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As someone who has spent a couple of decades in mostly enterprise environments, I assure you this article is largely correct - but it's not as bad as it seems.

by beat 8y ago

As someone who has spent a couple of decades in mostly enterprise environments, I assure you this article is largely correct - but it's not as bad as it seems. I'm reminded of the time I went to a meetup in Silicon Valley, talking about selling to the enterprise, and hearing a bunch of people shocked at how slow everything is, the scope of failures, and how the enterprise people must be really stupid and lazy. Nah. Enterprise people are just as smart and hardworking as startups. But they have much bigger problems. Just as it's harder to turn a battleship than a speedboat, the scale matters. One thing I pointed out to people at the meetup... if you heard of a startup doing $50m annually, you'd think they were big and successful, right? I've worked on several different projects that size in the enterprise, and they tend to be just a sideline in some behemoth doing tens of billions of dollars (or more) of business a year. One thing I often say about the enterprise, and what makes it different from startups - in the enterprise, it's more important to not be wrong than to be right. This encourages cautious behavior. Missed opportunities are better than disasters. Anyone with real experience in the enterprise has been on a proper death march. They've seen just how wrong things can get. Put a couple of years of labor in, handcuffed to a shambling corpse of a zombie project, and your attitude toward failure changes. The flip side, though, and this is awesome, is that you can work on really BIG things. Much bigger than any startup is tackling. That's fun.

da02 8y ago
What are the range of company profit margins on the 10s of billions of dollars enterprise companies? I thought high costs would lead to razor-thin margins.
- beat 8y ago
  Not necessarily. They often have huge moats. And they often have highly profitable businesses just because competing is dreadfully hard and complex, so they can afford for their software that makes the business work to be sucky and slow. The real danger for the big corporation business model is technological/social shifts wiping their business model out, not competition. I saw this when I worked at the Fed, years ago. I worked in a division that had two major financial products. One was 80% of their revenue and very powerful, a nearly billion dollar business. The other (what I worked on) was 20% of the division revenue. In the span of seven or eight years, those numbers flipped. The big line of business basically collapsed due to changes in the financial industry, and the smaller product basically ate all of its revenue and then some. This meant hundreds of layoffs and some very painful realignment at the executive level, including months wasted on a power grab.
  - ethbro 8y ago
    > And they often have highly profitable businesses just because competing is dreadfully hard and complex, so they can afford for their software that makes the business work to be sucky and slow. Prototypical example: health care insurance claim management systems. You cannot begin to imagine how hard it is to rip one of those out and replace it. But the broader lesson, in keeping with the article's balance, is that enterprise tends to calcify and optimize existing processes. This is excellent, if say, you need to scale a process to 10x the volume without wrecking your margin. Or survive a government regulatory audit. This is terrible if your market upends and you need to make sweeping changes to stay relevant. (viz Kmart and Sear's slow immolation) Sucky, slow software is serving a purpose. It just usually isn't the most important purpose in a rapidly mutating world.
thecleaner 8y ago
The "not wrong" argument resonates with me. I also think that the amount of liability is also why startups may find it hard to land clients in the enterprise space. I mean if SAP gets a contract and screws it up, they can be held liable. Startups might just go broke and then poof the product/support is gone. > The flip side, though, and this is awesome, is that you can work on really BIG things. Much bigger than any startup is tackling. That's fun. But big in what sense ?Could you give some examples of these projects or comment on their nature if you can't talk exactly about the projects ?
- zerkten 8y ago
  > the amount of liability is also why startups may find it hard to land clients in the enterprise space. This is definitely one factor, but I think it's something that enterprises manage on a regular basis. They have many suppliers and different arrangements to cover the risks. The problem is often on the startup side where there is a reticence to do anything that would change the product to suit a particular customer and "compromise the mission" of the startup. End users are important, but aren't the real customers of an enterprise startup. If you are relying on enterprise customers this will naturally bring a level of tech debt in order to service them. It's better to embrace this than avoid it in many cases. I've seen startups in denial that certain features would be useful to many customers, only to provide them to a subset of customers where they are legally obligated, simply to maintain a facade that they aren't really a traditional enterprise startup (to support recruitment, product management egos, etc.)
  - thecleaner 8y ago
    > They have many suppliers and different arrangements to cover the risks Doesn't that push up integration costs ? For every new product there is data migration from the old one, installation costs, API changes (maybe not this) and just cost due to downtime.
    - ethbro 8y ago
      In my experiences, large enterprises make decisions based on integration surety over integration cost (if it's competitive within an order of magnitude). A ridiculous number of integrations fail. If you can convince someone with authority (either technically or via relationship) that an integration will be successful, you're in. This is IBM and SAP's greatest asset: knowing that, if shit hits the fan, management can write a check for $x,000,000 and a team of engineers will be on-site tomorrow to fix the effort. Not having that is exactly what scares management about open source and/or startups.
tootie 8y ago
I honestly think enterprise IT folks are just not as good. I've been in and out of a lot of enterprises as an employee or (more commonly) part of a consulting crew asked to come in and work fast. Big companies reward tribal knowledge, relationships and politics much more than lean organizations. There are people who play the game well enough that they don't need to know what they're doing. People who have run systems for 10+ years become indispensable regardless of their ability. I can sum up 90% of enterprise fails in one word and it's "silos". Every system and every discipline is a fiefdom that must be protected. I have actually witnessed fast enterprises where you wouldn't expect because they successfully broke their silos and put everyone working on the same product on the same floor answering to the same bosses regardless of what layer was theirs.

by beat 8y ago

da02 8y ago

What are the range of company profit margins on the 10s of billions of dollars enterprise companies? I thought high costs would lead to razor-thin margins.

beat 8y ago
Not necessarily. They often have huge moats. And they often have highly profitable businesses just because competing is dreadfully hard and complex, so they can afford for their software that makes the business work to be sucky and slow. The real danger for the big corporation business model is technological/social shifts wiping their business model out, not competition. I saw this when I worked at the Fed, years ago. I worked in a division that had two major financial products. One was 80% of their revenue and very powerful, a nearly billion dollar business. The other (what I worked on) was 20% of the division revenue. In the span of seven or eight years, those numbers flipped. The big line of business basically collapsed due to changes in the financial industry, and the smaller product basically ate all of its revenue and then some. This meant hundreds of layoffs and some very painful realignment at the executive level, including months wasted on a power grab.
- ethbro 8y ago
  > And they often have highly profitable businesses just because competing is dreadfully hard and complex, so they can afford for their software that makes the business work to be sucky and slow. Prototypical example: health care insurance claim management systems. You cannot begin to imagine how hard it is to rip one of those out and replace it. But the broader lesson, in keeping with the article's balance, is that enterprise tends to calcify and optimize existing processes. This is excellent, if say, you need to scale a process to 10x the volume without wrecking your margin. Or survive a government regulatory audit. This is terrible if your market upends and you need to make sweeping changes to stay relevant. (viz Kmart and Sear's slow immolation) Sucky, slow software is serving a purpose. It just usually isn't the most important purpose in a rapidly mutating world.

thecleaner 8y ago

The "not wrong" argument resonates with me. I also think that the amount of liability is also why startups may find it hard to land clients in the enterprise space. I mean if SAP gets a contract and screws it up, they can be held liable. Startups might just go broke and then poof the product/support is gone. > The flip side, though, and this is awesome, is that you can work on really BIG things. Much bigger than any startup is tackling. That's fun. But big in what sense ?Could you give some examples of these projects or comment on their nature if you can't talk exactly about the projects ?

zerkten 8y ago
> the amount of liability is also why startups may find it hard to land clients in the enterprise space. This is definitely one factor, but I think it's something that enterprises manage on a regular basis. They have many suppliers and different arrangements to cover the risks. The problem is often on the startup side where there is a reticence to do anything that would change the product to suit a particular customer and "compromise the mission" of the startup. End users are important, but aren't the real customers of an enterprise startup. If you are relying on enterprise customers this will naturally bring a level of tech debt in order to service them. It's better to embrace this than avoid it in many cases. I've seen startups in denial that certain features would be useful to many customers, only to provide them to a subset of customers where they are legally obligated, simply to maintain a facade that they aren't really a traditional enterprise startup (to support recruitment, product management egos, etc.)
- thecleaner 8y ago
  > They have many suppliers and different arrangements to cover the risks Doesn't that push up integration costs ? For every new product there is data migration from the old one, installation costs, API changes (maybe not this) and just cost due to downtime.
  - ethbro 8y ago
    In my experiences, large enterprises make decisions based on integration surety over integration cost (if it's competitive within an order of magnitude). A ridiculous number of integrations fail. If you can convince someone with authority (either technically or via relationship) that an integration will be successful, you're in. This is IBM and SAP's greatest asset: knowing that, if shit hits the fan, management can write a check for $x,000,000 and a team of engineers will be on-site tomorrow to fix the effort. Not having that is exactly what scares management about open source and/or startups.

tootie 8y ago

I honestly think enterprise IT folks are just not as good. I've been in and out of a lot of enterprises as an employee or (more commonly) part of a consulting crew asked to come in and work fast. Big companies reward tribal knowledge, relationships and politics much more than lean organizations. There are people who play the game well enough that they don't need to know what they're doing. People who have run systems for 10+ years become indispensable regardless of their ability. I can sum up 90% of enterprise fails in one word and it's "silos". Every system and every discipline is a fiefdom that must be protected. I have actually witnessed fast enterprises where you wouldn't expect because they successfully broke their silos and put everyone working on the same product on the same floor answering to the same bosses regardless of what layer was theirs.