SaaS Needs a Single Point of Purchase • Hacker News Board

Re: SaaS Needs a Single Point of Purchase

#111

Post by GordonS » Fri, Nov 13, 2020, 6:42 PM UTC

alangibson wrote: post #103

GordonS wrote: post #100

Earlier quoted context omitted.

As someone who works in the enterprise space, I fully agree with you. In every enterprise I've ever worked at, the purchasing process is a nightmare - it invariably takes months at best to purchase anything, and the bureaucracy, meetings and wasted time will cost you your soul. When you add up all the wasted man-hours it takes to purchase a $100 app, it will easily run to an order of magnitude more - at best . Once y…

I agree with you in principle, but they're not going to reform because reform is in they eye of the beholder. For them everything is fine. They don't care how many gray hairs it costs you . Given that, it seems to me wise to look for ways to make purchasing less nightmarish without needing to reform several thousand large bureaucracies.

Even in the "happy path" where vendors accept POs, 30-day credit terms etc, the purchasing process is still a nightmare, even if it's less so than for card payments. And it's not "just" about stressing out those that interact with the purchasing process - big organisations waste a lot of otherwise productive hours, affecting their bottom line.

When I consider the vast sums of money wasted by the purchasing bureaucracy where I work, it boggles the mind.

Everyone knows it, but inertia and fear of change are rampant in large organisations.

Re: SaaS Needs a Single Point of Purchase

#112

Post by GordonS » Fri, Nov 13, 2020, 6:45 PM UTC

pembrook wrote: post #106

GordonS wrote: post #100

Earlier quoted context omitted.

As someone who works in the enterprise space, I fully agree with you. In every enterprise I've ever worked at, the purchasing process is a nightmare - it invariably takes months at best to purchase anything, and the bureaucracy, meetings and wasted time will cost you your soul. When you add up all the wasted man-hours it takes to purchase a $100 app, it will easily run to an order of magnitude more - at best . Once y…

This is why any smart Saas company is charging, at minimum, thousands of dollars per month for medium-large sized customers. They know the purchasing process will be the same headache regardless of whether the product costs $100/month or $10,000/month. If the company is large and the tool enables collaboration and time-saving, $10,000 is literally a rounding error for a company with 500+ employees in comparison to th…

I agree. Incredibly though, the same organisations will spend hundreds of man-hours quibbling over whether a dev team really needs a $20 app.

Sometimes I really hate working for large companies!

Re: SaaS Needs a Single Point of Purchase

#113

Post by dvtrn » Fri, Nov 13, 2020, 6:51 PM UTC

GordonS wrote: post #112

pembrook wrote: post #106

Earlier quoted context omitted.

This is why any smart Saas company is charging, at minimum, thousands of dollars per month for medium-large sized customers. They know the purchasing process will be the same headache regardless of whether the product costs $100/month or $10,000/month. If the company is large and the tool enables collaboration and time-saving, $10,000 is literally a rounding error for a company with 500+ employees in comparison to th…

I agree. Incredibly though, the same organisations will spend hundreds of man-hours quibbling over whether a dev team really needs a $20 app. Sometimes I really hate working for large companies!

I’ve come to the realization as a leader that I just do not have the skin for budget discussions of any form or variety beyond negotiating with potential hires what they would like to be paid.

And what you just said about $20 apps is 100% why.

I think it’s probably if not the entire reason, then part of a factor of having less power and influence in the former (Though being expected to be answerable in full for “why did cost x go up?”), and measurably more in the latter-personal history has born this out with a predictable consistency.

Ask me to do the math, I will happily and eagerly get to work. Ask me to sit on a budget call and deal with the politics of who gets how many beans and I want to throw myself out a top floor window.

Re: SaaS Needs a Single Point of Purchase

#114

Post by cosmie » Fri, Nov 13, 2020, 7:04 PM UTC

mtnGoat wrote: post #83

Sounds more like certain purchasing departments need to modernize, not the other way around. IMHO. Not being able to use the right tools for the job, because some bean counters don't like complexity, is silly and shortsighted.

That's pretty much not going to happen. That said, what you can do is:

- Provide a plan that fit within common purchasing card limits/tiers, to enable those who want to bypass the internal controls of their purchasing department and just slip it in on an expense report and be done with it.

- Provide a plan that adds several zeros, to make it worth the hassle when you get a customer that does try to go through the official purchasing department process. This will entail contract reviews, security/compliance certifications/audits, invoicing hassles, ongoing support requests (you will get lots of emails, even for things that could trivially be self-serviced by the client), etc. You'll be sinking lots of labor into this process regardless of the price tag, so make it worth it.

Re: SaaS Needs a Single Point of Purchase

#115

Post by pembrook » Fri, Nov 13, 2020, 7:04 PM UTC

GordonS wrote: post #112

pembrook wrote: post #106

Earlier quoted context omitted.

This is why any smart Saas company is charging, at minimum, thousands of dollars per month for medium-large sized customers. They know the purchasing process will be the same headache regardless of whether the product costs $100/month or $10,000/month. If the company is large and the tool enables collaboration and time-saving, $10,000 is literally a rounding error for a company with 500+ employees in comparison to th…

I agree. Incredibly though, the same organisations will spend hundreds of man-hours quibbling over whether a dev team really needs a $20 app. Sometimes I really hate working for large companies!

Me: "John wants to use this $20 app"

Manager: "Ok, schedule a meeting with the 3 of us and my boss to determine if it makes sense"

Me: "The 4 of us talking about this for a half hour will cost the company $375."

Manager: "..."

[cut to inside the $375 meeting]

Manager's Manager: "Things are tight, we just don't have the budget this year."

Re: SaaS Needs a Single Point of Purchase

#116

Post by GordonS » Fri, Nov 13, 2020, 7:24 PM UTC

pembrook wrote: post #115

GordonS wrote: post #112

Earlier quoted context omitted.

I agree. Incredibly though, the same organisations will spend hundreds of man-hours quibbling over whether a dev team really needs a $20 app. Sometimes I really hate working for large companies!

Me: "John wants to use this $20 app" Manager: "Ok, schedule a meeting with the 3 of us and my boss to determine if it makes sense" Me: "The 4 of us talking about this for a half hour will cost the company $375." Manager: "..." [cut to inside the $375 meeting] Manager's Manager: "Things are tight, we just don't have the budget this year."

In reality that would only be the first of several meetings. It might be funny if it wasn't true.

I recall a couple of years back I was trying to purchase a POEditor subscription, which is $14/m. This was for a large dev project where the customer was paying us around $10M. After several meetings encompassing a ridiculous number of people, many of whom weren't related to the project in any way, I added up the costs and showed the PM: it was well into 5 figures, not accounting for loss of productive time for our customer. The PM just shrugged, "that's the way it works, they won't change".

Re: SaaS Needs a Single Point of Purchase

#117

Post by npsimons » Fri, Nov 13, 2020, 7:25 PM UTC

GordonS wrote: post #100

mtnGoat wrote: post #83

Sounds more like certain purchasing departments need to modernize, not the other way around. IMHO. Not being able to use the right tools for the job, because some bean counters don't like complexity, is silly and shortsighted.

As someone who works in the enterprise space, I fully agree with you. In every enterprise I've ever worked at, the purchasing process is a nightmare - it invariably takes months at best to purchase anything, and the bureaucracy, meetings and wasted time will cost you your soul. When you add up all the wasted man-hours it takes to purchase a $100 app, it will easily run to an order of magnitude more - at best . Once y…

Honestly, as someone also currently inside a v. large bureaucracy, I concur. Sometimes it almost feels as if half of the "value" or "work" in selling to big businesses that I hear of is in navigating the purchasing departments. Once you've done that, you're golden. It's like picking the lock on a safe.

Re: SaaS Needs a Single Point of Purchase

#118

Post by kevincox » Fri, Nov 13, 2020, 7:28 PM UTC

What is a PO?

Re: SaaS Needs a Single Point of Purchase

#119

Post by npsimons » Fri, Nov 13, 2020, 7:30 PM UTC

cwp wrote: post #101

hobs wrote: post #84

Earlier quoted context omitted.

Yeah, telling your customers that they should modernize is a great way to let someone else sell to them.

OTOH, telling an entire industry to reorganize to accommodate your internal processes is also a fools errand. Just imagine the dilemma this puts on the growth team: "Hmm, spend 1000x effort to land this one customer or fix an obscure bug in the signup page and get an extra 1000 self-serve customers this month. Golly, I don't know..."

Seriously, though, GP is correct. Small companies that can adapt and snag these contracts won't push for change because they have a "competitive" advantage, and the businesses they sell to won't change because it's too painful for them. The whole industry isn't being asked to change, small B2B software houses will just keep ticking along, navigating the maze of purchasing to live high on the hog.

Re: SaaS Needs a Single Point of Purchase

#120

Post by conductr » Fri, Nov 13, 2020, 7:48 PM UTC

numbsafari wrote: post #12

jakozaur wrote: post #7

As a director at successful startup I see how we went from being able to buy new software in minutes by pulling credit card to multi stage procurement process of public company. All changes got good intention: 1. We need to be secure. Know what kind of data there. 2. We need check and balances for finance. 3. We need to be compliant. Etc. I would love if there would be open consortium that could provide a lot of serv…

In healthcare this is referred to as the Group Purchasing Organization (GPO) model. Instead of waiting for sales orgs to band together, purchasers band together to negotiate and vet products and services. This is a much better model, in my opinion, because it keeps the incentives on the side of the buyers, not the sellers. Keep in mind, certain products still have to be vetted by the individual purchasers due to stat…

What also happens in healthcare is the manufacturer raises prices to account for margins of/lost to the GPOs. Individual buyers become required to buy through GPO as the price differences are stark. As GPO gains negotiating power, they want to keep more spread for themselves. Manufacturers adjust. The cycle continues, all the while the ecosystem becomes more expensive since you inserted yet another middle man.