically, the whole SaaS, insta-deploy anything we feel like culture that has evolved in recent years has utterly destroyed that stability and reliability. I regard this as possibly the biggest retrograde step in the history of personal computing (and that "possibly" is mostly because the walled garden culture that has also become so powerful in recent years might be a larger backward step).
I don't disagree: there's a reason I prefer Debian Stable on my servers. But when done well, and in the right place, it can be a worthwhile avenue. Github is a pretty good example: they've not stood still (ok, they also haven't moved that fast either), but the core of what worked 10 years ago still works today.
The other gain you get from having the employee build the tool is that now the employee is better at building these tools, so you fundamentally have a better employee than the one that had to spend the time learning the non-transferable one-off tool.
It's easy to say "yes" and difficult to say "no". Becoming a financial steward comes by first saying "no" and only saying "yes" when the ROI worksheet is filled out, completed, and approved. If you want your manager to approve spending some money on tools you can help them by filling out your own preliminary ROI worksheet to show them why you think it's a no-brainer.
Buying a $5/mo subscription by accident, forgetting about it for years, and getting 0 value in return is cheaper than training on a formal purchase system, filling out a ROI sheet, and ping-ponging it back and forth in a few meetings before "responsibly" deciding not to buy.
Giving individual contributors purchase authority and then supervising spend -- the model implemented in every major cloud -- is a much better compromise, because it lets management prioritize where they spend ROI calculation cycles which are not free. Very not free!
What if that SAAS is data mining you though and your company secrets are leaking out? Or claiming some sort of ownership over content you post within it? I don’t know anyone who reads the privacy policies and TOS of those apps but tech companies just let their teams use what they like.
It’s hard to find a good SAAS privacy policy actually, and they target businesses who are theoretically more “serious” than individuals
We got well over $80k into manpower on optimizing our self-hosted app for resources so that we didn't have to tell less than a dozen big customers to upgrade their hardware before people stopped laughing right in my face for suggesting we just buy them some new rackmount equipment as a gift...
That project died the following year, and I believe the opportunity costs of that work were substantially responsible for the demise.
Lol, I do this. My customers would often try to run my software on dusty old servers and then complain that it's slow, so now I just send them the hardware for free.
Different team, we did a cluster install and they were getting 10% of our advertised transaction rate. Something was clearly off. I commented “did they plug the whole thing into a 10Mb hub?”
They had. We sent someone eight timezones away to find that out.
2. Enter cost per engineer of product (subscription, one time, etc.).
3. Enter required minutes to make worth your time (setup per employee can be factored in).
This may already exist, but if it doesn't it could be a useful tool for Saas companies. Something you could drop into emails to potential customers ("see how much you would save").
I don't think the problem is people at the executive level. It's that all kinds of teams across the org are paying for Saas products and it adds up over time. The other problem is that 15 teams might be paying for small group Slack (insert Saas here) licenses when they should be on a single corporate plan. Ironically I believe there is a startup that looks at accounting and located duplicate licenses.
I have a spreadsheet at work that does this for manual tasks. It calculates minutes to perform the task X # employees X yearly frequency of task.
Once I've plugged in the values, I go back and ask if we really want to spend 30 hours a year updating intranet employee profiles or if we should use that time to fix some bugs or code a new feature.
Its quite effective to pushing back on unneeded tasks.
They are just going to pay their employees less. Companies have to be profitable, temporary exceptions notwithstanding, and the money has to come from somewhere.
As long as the purchased software is worthwhile (i.e. it makes employees more effective; the company gets more output per employee expense dollar), this trend should actually increase employee pay. Higher output per employee allows a higher salary per employee while still being profitable.
Not sure if you are being facetious, but that's in fact the law. The board is a fiduciary of shareholder (investor) money. Is that a great idea for society? Not sure, until it changes we live in the world we live in.
And on the productivity point, that makes a good theoretical case but it is just not demonstrated by historical data. In the US, in the past 50 years, it even has a name (the pay-productivity gap or the wage gap). You can look at productivity vs wages since 1970 and see how they have not correlated. Further, you can go into income and wealth inquality growth over the same time (https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...) and see how the wealth generated by the productivity gains has been highly concentrated in the top 0.1% and 0.01% wealthiest. Some people will talk about real or nominal wages (adjustments with something called the Implicit Price Deflator) that show wages purchasing power increasing, but I think one can look at costs of home, college, and medical care and other critical things in social mobility that have increased in cost far exceeding inflation as complications to that idea.
Fiduciary duty means that the board is supposed to be honest with the shareholders and not actively work against the corporation. That does not mean, in fact, that they are required to put growth of shareholder value to any respect.
> Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668 (Mich. 1919) is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a charitable manner for the benefit of his employees or customers. It is often cited as affirming the principle of "shareholder primacy" in corporate America. At the same time, the case affirmed the business judgment rule, leaving Ford an extremely wide latitude about how to run the company.
[...]
> In the 1950s and 1960s, states rejected Dodge repeatedly, in cases including AP Smith Manufacturing Co v. Barlow or Shlensky v. Wrigley. The general legal position today is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole.
The caveat is important. If a company says, "Customers don't like it when rich people in suits treat <x> like shit. Therefore, if we spend a small amount of money treating <x> better, this will make our customers happy, and they will buy more of our products, recouping the cost and bringing in more profit for our shareholders." Substitute the environment, animals, customers, employees, people in Africa, cancer patients, the children, etc. It doesn't matter if you're completely full of shit, you just have to make the argument.
So while you're correct that companies have a primary requirement to increase profits for their shareholders, in practice, this requirement is incredibly loose, to the point of not actually being a requirement at all.
> many people in USA believe that corporation has duty to increase shareholder value. And similar stupid ideas.
No more stupid than the idea that companies are supposed to exist solely for the benefit of the employee. Shareholders are the ones that put the money up to start and grow the company in the first place, so yes, there is an obligation to shareholder value.
Don't like that? Then you are free to start a company that doesn't take investment.
Shareholders take a risk in their investment, mitigated by making it more fluid as they can easily trade the shares compared to more traditional investments.
There's however no law that holds a figurative gun to the heads of corporation that their duty is to increase the value of those shares.
Shareholders are only able to make contracts because the government uses guns to arrest people who break contracts. Don't like it? Move to an offshore oil rig, I guess.
Doesn't higher output per an employee lead to a change for demand of that type of employee, lowering pay?
It always seemed to me the value an employee brings is the upper bound on pay (demand drops near 0 over that), but the pay is determined by supply and demand for that labor.
"spending another $10K to make them even 10% more productive is a bargain."
$200K is not a good benchmark for what companies spend.
Median salary in the US is about $50K [1]
Average overhead per/employee is 18-26% [2]
So a $10K spend for 10% increase in productivity on someone earning about $60K ... is not a bargain.
But there's a problem with this, because SaaS can be
1) Individual productivity
2) Operational productivity
3) Product spending (i.e. like GMaps integration as a feature in your product)
So 1/2 and 3 represent a very different type of calculus to the point wherein that kind of spending should definitely fall into different buckets for accounting.
- Process mismatch / impedance : The software is unlikely to be able to do exactly what you want how you want. The human likely is able
- Vendor lock in: If the SaaS decides to change how it works, or the prices you now have a leaving cost
- Expenditure on someone else's competitive advantage: If you use tool X likely there is no reason your competitor cannot. You both use it, no net advantage gained over competitor. If you develop the expertise in house (likely the harder thing) then you have an advantage over your competitor. Of course this has to be balanced with what will be your competitive advantage and what will not
- Harder to manipulate: You cannot fire 1 of your SaaS and tell the other 2 to do the work
The parent of the parent comment clearly referenced engineering with his “If you’re already spending >$200k/year per employee then a productivity increase of 10%...”
> And the productivity increase using certain SaaS tools is not 10%, it can be an order of magnitude in certain instances
well... my productivity isn't always increased, regardless of what tools someone wants to buy. and... sometimes it's a drain on my productivity, but using tool ABC increases someone else's productivity (at the expense of mine). How do you account for the productivity increase of -5% for 30% of your employees, but 20% for the other 70%?
There's plenty of situations in business where using it is an incredibly good idea. There's even more situations where you're better off just paying for a service.
1. You can, and it makes sense for FOSS projects with real support ecosystems, like RedHat, or for freemium FOSS projects, that explicitly sell support.
2. You can still be locked into a single-supplier when you pay for third-party FOSS support. In fact, most third-party FOSS support comes from a single supplier.
3. FOSS that doesn't have a sustainable business model attached to it rarely serves the needs of enterprises. There's FOSS alternatives to Sharepoint, but what's your FOSS alternative to Tableau? Salesforce? Slack? Will you actually save money by using it, compared to just paying a vendor?
> There's FOSS alternatives to Sharepoint, but what's your FOSS alternative to Tableau? Salesforce? Slack?
From a purely technical POV, I'm pretty sure that feasible alternatives exist to all of these, e.g. I don't think Tableau's data viz product does anything that couldn't also be done with relative ease in R. Of course, these commercial offerings extend way beyond the purely technical domain where FLOSS makes the most sense; but that has little to do with "sustainable business models" - R itself is plenty sustainable on its own - and a lot to do with extremely niche or obscure "needs of enterprises" that FLOSS projects are either not clearly aware of, or not very interested in supplying. Niche and obscure problem domains have always been problematic for the open source model, this is nothing new.
Nobody truly believes "FOSS is free"... sure there's cost, you just gotta figure out what the cost is for you! (that's the trick a "free" product has a unique price for each "buyer", here in lies the beauty and the opportunity of the game). There's no "market price" so it's tricky, but when you can compute the cost and it happens to be very low for your team (and preferably high for competitor's teams), you have a competitive advantages.
OSS is all about leveraging "hidden" advantages agains competitors that have clear and obvious financial advantages over you. If you get it right, you win!
Of course, if you don't like risks and don't like "uncomputable" prices, or "prices unique to each buyer", then sure, be conservative, and stay away from FOSS.
Include health insurance, retirement match, employer side payroll taxes, equipment, etc. I don’t make nearly that much but I easily cost my company more than that.
Depends on the context, I guess. I'm generally more comfortable with lightweight things - like GitHub projects for software and Trello for everything else.
The person who convinced me to [pay for a personal license for] Jetbrains instead of torturing myself with Eclipse just passed on the questions that had convinced him to do it:
How much does it cost you for Jetbrains? How many technical books is that? Is in worth that many books a year for a decent tool?
This is reductive. If "10% more productive" translated into >= 10% more revenue as a percentage of their wage, it would make sense but it varies so wildly, that it's not a useful statement.
Some will translate to increased revenue, a few times over, (which incentivizes the vendor to increase the price accordingly) and some will be net negative.
For some situations whatever the given SaaS is ... that is that given department's business.
I wonder if this isn't as much as "is it done on a computer... probabbly a SaaS involved" and ... how many people aren't doing their business on a computer?
Crazy. Seems that a lot of these tools are purchased by single departments and poorly integrated into rest of the org—creating more chaos and thus need for more tools.
Before all of these tools though it was a bunch of Excel spreadsheets and a random Access database that only one person knew how to maintain. At least with SaaS there’s a support line.
No, total cost would be a better measure since there is no per-person cost to the SaaS provider.
If you have 10,000 employees that's $100M per year in expenses. If you're just renting payroll, purchasing, etc software for that price it'd be far cheaper to roll your own, or pay a few people to work on OSS full time.
One large company (170k employees) I worked at switched from an in house payroll system to an external month.
Second month was a disaster in the end they had to physically cut the tape on the last remaining partially destroyed copy - about 20% got paid on time.
Switching a large enterprise software system is almost as time consuming, expensive, and error prone as developing a replacement in-house. You would have experienced substantial problems even if it was in-house -> in-house-rewrite or external->in-house or external-a -> external-b.
> If you're just renting payroll, purchasing, etc software for that price it'd be far cheaper to roll your own, or pay a few people to work on OSS full time.
This is the kind of hubris I come to this site for.
Is the other half the hole of legacy support you dig yourself into supporting the bad decisions and naive assumptions you made driving with that hubris?
Nah that's when you leave the company and leave some intern to clean it up so they can develop their own sense of hubris over your bad decisions. And the cycle repeats.
We wanted to build our own payroll system, but engineering is too busy milking the cows to restock the fridge to learn the tax code for multiple countries.
Has anyone thought about asking engineering to implement or build an interface for someone else (business side?) to manage country level differences in taxes?
Read up on the history Chrysler Comprehensive Compensation System (C3). The team worked for 7 years and although they achieved some technical goals they never managed to deliver a working payroll system.
Payroll is harder than it looks due to all the edge cases. For example, it is literally possible for an employee to have so many payroll deductions including court-ordered wage garnishment that net pay would be negative. How do you handle that in all legal jurisdictions where the company operates?
> For example, it is literally possible for an employee to have so many payroll deductions including court-ordered wage garnishment that net pay would be negative. How do you handle that in all legal jurisdictions where the company operates?
By issuing a error and demanding that a human deal with it. Obviously.
If you're legally required do your payroll with a buggy computer system rather than manually (and not even "this specific buggy computer that we gave you", just any old buggy piece of crap), then, uh, I don't really know what to say to that. My condolences, I guess?
If you mean it's impractical and error-prone to do payroll manually, well that's the point of automating >99.999% of it. For the remaining <0.001%, someone is going to have decide how to deal with it, and I'm sceptical that a programmer seven years ago will know better than a lawyer today what the legal requirements today are.
The level of aggressive ignorance in HN comments can be quite shocking. There is no legal requirement to use any particular payroll system. The payroll rules are written by domain experts including lawyers and others, and encoded into rules engines.
Well, how do existing manual systems deal with it? Why not just make do with partial automation and fall back on the existing methods for those thorny legal edge cases?
Except for the smallest local businesses, there is literally no such thing as existing manual systems anymore. It's simply not possible to do manual payroll while maintaining compliance with laws, regulations, civil orders, labor contracts, and company policies. Every significant enterprise has either built up a custom automated system over decades, or has customized a commercial ERP payroll module, or outsourced the entire thing to a specialized payroll company.
You could argue that payroll shouldn't be so complex but that's the reality of it today.
For a lot of companies I think it's actually the key to being able to expand and hire in the first place. Most startups aren't choosing between "should I hire someone to do this, or buy a solution?"--they're choosing between "Can I do this by buying a solution or do we go without? (either this, or something else because we need to build this)"
Just an interesting idea, if no one wants to have employees (lets face it, they are a mess, they waste oxygen, they fart, producing CO2, are corona virus friendly, produce road accidents... and you need to pay them so they can live) maybe everyone is having wrong bussiness plan. Whole world should transform to produce only SAAS products for SAAS people as they are the only customers who will in long term still have money to buy SAAS. /s
This is becoming a joke.
In my whole life I didnt buy a one single software product, that is based on subscription model (unless necessary as there are ongoing costs for its development like antiviruses (which I dont use, but this is another story)). Why? As it tells me, the product is at the end of its inovative phase and has nothing more to offer. I am fine with paying for update hunderds of dollars if, and only if, i need the added functionality. Or in different words Microsoft Office 97 was more than enough for 99% of its users (I dare you to install it and find something that you miss, it wasn't perfect but it did get the job done).
But there is more. I wont pay for cloud products either. Why? I believe that what is giving you the "edge" is your knowlidge. Using, for instance, gmail is taking you the chance to increase it. Yeah sure, time to market, but if you stick to DIY logic, this is not going to be a problem (I can set up a mail server with left hand while coding with right hand... and offer it as a SAAS to those that ignore DIY and earn extra bucks ;) /s ). If you ignore the lack of knowlidge, you will end up always paying to someone else or stuck in a problem that wouldn't be a problem if you wouldn't be ignoring it for so long. Not to even go into lack of inovation and reinventing / copying the solutions that were solved long time ago, but this is just another story.
I like your first sentence, but unsarcastically. Companies should always strive to do more with fewer employees by automating them away.
As for the rest of your argument, most people are not like you, as they will not want to spend time setting up their own mail server. For companies this is doubly true, as they will likely spend more money setting it up, maintaining it, and upgrading it, than the subscription actually costs.
This. Bunch of crappy apps which meet the minimum rqt to keep you in the ecosystem. Teams is the business equivalent of imessage. Keeps people on msft products vs. switching platforms. That plus finance folks cant not have their Excel for their 30-tab whatevers.
I'd actually prefer slashdot's moderation/meta moderation model to the one used by HN, though it's hard to fault the job dang and co. are doing with their hands-on approach.
Of course not, there is no incentive to do so. Until there is, nothing will change. I am all for socialization of wealth, as money in circulation boosts the economy more than hoarding it, but I just don't understand how people can say that companies should (morally) socialize their wealth "out of the goodness of their hearts" without some incentive. Companies, like all organizations of individual agents, do not have collective morals. They are merely machinations that have the sole fitness function of increasing wealth, at whatever cost. If we take this to be true, why exactly would, without another fitness function, a company socialize wealth?
You've attached a sarcasm tag to your first paragraph, but I do think the market is actually going there. Notice how many products around you get replaced by services.
Hmm, there are many companies where what you proposed make sense. But there are also many that I think it's hard to debate that SaaS doesn't offer value.
Running the mail server is simple enough, but then you need to set up storage. Emails are sensitive and often can't afford to lose. Then you need to set up backs, monitor and regularly test DR scenarios to see if your failovers, recovery plans are operational. Of course you need to maintain your data centers as well if you don't want subscriptions.
Then think of login. Employees don't want to log in to 15 different software. So they are going to ask for SSO. You are going to have to deploy and maintain something like active directory. Sometimes they need to be maintained across networks between different offices that are far from each other. After all this, you will still have to buy support packages from principle vendors for times when things go wrong (and they go wrong all the time when you host your own stuff). Shit escalates mate.
But this work scales better than linearly. One sysadmin, if doing their job properly, can configure a robust backup solution once and it will apply to many different programs. Machines in a DC can be set up once and host many programs.
Login is surely one of the best arguments for non-SaaS solutions. SSO is a total mess in the SaaS world. Everyone ends up with a billion passwords that they manage individually, change at different times, have to use a password manager to keep track of (but they all use different ones), etc. Active Directory is actually a solution to that which got lost in the move to SaaS-in-the-cloud.
People haven't figured out that "SaaS will liberate you from worrying about IT" is bullshit. All it does is change the types of problems in IT that you have to worry about.
Totally, but it gives small companies room to breath. Much easier to spend a few hundred bucks/month on a communication tool / management software / aws vm, etc. than pay the entry fee to a high cost self hosted service that might not even make sense in a few months.
Problem is that most companies consider IT (and tooling) a cost , not an asset (that needs to be taken care of, tended and re-evaluated every once in a while), then suddenly you're stuck with a midsized frankenstein blob of services that takes half your budget but is so damn complicated to untangle that it's cheaper to eat the cost. Middle management hell in one paragraph.
Translation: Companies are pissed that the free software gravy-train is over and how they actually have to start paying for it. This is the way it should have been for the past decade.
Those SaaS companies are probably not paying for the free software they're using though. Internal costs (people wrangling free/open source/homegrown software) have just become external costs (credit card charges of SaaS businesses doing the same).
The more things change, the more they stay the same. I suppose if folks are getting to capture more dollars for the value they deliver, that's always a good thing. Better to own your own biz versus being a cog in someone else's machine (IMHO).
I genuinely appreciate this as a Fastmail customer and JMAP enthusiast! Are SaaS companies more nimble in their ability to provide this type of support? Most certainly. I'm just uncertain it applies broadly to SaaS companies in general.
It's more likely that something like Cyrus or Perl will be a key part of the business at Fastmail than at some random similarly sized shop where email is something they use rather than a key part of the business, and hence worth spending time/money on.
And there's economies of scale. A few cents from the payment by each of our customers adds up to a decent amount of money to spend on an open source project.
I don't remember many enterprises that relied on large scale free software that was anything like SaaS products today... they were spending plenty on software...
I feel like this narrative is still apples to oranges and the concerns expressed are more about managing the costs all the SaaS products, not having to pay...
It's not terribly common anymore, but people used to pay for the Coldfusion programming language...well at least a compiler/interpreter for it. Outside of some third-party things like OpenBluedragon and Railo, if you wanted to deploy Coldfusion in any capacity, you had to pay Macromedia/Adobe for a license.
I don't know of any companies that are still using Coldfusion and I haven't had to touch it since 2012 (thank god), but it certainly was a common thing for awhile.
There were still internal costs related to running IRC though, assuming you weren't paying some provider to do it for you... not large internal costs, but I don't think on a radically different scale from Slack considering that you could also view a Slack subscription as covering a client with a lot more features than a typical IRC setup (sure you could run a web client, bouncers, services, but that's all increasing your internal costs).
I guess my point is that I feel like what GP refers to as "free" is actually just "developed/operated/maintained internally"... these commercial services are still by and large based on free software but you're paying someone else to do the work your internal IT capability used to do.
This couples with a general trend I've observed of organizations shifting their IT workload from inside to outside via PaaS/SaaS providers. This could be viewed as a form of outsourcing... in the '90s enterprises were moving their IT functions to India. Now they're moving them to a hundred different contractors, each supporting one system.
Paying some provider to run a standard FLOSS service based on your needs is going to be a hell of a lot cheaper than some bespoke SaaS solution. And Matrix gives you those "rich client features" anyway, with a broad choice of client-side software - so it's a better comparison than IRC.
Indeed, Vector's managed Matrix service is quite a bit cheaper than Slack. but it's also effectively subsidized by Matrix's patreon backers, such as myself. Not necessarily saying this is right or wrong, just that the money always comes from somewhere.
Additionally, as a rather dedicated Matrix user and advocate, it's clearly less stable and usable than Slack at present. See e.g. the effort towards a complete rewrite of the Riot on mobile and significant changes to Riot on web. Most third-party clients are not feature complete and are often rather unstable themselves (e.g. I am a heavy user of the Weechat python plugin but it takes expertise to get it up and running). The pricing no doubt accommodates the fact that anyone adopting Matrix for business use is going out on a limb to some extent.
> but it's also effectively subsidized by Matrix's patreon backers, such as myself.
I think that's the wrong way of putting it, since that Patreon money is clearly paying for the open component of Matrix. That's work that needs to be done anyway, whether Slack exists or not, and whether businesses choose to host their service instances via Vector or not. And it's definitely a Good Thing that FLOSS suppliers can now get funded via those crowd-based mechanisms - both for aligning incentives and for enhancing the overall "community"/"bazaar" aspect that has helped make a lot of FLOSS software successful in the past.
I'm not sure you grasp the absurdly low cost of running an IRC server even with the things you mention. You could probably support a nation-wide enterprise on a Raspberry Pi.
Bonus, unlike SaaS, you have complete control over the damned thing. New "features" won't suddenly get added to your tools that break your workflow, you can add new features if you need them without begging some vendor to whom you are a tiny insignificant nobody, etc.
I feel like the Linux, Apache, MySQL, and PHP was all free (as in beer) software that people rent in the cloud. If you're going to have web infrastructure, I'm not sure what difference it makes whether your cost center is an internal IT staff or an invoice from AWS.
I'm going to use the same argument used about copying/pirating proprietary software: They wouldn't have paid for it in the first place, so you can't count it as lost revenue.
That's not totally true, I used to see my desktop software revenue fall off after a pirated version was published. Not only that but the people using the pirated version would still contact me for support.
Even worse were customers who would buy once license but use the software across their organisation. As soon as I dealt with that those customers started buying more licenses.
If Slack is going to round out at $100/a/staff member ... then how on earth does that number creep to $10K?
I think there might be some 'crossing of streams' in this data, for example, perhaps they're including general services like AWS in there, which I'm not sure makes sense because conflating product-related IT charges with other services isn't helpful. Also relevant is the fact that said AWS product or IT charges would be borne anyhow.
I think dividing between 'productivity/IT' kind of spending, and product-related services would reallly help, also, comparing that $10K to historical, non-SaaS numbers would help as well.
>> If Slack is going to round out at $100/a/staff member ... then how on earth does that number creep to $10K?
ERP software like NetSuite usually isn't more than $2,500 a year. Add in an identity provider (Okta), Email/office (O365), Chat (Slack), CRM (Salesforce), Conferencing (Zoom), Storage (DropBox), Payroll (ADP), VPN... Even the enterprise plans for those aren't much more than $50/month.
If your company has more than around 100 people, there's a good chance your employer uses Netsuite; ask around about what they're paying for that. Salesforce gets pretty spendy, too.
I think you're missing out on a few of the big SaaS players here and then some of the smaller ones you never see if you're not in that dept. Most companies will have some CRM (salesforce, dynamics...), an ERP system (Workday, NetSuite...) and some marketing system (Hubspot, Marketo...) each of those will cost you a few thousand. Then there are the smaller tools, HR / Recruiting, T&E, team planning (monday, pivotal...) and finally Email/Calendar - just look at what GSuite costs. All of those costs add up quickly for the rank and file employees.
There's usually a few core systems like the CRM, the marketing suite, ERP (in bigger companies) that cost literally magnitudes more than your Slack's and G Suites. Even in a small company you may be spending most of your SaaS budget on just the first two.
Not that companies tend to have a SaaS budget, it's more like a Sales budget, a Marketing budget, Engineering budget etc. That's why sales and marketing doesn't mind spending 5-6 digits on their software without sweating it if there's clear ROI. Hey, it's probably still cheaper than a single rep or two. If anything, Engineering seriously undervalues their time and overvalues building their own worse versions of popular SaaS software (no, your ad-hoc Lambda function hooked up to send an SMS is not better than PagerDuty), I see it all the time. Software that saves you an hour a month is probably worth at least $1K+/year as an engineer in the US, and most engineering tools are way cheaper than that.
We just upped our lowest tier prices to over 10k a year and are still seeing companies falling over themselves to sign up and implement. I think it's 100% about how much value people see in something.
SaaS is a disaster without controls. They make it damn hard to automatically disable users who are no longer active. Then you have users picking competing duplicative tools, and now users can't work together without having duplicate accounts in each tool. Once they get you in, you've got no leverage--they'll just keep increasing prices because you're locked in. Companies are pushing you from perpetual license to cloud not for your benefit.
Some of us put accounts on pause if they've been inactive for 30 days. It's not the norm (yet), but the good PR and happy customers were well worth the extra business logic.
At the startup I used to work at the MD spent quite a bit of time dodging calls from Cloudinary. Every few months we needed to be on a higher tier package. We'd generally be tasked with optimising whichever metric was causing the problem a coupe of times a year (deleting / consolidating versions of various images etc).
It felt pretty shady (both his behaviour and their pricing structures).
This trend has the potential to be a win-win for vendors and customers. Vendors get a more stable and predictable source of revenue, while customers move their pesky lump sum cap-ex to the smoother op-ex payments. Now the question is are those SaaS offerings priced correctly for this to remain sustainable, or will all this break at some point (perhaps catalyzed by an economic slump).
The financial accounting standards board updated their guidance in late 2018 to require calculating the present value of expected future SaaS agreement payments and adding that to the balance sheet, so it’s still CapEx in most cases.
Does such a rule only apply to SaaS with a contract term? If it applies to all SaaS/subscriptions, I feel that's not an appropriate characterization.
There's value in having options. If a company had to wind-down some operation or segment, any CapEx in that segment could be considered lost (after applying a discount equivalent to x time using a subscription service, of course). With SaaS you can just terminate any no-term-contract/month-to-month/pay-as-you-go expenses.
That flexibility is extremely valuable and makes the company more flexible. Heck, I'd argue accounting should apply an expected future cost discount to such expenses.
Based on my layman understanding, while that changes how numbers are reflected on the books, the reality of how SaaS products improve customers' cashflow is still true.
This is a case of YMMV depending on the company and how its SaaS tools are managed. Plus, pricing could vary at the Enterprise levels for many SaaS products depending on pricing negotiation and monthly/annual terms.
I’m sure many people have stories of their enterprises making bad decisions when it comes to SaaS contracts - or picking the wrong tools and forcing them on employees only to later abandon the existing tools for different tools, further driving up the cost.
the only way this is true is if AWS and other infrastructure services to run the business are included in that calculation, and even then I'd doubt it comes close to that for most any business.
It seems to me companies should instead invest in open source alternatives. They could pay less, funding the development of open source alternatives and everyone wins. Blender is a good example of this.
There's no reason to think most of the SaaS tools being bought are complementary to the products and services they are being used to produce.
For example, if I'm a car manufacturer using software tools for engineering, sales, inventory management, payroll, etc., the software tools are not a complement to what I sell, they are just a production cost.
That's the exact thought that has crossed my mind a few weeks ago. I was more focused on the specific of advertising / marketing given the amount of open source solutions available nowadays.
The second benefit being that they'd own the underlying data rather than yet another tech giant. So hopefully better for privacy.
Yes there are so many open-source alternatives to popular SaaS nowadays and more are popping up. The barrier of building a great application has gone down significantly the past 4-5 years.
I'm work on building an extensive alternatives list here: https://opensource.builders. Which commercial product is Blender an open-source alternative to?
Just doing the math, telling your engineers to spend $10 worth of their time every month contributing to an open source alternative is worthless. Building something reasonable is going to be a lot more expensive than what they currently spend on the software.
That's enough time to put some proof-of-concept code online ("scratch your itch"), which is how successful FLOSS projects tend to start. It would be largely self-sustaining going from there.
"Invest" is the correct word. You take on a complex software with zero guarantees, zero support, outdated documentation and basically have to do it all yourself: analyzing the quality of the thing, making it seaworthy by developing a deployment if needed, testing it, migrating it, etc etc. The boss's boss's eyes glazed over when I said free and open source but he got a reality check when I told him no, significant cost accrues elsewhere.
SaaS is really one of the only ways to make money and build a company with software these days. Decades of piracy have pushed most companies to create a subscription service where the software can't just be copied.
"SaaS just more popular/lucrative/financially gamable"
Piracy definitely killed the ownership model. After Napster and prolific piracy of music for 10+ years, the value of music plummeted to almost nothing.
Piracy is closer to counterfeiting than stealing, because the actual value of the pirated good approaches $0 as more and more people have the idea that they can get it for free.
This won't happen to any automotive company if you steal a car. This is why I always thought those ads about piracy/stealing were silly.
SaaS for the music industry might have happened without piracy, but piracy was definitely the catalyst for the services we see today.
It's not just because of piracy. SaaS has other advantages like making customer support easier, drive continued development with little risk, have easy cross-platform support, easier and more accurate usability testing, etc.
I agree with all of these. but, the main driver is piracy.
Look at products like 1Password. Everybody I knew was buying one license key and installing it on 5+ computers. Now that it's a service, you can't really do that anymore. The company definitely has more control over their software.
It's also one of the only ways to make money with open source, unless you want to make money on support, which is brutal for a small company with only a few employees.
Nonsense. Enterprise customers almost always paid 20-35% maintenance on perpetual software.
Places that I’m familiar with had SaaS spending went through the roof because of Microsoft, Oracle and Adobe. Actual spend hasn’t gone up and in many cases gone down as the usual software company overselling bullshit is easier to avoid.
On the flip side, the treadmill and all or nothing approach to the rental model kills small vendors. At one place I know, we purged 60% of vendors. Companies who are obnoxious rent seekers are easy pickings too. You can pretty easily purge them, as you’re on an upgrade treadmill anyway!
Oh I like that point of view, it really does force everyone to compete at a much faster pace. We've ended up with such a great selection of options as a result (And a lot of innovation we probably wouldn't have seen otherwise) because of the competition/expansion
Opaque billing and lack of customer oversight/clue are powerful components of this. Shit gets bought and then sits unused a lot of times. I've worked for a company about 10 years ago which got sold IBM DB2 at a cost of $2M/yr. The company had no use whatsoever for DB2, but paid for a few years of that until they hired people (me) who convinced them they don't need it. It was replaced with a MS SQL subscription which cost a "mere" $150K/yr at the time, and _was_ actually used. Some companies just have way too much money and no clue.
This from the article: According to a recent analysis of more than 30 million transactions, Zylo—a local firm that helps its customers track and manage software subscriptions—found enterprise companies are spending an average of more than $10,000 per employee per year on software. So, for every 100 employees, companies are spending $1 million on software subscriptions.
So what would an IT department, physical plant, and software purchase prices cost? This is an area where data scientists have had a big impact, pricing models. Between keeping the cost "just under" the similar cost to do it yourself, and adding the value of "you can double or halve your size without any additional HR costs", the SaaS model gets an enterprise to be closer to being precisely sized.
Think about how this worked in the past, you over provisioned infrastructure based on projected growth, you sold off at a loss infrastructure you no longer used, your business expense didn't track your actual size and always cost more. So in that model SaaS wins pretty handily.
Google Enterprise - replaces Web server, mail server, DNS server, chat server, and NAS devices.
Solidworks SaaS - replaces simulation resources with cloud resources.
Slack SaaS - chat servers, administration of same.
There is an IT concept, SUDs, which is short for "Servers Under Desks." That is a situation where an employee sets up a server do do something and it "lives" under their desk because they don't have an official place to put it. And then it becomes mission critical without anyone knowing and there is a big fire drill when something disrupts the flow (employee leaves, server crashes/fails, scaling requirement isn't met, Etc)
> Companies fret as costs soar for software subscriptions
Seems like an odd complaint. If you spend $1 on SaaS for some service you need, you are likely saving $10 on the cost it would take to build it for yourself. Surely the money you spend on SaaS is as much a measure of productive economy, provided of course you use it.
Assuming the Saas is sensibly priced, which may or may not be true in the enterprise realm. Or may have been when you first adopted the service, but may not be currently.
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[ 107 ms ] story [ 6631 ms ] thread(I'm fairly sure this exists, actually.)
"The fully-loaded costs of employees are much higher than their salary: exactly how much higher depends on your locality’s laws, your benefits package, and a bunch of other HR administrivia, but a reasonable guesstimate is between 150% and 200% of their salary." -https://www.kalzumeus.com/2012/01/23/salary-negotiation/
I'd hypothesis that most employees on whom companies spend $10k for cloud software are making $100k+.
But even so, the average salary in the US is < $60k. Use whatever multiplier you want, $200k is way high.
Companies are spending far less than $200k/employee all-in.
So to slightly rephrase the OP's question:
> Do people really believe that $100k is a normal salary?
But it's pretty obvious that a basic "customer support" combo like Office 365 + Okta + Zendesk + Intercom + Slack + Zenefits starts to add up to a meaningful percentage of the employee's take-home compensation. (Remember these are positions where $20/hr is a good rate.) And remember, the comparison figure for managers over 50 is roughly $0, which approximates the spend on these functions as far back ago as 2008.
Then what happens is somebody making $100+/hour would spend several hours to do the job that would be covered by a tool that costs under $50/month.
FTFY
At least for Medium, "Holacracy" pretty much imploded. Zsppos switched from it to an internal marketplace - which is, oddly, controlled by excecutives.
Flat organizations beyond a certain size either move away from flatness officially, create unacknowledged hierarchy, or fail. I'm really not aware of a single large-scale example that still works.
This is much different for small orgs - there's something about org size that requires some sort of centralization. (I think it's communications overhead + complexity exceeding the limit of what a single person can keep in their mind. I'm not 100% convinced, but these are the pressure points I usually see)
Flat organizations are unusual, but survive about as well as other similar organizations. The difference is when a giant reorganization/buyout etc hits, they more obviously change into something else.
But that all aside... I mean they have a new Half Life game on the near term horizon (later this month apparently) and they have done a ton of work on VR and Linux support.
Summary: the game was brilliant ("uniquely amazing") if you were really good at it but was essentially impossible to get into, and its economy was badly constructed.
Most Startups are at least trying to change the status quo.
Steam certainly challenged the status quo when it was released, and several times in its life.
Hell, who else is working on Linux gaming right now? They were relatively early on game streaming, VR. Steam Workshop? How cool is it that a large amount of one of their flagship games, Team Fortress 2, not only integrated a lot of third party content, but also paid creators back? How cool is it that many games like Counter Strike began as Half Life mods?
I don’t really use Steam much anymore, so it’s not that I’m personally attached much, but I will admit to being pretty impressed.
Also, valve's ther ventures are....massively successful. The microtransaction model in gaming originated with Valve, and now the entire mobile and freemium gaming markets use that business model.
So in this case...I would say yes, everything valve has done as a company trying to make money in the last 10 years is par for other successful SAAS platforms.
Xbox Live.
Steam/valve was brought up because they have a successful cloud SASS model with no subscriptions oand a flat org structure.
Xbox live has a subscription fee since day 1, is maintained by MS (the definition of "non-flat organizational structure"), and is vendor locked. Not even remotely comparable.
Here is evidence that claim CEOs produce more value than they are compensated for (i.e. they are underpaid): https://faculty.chicagobooth.edu/steven.kaplan/research/kceo... https://econpapers.repec.org/article/inmormnsc/v_3a60_3ay_3a... https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1686068
Just because they are there doesn’t mean the achievements are due to them.
There have been a number of attempts, tens of millions of dollars spent on one study alone, trying to quantify what technologies and people generate value.
The meta-conclusion considering all the studies I know of (traveling and not looking them up), is the math becomes so Byzantine it’s a pointless measure and we should just stick with ideology to avoid blowing up society in people’s minds (an idea that was peddled for thousands of years already, reaffirmed by math, glad we spent the time on it.)
Just because we’ve emotionally conditioned ourselves to engage our mechanical agency towards these ends does not imply it’s because of management.
Manufactured consent is a thing.
Management is necessary to allocate resources (including labor) efficiently at scale, but it comes with overhead.
As such, at smaller companies, startups, small businesses, the overhead of management can be outsized, the pain felt acutely when compared relatively to the actual output of ICs and such.
At larger companies, the massive cadre of management which is necessary to keep the machine running is also very obvious, as the overhead of a large organization is very large, even if the management itself is excellent and highly efficient.
As such... How does one allocate credit? An analogy would be like financing or investment. Necessary. A filtering mechanism. Sometimes helpful in an advisory mechanism. But are they the ones creating output? No. But do they deserve some credit? If something cannot be done without it, then they must deserve SOME credit, it's just a question of how much.
A healthy society takes a village. IMO there’s plenty of literal history to show isolating a minority from the demands the rest of us face is ripe for abuse at scale.
One person did not invent languages, lay down the highways and invent computers.
All the people we hold up relied not just on the historical invention to push them forward but society giving them space and not killing them. Every individual inventor is outnumbered.
IMO that space to be and do is what we should optimize for. Not a tether to tradition of emotionally wanking off a handful over what is ultimately a linguistic twist on an idea that was discovered/defined collectively
Github made it all the way until 2014 (and was a massive success by then) too, IIRC.
This is what 'agile' is supposed to emulate for larger businesses.
Yeah, you can fake through it more than half of the time, comfortably. Just be eloquent, tall, and loud.
Sure, but then there's the slightly more complicated economic calculus: do we build our own tooling now, for a significant up front cost, or do we buy the SaaS which we might use essentially forever for an unknown future TCO?
The slightly more complicated question is "do we invest in optimizing SaaS costs/utilization? Or use those resources to start building our own?". But even for this question the right answer is usually fairly obvious.
If it was so easy, why are the companies in the article "fretting"? Because putting values on "good", "opportunity" and "makes sense" (not even counting the fact you have no control over the SaaS raising prices or going out of business in the future) is harder than we can spend $400/month or $50/month.
Absolute zero ongoing commitments? Very rarely.
Negligible ongoing commitments compared to the outsourcing alternative? Many, many times.
I don't think it's clear-cut. Some SaaS has worked out remarkably well for me and others I wish I had just built the thing in-house. Also, few providers give a way to actually get your data back out in a usable fashion, so you tend to get locked in without substantial cost to back out.
It's never that simple, though, is it? Suppose that tool solves a problem that a $100/hour employee would have solved manually in a day. How long did it take the employee to identify and choose the tool, arrange the purchase, and then learn to solve the problem using it? Probably a few hours too. So that $50/month tool had better be useful for replacing that job several times in a year or it's unlikely to be a net win in terms of time and money. It's certainly possible that good tools are far better than that cost/benefit ratio and using them is easily justified, but I'm guessing that in these organisations with hundreds of different SaaS subscriptions only a few of them are in that class.
Of course the elephant in the room is that there used to be another alternative, which was buying a tool outright for say $1,000 and then using it indefinitely, which would be a financial win compared to an equivalent $50/month SaaS tool in well under two years. Yes, there are factors like CAPEX vs. OPEX to consider so this isn't so simple either, but ultimately paying much more money for the same thing is still paying much more money, however you slice it.
Some people might hope for that. Personally, if I'm buying a tool for professional use, I want to choose my preferred one and then have it be reliable and future-proof. Things like security updates are one thing, but the last thing I want is random changes in functionality or UI being forced on me.
This worked just fine in the traditional model where you bought a version of some software, and then if there was another version released later with something more that you wanted and adequate compatibility, you bought the upgrade too. The user gets stability and new developments if they want them. The developer gets paid for new developments, though only if they are actually valuable to users. No-one gets forced into anything unexpected changing, or going missing, or breaking compatibility.
Tragically, the whole SaaS, insta-deploy anything we feel like culture that has evolved in recent years has utterly destroyed that stability and reliability. I regard this as possibly the biggest retrograde step in the history of personal computing (and that "possibly" is mostly because the walled garden culture that has also become so powerful in recent years might be a larger backward step).
Giving individual contributors purchase authority and then supervising spend -- the model implemented in every major cloud -- is a much better compromise, because it lets management prioritize where they spend ROI calculation cycles which are not free. Very not free!
It’s hard to find a good SAAS privacy policy actually, and they target businesses who are theoretically more “serious” than individuals
That project died the following year, and I believe the opportunity costs of that work were substantially responsible for the demise.
They had. We sent someone eight timezones away to find that out.
1. Enter salary of engineer.
2. Enter cost per engineer of product (subscription, one time, etc.).
3. Enter required minutes to make worth your time (setup per employee can be factored in).
This may already exist, but if it doesn't it could be a useful tool for Saas companies. Something you could drop into emails to potential customers ("see how much you would save").
Would pay for this monthly if it works.
https://kanbanmail.app/pricing
Once I've plugged in the values, I go back and ask if we really want to spend 30 hours a year updating intranet employee profiles or if we should use that time to fix some bugs or code a new feature.
Its quite effective to pushing back on unneeded tasks.
Remember, many people in USA believe that corporation has duty to increase shareholder value. And similar stupid ideas.
And on the productivity point, that makes a good theoretical case but it is just not demonstrated by historical data. In the US, in the past 50 years, it even has a name (the pay-productivity gap or the wage gap). You can look at productivity vs wages since 1970 and see how they have not correlated. Further, you can go into income and wealth inquality growth over the same time (https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...) and see how the wealth generated by the productivity gains has been highly concentrated in the top 0.1% and 0.01% wealthiest. Some people will talk about real or nominal wages (adjustments with something called the Implicit Price Deflator) that show wages purchasing power increasing, but I think one can look at costs of home, college, and medical care and other critical things in social mobility that have increased in cost far exceeding inflation as complications to that idea.
Fiduciary duty means that the board is supposed to be honest with the shareholders and not actively work against the corporation. That does not mean, in fact, that they are required to put growth of shareholder value to any respect.
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668 (Mich. 1919) is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a charitable manner for the benefit of his employees or customers. It is often cited as affirming the principle of "shareholder primacy" in corporate America. At the same time, the case affirmed the business judgment rule, leaving Ford an extremely wide latitude about how to run the company.
[...]
> In the 1950s and 1960s, states rejected Dodge repeatedly, in cases including AP Smith Manufacturing Co v. Barlow or Shlensky v. Wrigley. The general legal position today is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole.
The caveat is important. If a company says, "Customers don't like it when rich people in suits treat <x> like shit. Therefore, if we spend a small amount of money treating <x> better, this will make our customers happy, and they will buy more of our products, recouping the cost and bringing in more profit for our shareholders." Substitute the environment, animals, customers, employees, people in Africa, cancer patients, the children, etc. It doesn't matter if you're completely full of shit, you just have to make the argument.
So while you're correct that companies have a primary requirement to increase profits for their shareholders, in practice, this requirement is incredibly loose, to the point of not actually being a requirement at all.
But that's beyond my knowledge on this matter :)
No more stupid than the idea that companies are supposed to exist solely for the benefit of the employee. Shareholders are the ones that put the money up to start and grow the company in the first place, so yes, there is an obligation to shareholder value.
Don't like that? Then you are free to start a company that doesn't take investment.
There's however no law that holds a figurative gun to the heads of corporation that their duty is to increase the value of those shares.
It always seemed to me the value an employee brings is the upper bound on pay (demand drops near 0 over that), but the pay is determined by supply and demand for that labor.
Yes, pretty much so.
> lowering pay?
Nope. Reality is way more complex than that.
$200K is not a good benchmark for what companies spend.
Median salary in the US is about $50K [1]
Average overhead per/employee is 18-26% [2]
So a $10K spend for 10% increase in productivity on someone earning about $60K ... is not a bargain.
But there's a problem with this, because SaaS can be
1) Individual productivity 2) Operational productivity 3) Product spending (i.e. like GMaps integration as a feature in your product)
So 1/2 and 3 represent a very different type of calculus to the point wherein that kind of spending should definitely fall into different buckets for accounting.
[1] https://www.thebalancecareers.com/average-salary-information...
[2] https://beebole.com/blog/how-to-calculate-the-real-cost-of-a...
> Median salary in the US is about $50K
The median company isn't necessarily spending $10k per employee for software.
- Process mismatch / impedance : The software is unlikely to be able to do exactly what you want how you want. The human likely is able
- Vendor lock in: If the SaaS decides to change how it works, or the prices you now have a leaving cost
- Expenditure on someone else's competitive advantage: If you use tool X likely there is no reason your competitor cannot. You both use it, no net advantage gained over competitor. If you develop the expertise in house (likely the harder thing) then you have an advantage over your competitor. Of course this has to be balanced with what will be your competitive advantage and what will not
- Harder to manipulate: You cannot fire 1 of your SaaS and tell the other 2 to do the work
And the productivity increase using certain SaaS tools is not 10%, it can be an order of magnitude in certain instances.
https://money.usnews.com/careers/best-jobs/software-develope...
https://www.glassdoor.com/Salaries/software-engineer-salary-...
https://www.payscale.com/research/US/Job=Software_Engineer/S...
https://www.indeed.com/career/software-engineer/salaries
The vast majority of users of SaaS are not software developers.
well... my productivity isn't always increased, regardless of what tools someone wants to buy. and... sometimes it's a drain on my productivity, but using tool ABC increases someone else's productivity (at the expense of mine). How do you account for the productivity increase of -5% for 30% of your employees, but 20% for the other 70%?
FOSS as much as possible.
There's plenty of situations in business where using it is an incredibly good idea. There's even more situations where you're better off just paying for a service.
2. You can still be locked into a single-supplier when you pay for third-party FOSS support. In fact, most third-party FOSS support comes from a single supplier.
3. FOSS that doesn't have a sustainable business model attached to it rarely serves the needs of enterprises. There's FOSS alternatives to Sharepoint, but what's your FOSS alternative to Tableau? Salesforce? Slack? Will you actually save money by using it, compared to just paying a vendor?
From a purely technical POV, I'm pretty sure that feasible alternatives exist to all of these, e.g. I don't think Tableau's data viz product does anything that couldn't also be done with relative ease in R. Of course, these commercial offerings extend way beyond the purely technical domain where FLOSS makes the most sense; but that has little to do with "sustainable business models" - R itself is plenty sustainable on its own - and a lot to do with extremely niche or obscure "needs of enterprises" that FLOSS projects are either not clearly aware of, or not very interested in supplying. Niche and obscure problem domains have always been problematic for the open source model, this is nothing new.
It's zingers like this that keep me coming back to threads like this one! "No wireless. Less space than a nomad. Lame."
I use FOSS when it makes sense but 90% of the time the answer has been, 'just use what AWS has.'
OSS is all about leveraging "hidden" advantages agains competitors that have clear and obvious financial advantages over you. If you get it right, you win!
Of course, if you don't like risks and don't like "uncomputable" prices, or "prices unique to each buyer", then sure, be conservative, and stay away from FOSS.
all of these three are included in the gross in france
It's a lowest common denominator product. Which is fine. I use it for anything I need to share on and Trello for organizing, "in my own head."
I won't even look at sharepoint.
Is the expectation that your employees cost > $200k or is that not qualified?
In some companies / countries you spend $10k per employee.
How much does it cost you for Jetbrains? How many technical books is that? Is in worth that many books a year for a decent tool?
Some will translate to increased revenue, a few times over, (which incentivizes the vendor to increase the price accordingly) and some will be net negative.
I wonder if this isn't as much as "is it done on a computer... probabbly a SaaS involved" and ... how many people aren't doing their business on a computer?
Hm how would we make that cost more though if there aren’t that many large organizations
Here you go
If you have 10,000 employees that's $100M per year in expenses. If you're just renting payroll, purchasing, etc software for that price it'd be far cheaper to roll your own, or pay a few people to work on OSS full time.
Second month was a disaster in the end they had to physically cut the tape on the last remaining partially destroyed copy - about 20% got paid on time.
This is the kind of hubris I come to this site for.
https://en.wikipedia.org/wiki/Chrysler_Comprehensive_Compens...
Payroll is harder than it looks due to all the edge cases. For example, it is literally possible for an employee to have so many payroll deductions including court-ordered wage garnishment that net pay would be negative. How do you handle that in all legal jurisdictions where the company operates?
By issuing a error and demanding that a human deal with it. Obviously.
If you mean it's impractical and error-prone to do payroll manually, well that's the point of automating >99.999% of it. For the remaining <0.001%, someone is going to have decide how to deal with it, and I'm sceptical that a programmer seven years ago will know better than a lawyer today what the legal requirements today are.
You could argue that payroll shouldn't be so complex but that's the reality of it today.
This is becoming a joke.
In my whole life I didnt buy a one single software product, that is based on subscription model (unless necessary as there are ongoing costs for its development like antiviruses (which I dont use, but this is another story)). Why? As it tells me, the product is at the end of its inovative phase and has nothing more to offer. I am fine with paying for update hunderds of dollars if, and only if, i need the added functionality. Or in different words Microsoft Office 97 was more than enough for 99% of its users (I dare you to install it and find something that you miss, it wasn't perfect but it did get the job done).
But there is more. I wont pay for cloud products either. Why? I believe that what is giving you the "edge" is your knowlidge. Using, for instance, gmail is taking you the chance to increase it. Yeah sure, time to market, but if you stick to DIY logic, this is not going to be a problem (I can set up a mail server with left hand while coding with right hand... and offer it as a SAAS to those that ignore DIY and earn extra bucks ;) /s ). If you ignore the lack of knowlidge, you will end up always paying to someone else or stuck in a problem that wouldn't be a problem if you wouldn't be ignoring it for so long. Not to even go into lack of inovation and reinventing / copying the solutions that were solved long time ago, but this is just another story.
As for the rest of your argument, most people are not like you, as they will not want to spend time setting up their own mail server. For companies this is doubly true, as they will likely spend more money setting it up, maintaining it, and upgrading it, than the subscription actually costs.
I wonder if those same companies intend to socialize the wealth generated by their automation.
I don't like it at all.
Running the mail server is simple enough, but then you need to set up storage. Emails are sensitive and often can't afford to lose. Then you need to set up backs, monitor and regularly test DR scenarios to see if your failovers, recovery plans are operational. Of course you need to maintain your data centers as well if you don't want subscriptions.
Then think of login. Employees don't want to log in to 15 different software. So they are going to ask for SSO. You are going to have to deploy and maintain something like active directory. Sometimes they need to be maintained across networks between different offices that are far from each other. After all this, you will still have to buy support packages from principle vendors for times when things go wrong (and they go wrong all the time when you host your own stuff). Shit escalates mate.
Login is surely one of the best arguments for non-SaaS solutions. SSO is a total mess in the SaaS world. Everyone ends up with a billion passwords that they manage individually, change at different times, have to use a password manager to keep track of (but they all use different ones), etc. Active Directory is actually a solution to that which got lost in the move to SaaS-in-the-cloud.
Problem is that most companies consider IT (and tooling) a cost , not an asset (that needs to be taken care of, tended and re-evaluated every once in a while), then suddenly you're stuck with a midsized frankenstein blob of services that takes half your budget but is so damn complicated to untangle that it's cheaper to eat the cost. Middle management hell in one paragraph.
The more things change, the more they stay the same. I suppose if folks are getting to capture more dollars for the value they deliver, that's always a good thing. Better to own your own biz versus being a cog in someone else's machine (IMHO).
And there's economies of scale. A few cents from the payment by each of our customers adds up to a decent amount of money to spend on an open source project.
I don't remember many enterprises that relied on large scale free software that was anything like SaaS products today... they were spending plenty on software...
I feel like this narrative is still apples to oranges and the concerns expressed are more about managing the costs all the SaaS products, not having to pay...
Do people actually do this?
I don't know of any companies that are still using Coldfusion and I haven't had to touch it since 2012 (thank god), but it certainly was a common thing for awhile.
I guess my point is that I feel like what GP refers to as "free" is actually just "developed/operated/maintained internally"... these commercial services are still by and large based on free software but you're paying someone else to do the work your internal IT capability used to do.
This couples with a general trend I've observed of organizations shifting their IT workload from inside to outside via PaaS/SaaS providers. This could be viewed as a form of outsourcing... in the '90s enterprises were moving their IT functions to India. Now they're moving them to a hundred different contractors, each supporting one system.
Additionally, as a rather dedicated Matrix user and advocate, it's clearly less stable and usable than Slack at present. See e.g. the effort towards a complete rewrite of the Riot on mobile and significant changes to Riot on web. Most third-party clients are not feature complete and are often rather unstable themselves (e.g. I am a heavy user of the Weechat python plugin but it takes expertise to get it up and running). The pricing no doubt accommodates the fact that anyone adopting Matrix for business use is going out on a limb to some extent.
I think that's the wrong way of putting it, since that Patreon money is clearly paying for the open component of Matrix. That's work that needs to be done anyway, whether Slack exists or not, and whether businesses choose to host their service instances via Vector or not. And it's definitely a Good Thing that FLOSS suppliers can now get funded via those crowd-based mechanisms - both for aligning incentives and for enhancing the overall "community"/"bazaar" aspect that has helped make a lot of FLOSS software successful in the past.
Bonus, unlike SaaS, you have complete control over the damned thing. New "features" won't suddenly get added to your tools that break your workflow, you can add new features if you need them without begging some vendor to whom you are a tiny insignificant nobody, etc.
Even worse were customers who would buy once license but use the software across their organisation. As soon as I dealt with that those customers started buying more licenses.
If Slack is going to round out at $100/a/staff member ... then how on earth does that number creep to $10K?
I think there might be some 'crossing of streams' in this data, for example, perhaps they're including general services like AWS in there, which I'm not sure makes sense because conflating product-related IT charges with other services isn't helpful. Also relevant is the fact that said AWS product or IT charges would be borne anyhow.
I think dividing between 'productivity/IT' kind of spending, and product-related services would reallly help, also, comparing that $10K to historical, non-SaaS numbers would help as well.
ERP software like NetSuite usually isn't more than $2,500 a year. Add in an identity provider (Okta), Email/office (O365), Chat (Slack), CRM (Salesforce), Conferencing (Zoom), Storage (DropBox), Payroll (ADP), VPN... Even the enterprise plans for those aren't much more than $50/month.
If your company has more than around 100 people, there's a good chance your employer uses Netsuite; ask around about what they're paying for that. Salesforce gets pretty spendy, too.
Not that companies tend to have a SaaS budget, it's more like a Sales budget, a Marketing budget, Engineering budget etc. That's why sales and marketing doesn't mind spending 5-6 digits on their software without sweating it if there's clear ROI. Hey, it's probably still cheaper than a single rep or two. If anything, Engineering seriously undervalues their time and overvalues building their own worse versions of popular SaaS software (no, your ad-hoc Lambda function hooked up to send an SMS is not better than PagerDuty), I see it all the time. Software that saves you an hour a month is probably worth at least $1K+/year as an engineer in the US, and most engineering tools are way cheaper than that.
Price increases due to inflation are a necessity.
I can't see a world where I would buy a software once and use it forever, so paying for upgrades is necessary at some point.
It felt pretty shady (both his behaviour and their pricing structures).
There's value in having options. If a company had to wind-down some operation or segment, any CapEx in that segment could be considered lost (after applying a discount equivalent to x time using a subscription service, of course). With SaaS you can just terminate any no-term-contract/month-to-month/pay-as-you-go expenses.
That flexibility is extremely valuable and makes the company more flexible. Heck, I'd argue accounting should apply an expected future cost discount to such expenses.
I’m sure many people have stories of their enterprises making bad decisions when it comes to SaaS contracts - or picking the wrong tools and forcing them on employees only to later abandon the existing tools for different tools, further driving up the cost.
For example, if I'm a car manufacturer using software tools for engineering, sales, inventory management, payroll, etc., the software tools are not a complement to what I sell, they are just a production cost.
The second benefit being that they'd own the underlying data rather than yet another tech giant. So hopefully better for privacy.
I'm work on building an extensive alternatives list here: https://opensource.builders. Which commercial product is Blender an open-source alternative to?
My take is that SaaS is just a more predictable business model with fewer operating complexities and easier sales funnels.
yes
Piracy definitely killed the ownership model. After Napster and prolific piracy of music for 10+ years, the value of music plummeted to almost nothing.
Piracy is closer to counterfeiting than stealing, because the actual value of the pirated good approaches $0 as more and more people have the idea that they can get it for free.
This won't happen to any automotive company if you steal a car. This is why I always thought those ads about piracy/stealing were silly.
SaaS for the music industry might have happened without piracy, but piracy was definitely the catalyst for the services we see today.
Look at products like 1Password. Everybody I knew was buying one license key and installing it on 5+ computers. Now that it's a service, you can't really do that anymore. The company definitely has more control over their software.
It's also one of the only ways to make money with open source, unless you want to make money on support, which is brutal for a small company with only a few employees.
Places that I’m familiar with had SaaS spending went through the roof because of Microsoft, Oracle and Adobe. Actual spend hasn’t gone up and in many cases gone down as the usual software company overselling bullshit is easier to avoid.
On the flip side, the treadmill and all or nothing approach to the rental model kills small vendors. At one place I know, we purged 60% of vendors. Companies who are obnoxious rent seekers are easy pickings too. You can pretty easily purge them, as you’re on an upgrade treadmill anyway!
So what would an IT department, physical plant, and software purchase prices cost? This is an area where data scientists have had a big impact, pricing models. Between keeping the cost "just under" the similar cost to do it yourself, and adding the value of "you can double or halve your size without any additional HR costs", the SaaS model gets an enterprise to be closer to being precisely sized.
Think about how this worked in the past, you over provisioned infrastructure based on projected growth, you sold off at a loss infrastructure you no longer used, your business expense didn't track your actual size and always cost more. So in that model SaaS wins pretty handily.
That's usually not the case. SaaS usually does not replace in house machines, and it usually does not deal with high performance applications.
Github SaaS - source repository, build servers, integration infrastructure.
Quickbooks SaaS - replaces DB server, DBA
Google Enterprise - replaces Web server, mail server, DNS server, chat server, and NAS devices.
Solidworks SaaS - replaces simulation resources with cloud resources.
Slack SaaS - chat servers, administration of same.
There is an IT concept, SUDs, which is short for "Servers Under Desks." That is a situation where an employee sets up a server do do something and it "lives" under their desk because they don't have an official place to put it. And then it becomes mission critical without anyone knowing and there is a big fire drill when something disrupts the flow (employee leaves, server crashes/fails, scaling requirement isn't met, Etc)
Seems like an odd complaint. If you spend $1 on SaaS for some service you need, you are likely saving $10 on the cost it would take to build it for yourself. Surely the money you spend on SaaS is as much a measure of productive economy, provided of course you use it.