Companies fret as costs soar for software subscriptions (2019) • Hacker News Board

Re: Companies fret as costs soar for software subscriptions (2019)

#81

Post by Androider » Thu, Mar 05, 2020, 6:21 PM UTC

jariel wrote: post #29

$10K seems like a lot. 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 AW…

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.

Re: Companies fret as costs soar for software subscriptions (2019)

#82

Post by mm89 » Thu, Mar 05, 2020, 6:22 PM UTC

toomuchtodo wrote: post #36

duxup wrote: post #35

Earlier quoted context omitted.

Was there a free software gravy-train? 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...

Java, PHP, MySQL, Postgresql, OpenSSL, Linux come to mind.

Perhaps this is an effect of learning to program in the 2010s, but paying for a programming language (Java, PHP) sounds crazy to me.

Do people actually do this?

Re: Companies fret as costs soar for software subscriptions (2019)

#83

Post by fludlight » Thu, Mar 05, 2020, 6:22 PM UTC

phkahler wrote: post #43

JakeWesorick wrote: post #11

Lots of the SaaS products we use mean we don't have to hire more employees. So I'm not sure if dollars per employee is a meaningful stat.

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.

Rolling your own payroll is about as good an idea as rolling your own crypto.

Re: Companies fret as costs soar for software subscriptions (2019)

#84

Post by brongondwana » Thu, Mar 05, 2020, 6:23 PM UTC

toomuchtodo wrote: post #69

brongondwana wrote: post #67

Earlier quoted context omitted.

Citation: I run a SaaS company which contributes PRs, in kind contributions and dollars to key open source projects that we use.

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.

Re: Companies fret as costs soar for software subscriptions (2019)

#85

Post by mattkrick » Thu, Mar 05, 2020, 6:24 PM UTC

munchkinship wrote: post #47

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 clou…

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.

Re: Companies fret as costs soar for software subscriptions (2019)

#86

Post by humblebee » Thu, Mar 05, 2020, 6:25 PM UTC

jcrawfordor wrote: post #49

zcw100 wrote: post #27

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.

What free software that enterprises were using has been replaced by SaaS?

IRC for Slack was one that happened at a company I worked at.

Re: Companies fret as costs soar for software subscriptions (2019)

#87

Post by mattmar96 » Thu, Mar 05, 2020, 6:25 PM UTC

mm89 wrote: post #82

toomuchtodo wrote: post #36

Earlier quoted context omitted.

Java, PHP, MySQL, Postgresql, OpenSSL, Linux come to mind.

Perhaps this is an effect of learning to program in the 2010s, but paying for a programming language (Java, PHP) sounds crazy to me. Do people actually do this?

MatLab

Re: Companies fret as costs soar for software subscriptions (2019)

#88

Post by mm89 » Thu, Mar 05, 2020, 6:25 PM UTC

munchkinship wrote: post #47

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 clou…

Name some examples of price increases that were unfair?

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.

Re: Companies fret as costs soar for software subscriptions (2019)

#89

Post by jariel » Thu, Mar 05, 2020, 6:26 PM UTC

paxys wrote: post #8

If you are already spending >$200K per employee, spending another $10K to make them even 10% more productive is a bargain.

"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.

[1] https://www.thebalancecareers.com/average-salary-information...

[2] https://beebole.com/blog/how-to-calculate-the-real-cost-of-a...

Re: Companies fret as costs soar for software subscriptions (2019)

#90

Post by ac29 » Thu, Mar 05, 2020, 6:27 PM UTC

mm89 wrote: post #79

freepor wrote: post #45

Earlier quoted context omitted.

Yes but companies that are spending $60K on an employee aren’t spending $10K on their SaaS.

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.