8 ms·

Everytime I look into B2B software space (I am a complete outsider, btw), I see that here and there always pop up some new company, offering something similar t

Everytime I look into B2B software space (I am a complete outsider, btw), I see that here and there always pop up some new company, offering something similar to competitors and what can be stiched together using open source (and almost free, not counting the support) tools. How these companies thrive? Why customers keep buying new stuff, when there are solutions already to most of the business neeeds out there (and even free ones!). Is this still the case of idiot-managers doing decisions like "nobody was fired for buying IBM" (and now SAP, salesforce, <yourcompany>) or am I not seeing something? Genuine qustions, really interested.

rozenmd 5y ago
I built a website monitoring service (last I checked, 191 alternatives on AlternativeTo). Customers really really really don't want to have to run their own solution. They want to be able to pay someone to make the pain go away. (https://onlineornot.com https://onlineornot.com if you're curious)
- TAForObvReasons 5y ago
  I personally feel that uptime monitoring, status pages and similar solutions should always involve a third party. You can run your own service, but you would have to trust your service to be working properly. And in the exact cases where uptime monitoring is relevant, you may end up facing issues with your own monitoring service.
- kaloryfer 5y ago
  "Rated 5 stars by the founder, and his mates" that's so funny. ;)
Irishsteve 5y ago
Historically there has always been consultancies building 'bespoke' software for local companies. For example the CRM market usually had lots of local companies who built and maintained a CRM and would do add ons etc. for customers. Fast forward 20+ years later, that type of work is essentially the SAAS apps you see popping up. It's not a very capital intensive business to sustain so with a few thousand customers you could have a pretty healthy company and continue product development / grow your customer base. Why do people go for these new SAAS apps ? I've seen a few reasons 1) Pricing is somehow better 2) Integration and or support is more personal so the customer (usually a business stakeholder) prefers it. 3) Some specific feature exists that is important to the customer i.e ease of deletion for GDPR requests 4) CTO / CIO / Techie prefers it. Why I've seen people not go with the open source alternatives is the same oul reason. Focus. If you've less than 30 people at your org, unless one of those tools has a specific team covering that area - it will just split focus and end up in a suboptimal setup and create pain points in terms of support. Examples that come to mind, we used open source snowplow analytics because we had a data platform team that supported it and ran it full time. There was no cost with regards to the software, but certainly was with head-count to maintain, and evolve. We used external newsletter services to inform customers about updates etc. in the product. We went with an external paid service because this didn't tie directly into a specific team and for 100 - 500 euro a month we got what probably would have cost 0.3 - 1.0 full time head count to keep a minimal service up and running (Which meant -0.3 to -1.0 headcount working on important things for the company).
dutchbrit 5y ago
Competition is always good and sometimes one solution just fits a use case better than the other. When it comes to free solutions, you still need someone to update it and how stable are these solutions. How often are they updated with essential or nice to have features? How is the support?
hdjjhhvvhga 5y ago
It's not so much about being open source or not, but rather how easy it is to set up, integrate and maintain. People know this so many companies offer their products as open source plus a nice hosted (usually marketed as "cloud") version for easy access. So your choice is between two clicks and paying a few bucks using company card vs. spending a few hours or in complex cases days dealing with setup, resolving dependencies, solving any problems that arise when you deal with any complex piece of software and so on. Moreover, you need to maintain it yourself, so again you have a choice of updating it with each new version to stay up to date, without any guarantee that there are no problems with each update, or withhold the updates - but then you risk either a security incident or delaying it so long that updating gets difficult. So for non-essential services it's a no-brainer, you just pay a bit and forget it. Especially if it's open source so in the worst case you can just migrate to a self-hosted solution as nobody holds your data (incl. configurations etc.) hostage. It's quite different with core and expensive proprietary services though. In this case you better think and calculate everything precisely as you may regret going with a proprietary solution in the long run and switching can be painful.
input_sh 5y ago
Not enough resources? I work as a sysadmin in an org that highly prefers self-hosting (paid or non-paid, doesn't really matter). I spend a fairly considerable amount of time on updating services, updating plugins for our services, making sure backups work, integrating our SSO, testing updates on non-live environments etc etc. You can't just set it and forget it. When you approach a dozen or so self-hosted projects, you have to dedicate resources to keep everything running and up to date. Therefore, we consciously off-load some of the stuff to third parties — sometimes just for a couple of rough months, sometimes for far too long, sometimes permanently. It's far from being our only responsibility.
- kilroy123 5y ago
  Interesting, I've always worked at places that prefer to pay someone else for the trouble and use a ton of third-party tools for all the things. In the end, do you think the self-hosting route is worth all the trouble and costs?
  - input_sh 5y ago
    It's certainly cheaper to have a couple of sysadmins, but then again, it depends on how valuable is the stuff you're dealing with. Small web agency? Probably not. Supporting dozens of journalists (like my org)? Absolutely. There are also trade-offs. A few sysadmins can't host emails against hostile (sometimes state-sponsored) parties like Google can. We can't roll out a better messaging service than Signal. We could roll out our own VPN, but if the goal is getting lost in the noise, you want a popular VPN, not routing journalists' traffic through unique IPs. On the other hand, just Nextcloud and GitLab (two fairly common services) require about 10h/month if you don't want to be major versions behind or miss security patches in minor versions.
    - walteweiss 5y ago
      Would you mind to elaborate on the VPN thing? We do work with journalists as well and we see private Wire Guard configuration as a better option, as nobody knows that’s a VPN a journalist connects to.
jasode 5y ago
>Is this still the case of idiot-managers doing decisions like "nobody was fired for buying IBM" (and now SAP, salesforce, Enterprise software like SAP and Salesforce are gigantic comprehensive business process management tools for Fortune 1000 companies that can't be replicated by stitching together open source projects. Even tech companies with expert domain knowledge of software programming like Microsoft, Amazon, Apple, Google, etc all buy SAP licenses to use. Google recently switched from Oracle Financials to SAP. None of those tech companies are strangers to the open source ecosystem and yet they pay millions every year in SAP licenses. Yes, a small business might be able to use an open source accounting package instead of paying $150 for Intuit QuickBooks. In contrast, no free software has the same scope and integration of SAP to save $millions. Analogous situation with GIMP vs Photoshop. Why do so many pay for Photoshop when GIMP is free? Because as great as GIMP is... it is still missing many features that Photoshop has had for years. CMYK color support, layer effects, latest algorithmic filters, action macros without requiring script programming, etc. This is the problem with most of these "open source alternatives to $TOOLS$" type of lists: they usually don't tell you what critical features are missing that prevent them from being realistic substitutes.
- xvilka 5y ago
  Gigantic part of products like SAP etc (maybe the main part) is their integration with local standards and legislation in every jurisdiction the company operates. Yes, writing code that can substitute their products is probably easy. Knowing what exactly to write is hard, especially for multinationals.
  - gmueckl 5y ago
    Another big part is the under the hood flexibility, at least in SAP. What you usually see as a user is a specific configuration of the package that has been adapted to your company's workflows. There is a lot of domain knowledge and implementation effort hidden within that configurability.
pembrook 5y ago
I think a good way to get an understanding of this is to start a company yourself. You’ll quickly learn why businesses make the decision to pay for software instead of cobbling together open source. Let’s say you’re a small, but growing company doing $2M ARR. You absolutely could run your email marketing using an open source tool hooked up to Amazon SES and save a thousand bucks a month over something like Mailchimp. But the problem is, it’ll take you up to a week to get setup (thousands of dollars lost already) and then none of your employees will understand how to send emails with it (thousands of dollars wasted in training). Once they do understand how to use it, it will likely still be slower than a dummy-proof visual UI that has been battle tested on thousands of customers instead of an esoteric open source solution. If it wastes 8 hours of employee time per month, that’s another $1k a month lost. Then when something goes wrong, which it always does, it’ll require expensive developer time (likely costing the company $1000-$1500/day per engineer all-in) instead of a simple support phone call. And when you realize the open source version is missing a feature you need, you have to build it yourself, of which any trivial engineering task inside the company will cost at least $5k in employee time. Not to mention the cost to maintain the feature when the open source team breaks it with an update. So, you’re already in the hole and losing money compared to Mailchimp. This says nothing about the opportunity cost of engineering time that could have been spent serving your own customers, allowing you to generate more revenue. You can generate revenue to infinity, but can only cut costs to zero. For a growing company, time spent on cost saving over making new sales is likely time wasted.
- yakshaving_jgt 5y ago
  > If it wastes 8 hours of employee time per month, that’s another $1k a month lost… it’ll require expensive developer time (likely costing the company $1000-$1500/day per engineer all-in) That's not universally true, of course. That money would buy you a week of developer time in most of Europe, and even a month of developer time in some developing economies.
  - pembrook 5y ago
    > That money would buy you a week of developer time in most of Europe That's only true if you live in Poland and also ignore the all-in cost of your employees. A good rule of thumb is to assume 2-3x salary for the all-in cost of having a workforce.
Radim 5y ago
I live on both sides of this divide, so maybe I can offer my 2 cents: * Created & maintain Gensim and other open source, used by thousands of companies for free. * Created & sell an (unrelated) B2B product. Yes, I've had B2B prospects who thought they could "stitch my product together using open source". These people are invariably either low budget & high-maintenance, or unsophisticated = don't realize how much work the "just stitching" part is. Plus how little the stitched-together-from-open-source part actually is of the whole. Good riddance of the former – go ahead and use open source, god speed. Your time is free, mine is not. The latter often come back after being burned & learning the ropes. Maybe it helps to think of it this way: savvy companies are much more risk-averse than your typical open source hacker. They price in risk into their decision making. So your assertion of "almost free" is the root of the issue: a business sees the lack of business scaffolding (stability, continuity, legal, management…) and thinks "Expensive! We'll have to do this ourselves! Headache! Liability! Extra cost!". Sure, "free code" helps, everybody likes free, but the code is not the only consideration.
- carschno 5y ago
  This sounds so familiar. I have worked in several startups that were commercializing NLP-based solutions for different problems. The approach of management (although relatively educated in the field, but obviously not knowledgeable in everything) was essentially expecting from their research engineers: - look into state-of-the-art related to our problem - think very hard about how to apply the academic state-of-the-art to our problem - stitch a fully fletched software solution together The problem obviously emerged reliably in the last step, which was supposed to take negligible time and should be done by more junior team members (because they were not smart enough for step 2). The result was a bunch of prototypes running in production, and huge costs for keeping the whole thing somehow running.
snowwrestler 5y ago
This question may be easier to understand in the general case: why don’t people do everything themselves? Why don’t people paint their own houses? Why don’t people fix their own cars? Why don’t people sew their own clothes? Why don’t people cook their own food? Of course a lot of people do do these things themselves! Just like a lot of people do use free and/or open source software tools. But a lot of people don’t do these things, at least not all of them, and probably not all the time. If you can think of the reasons you pay for things you might be able to do yourself, you can start to understand why a business does too. It usually comes down to opportunity cost and specialization—answering the question “how is my limited time best spent?”
deleted 5y ago
[deleted]

rozenmd 5y ago

I built a website monitoring service (last I checked, 191 alternatives on AlternativeTo). Customers really really really don't want to have to run their own solution. They want to be able to pay someone to make the pain go away. (https://onlineornot.com https://onlineornot.com if you're curious)

TAForObvReasons 5y ago
I personally feel that uptime monitoring, status pages and similar solutions should always involve a third party. You can run your own service, but you would have to trust your service to be working properly. And in the exact cases where uptime monitoring is relevant, you may end up facing issues with your own monitoring service.
kaloryfer 5y ago
"Rated 5 stars by the founder, and his mates" that's so funny. ;)

Irishsteve 5y ago

Historically there has always been consultancies building 'bespoke' software for local companies. For example the CRM market usually had lots of local companies who built and maintained a CRM and would do add ons etc. for customers. Fast forward 20+ years later, that type of work is essentially the SAAS apps you see popping up. It's not a very capital intensive business to sustain so with a few thousand customers you could have a pretty healthy company and continue product development / grow your customer base. Why do people go for these new SAAS apps ? I've seen a few reasons 1) Pricing is somehow better 2) Integration and or support is more personal so the customer (usually a business stakeholder) prefers it. 3) Some specific feature exists that is important to the customer i.e ease of deletion for GDPR requests 4) CTO / CIO / Techie prefers it. Why I've seen people not go with the open source alternatives is the same oul reason. Focus. If you've less than 30 people at your org, unless one of those tools has a specific team covering that area - it will just split focus and end up in a suboptimal setup and create pain points in terms of support. Examples that come to mind, we used open source snowplow analytics because we had a data platform team that supported it and ran it full time. There was no cost with regards to the software, but certainly was with head-count to maintain, and evolve. We used external newsletter services to inform customers about updates etc. in the product. We went with an external paid service because this didn't tie directly into a specific team and for 100 - 500 euro a month we got what probably would have cost 0.3 - 1.0 full time head count to keep a minimal service up and running (Which meant -0.3 to -1.0 headcount working on important things for the company).

dutchbrit 5y ago

Competition is always good and sometimes one solution just fits a use case better than the other. When it comes to free solutions, you still need someone to update it and how stable are these solutions. How often are they updated with essential or nice to have features? How is the support?

hdjjhhvvhga 5y ago

It's not so much about being open source or not, but rather how easy it is to set up, integrate and maintain. People know this so many companies offer their products as open source plus a nice hosted (usually marketed as "cloud") version for easy access. So your choice is between two clicks and paying a few bucks using company card vs. spending a few hours or in complex cases days dealing with setup, resolving dependencies, solving any problems that arise when you deal with any complex piece of software and so on. Moreover, you need to maintain it yourself, so again you have a choice of updating it with each new version to stay up to date, without any guarantee that there are no problems with each update, or withhold the updates - but then you risk either a security incident or delaying it so long that updating gets difficult. So for non-essential services it's a no-brainer, you just pay a bit and forget it. Especially if it's open source so in the worst case you can just migrate to a self-hosted solution as nobody holds your data (incl. configurations etc.) hostage. It's quite different with core and expensive proprietary services though. In this case you better think and calculate everything precisely as you may regret going with a proprietary solution in the long run and switching can be painful.

input_sh 5y ago

Not enough resources? I work as a sysadmin in an org that highly prefers self-hosting (paid or non-paid, doesn't really matter). I spend a fairly considerable amount of time on updating services, updating plugins for our services, making sure backups work, integrating our SSO, testing updates on non-live environments etc etc. You can't just set it and forget it. When you approach a dozen or so self-hosted projects, you have to dedicate resources to keep everything running and up to date. Therefore, we consciously off-load some of the stuff to third parties — sometimes just for a couple of rough months, sometimes for far too long, sometimes permanently. It's far from being our only responsibility.

kilroy123 5y ago
Interesting, I've always worked at places that prefer to pay someone else for the trouble and use a ton of third-party tools for all the things. In the end, do you think the self-hosting route is worth all the trouble and costs?
- input_sh 5y ago
  It's certainly cheaper to have a couple of sysadmins, but then again, it depends on how valuable is the stuff you're dealing with. Small web agency? Probably not. Supporting dozens of journalists (like my org)? Absolutely. There are also trade-offs. A few sysadmins can't host emails against hostile (sometimes state-sponsored) parties like Google can. We can't roll out a better messaging service than Signal. We could roll out our own VPN, but if the goal is getting lost in the noise, you want a popular VPN, not routing journalists' traffic through unique IPs. On the other hand, just Nextcloud and GitLab (two fairly common services) require about 10h/month if you don't want to be major versions behind or miss security patches in minor versions.
  - walteweiss 5y ago
    Would you mind to elaborate on the VPN thing? We do work with journalists as well and we see private Wire Guard configuration as a better option, as nobody knows that’s a VPN a journalist connects to.

jasode 5y ago

>Is this still the case of idiot-managers doing decisions like "nobody was fired for buying IBM" (and now SAP, salesforce, Enterprise software like SAP and Salesforce are gigantic comprehensive business process management tools for Fortune 1000 companies that can't be replicated by stitching together open source projects. Even tech companies with expert domain knowledge of software programming like Microsoft, Amazon, Apple, Google, etc all buy SAP licenses to use. Google recently switched from Oracle Financials to SAP. None of those tech companies are strangers to the open source ecosystem and yet they pay millions every year in SAP licenses. Yes, a small business might be able to use an open source accounting package instead of paying $150 for Intuit QuickBooks. In contrast, no free software has the same scope and integration of SAP to save $millions. Analogous situation with GIMP vs Photoshop. Why do so many pay for Photoshop when GIMP is free? Because as great as GIMP is... it is still missing many features that Photoshop has had for years. CMYK color support, layer effects, latest algorithmic filters, action macros without requiring script programming, etc. This is the problem with most of these "open source alternatives to $TOOLS$" type of lists: they usually don't tell you what critical features are missing that prevent them from being realistic substitutes.

xvilka 5y ago
Gigantic part of products like SAP etc (maybe the main part) is their integration with local standards and legislation in every jurisdiction the company operates. Yes, writing code that can substitute their products is probably easy. Knowing what exactly to write is hard, especially for multinationals.
- gmueckl 5y ago
  Another big part is the under the hood flexibility, at least in SAP. What you usually see as a user is a specific configuration of the package that has been adapted to your company's workflows. There is a lot of domain knowledge and implementation effort hidden within that configurability.

pembrook 5y ago

I think a good way to get an understanding of this is to start a company yourself. You’ll quickly learn why businesses make the decision to pay for software instead of cobbling together open source. Let’s say you’re a small, but growing company doing $2M ARR. You absolutely could run your email marketing using an open source tool hooked up to Amazon SES and save a thousand bucks a month over something like Mailchimp. But the problem is, it’ll take you up to a week to get setup (thousands of dollars lost already) and then none of your employees will understand how to send emails with it (thousands of dollars wasted in training). Once they do understand how to use it, it will likely still be slower than a dummy-proof visual UI that has been battle tested on thousands of customers instead of an esoteric open source solution. If it wastes 8 hours of employee time per month, that’s another $1k a month lost. Then when something goes wrong, which it always does, it’ll require expensive developer time (likely costing the company $1000-$1500/day per engineer all-in) instead of a simple support phone call. And when you realize the open source version is missing a feature you need, you have to build it yourself, of which any trivial engineering task inside the company will cost at least $5k in employee time. Not to mention the cost to maintain the feature when the open source team breaks it with an update. So, you’re already in the hole and losing money compared to Mailchimp. This says nothing about the opportunity cost of engineering time that could have been spent serving your own customers, allowing you to generate more revenue. You can generate revenue to infinity, but can only cut costs to zero. For a growing company, time spent on cost saving over making new sales is likely time wasted.

yakshaving_jgt 5y ago
> If it wastes 8 hours of employee time per month, that’s another $1k a month lost… it’ll require expensive developer time (likely costing the company $1000-$1500/day per engineer all-in) That's not universally true, of course. That money would buy you a week of developer time in most of Europe, and even a month of developer time in some developing economies.
- pembrook 5y ago
  > That money would buy you a week of developer time in most of Europe That's only true if you live in Poland and also ignore the all-in cost of your employees. A good rule of thumb is to assume 2-3x salary for the all-in cost of having a workforce.

Radim 5y ago

I live on both sides of this divide, so maybe I can offer my 2 cents: * Created & maintain Gensim and other open source, used by thousands of companies for free. * Created & sell an (unrelated) B2B product. Yes, I've had B2B prospects who thought they could "stitch my product together using open source". These people are invariably either low budget & high-maintenance, or unsophisticated = don't realize how much work the "just stitching" part is. Plus how little the stitched-together-from-open-source part actually is of the whole. Good riddance of the former – go ahead and use open source, god speed. Your time is free, mine is not. The latter often come back after being burned & learning the ropes. Maybe it helps to think of it this way: savvy companies are much more risk-averse than your typical open source hacker. They price in risk into their decision making. So your assertion of "almost free" is the root of the issue: a business sees the lack of business scaffolding (stability, continuity, legal, management…) and thinks "Expensive! We'll have to do this ourselves! Headache! Liability! Extra cost!". Sure, "free code" helps, everybody likes free, but the code is not the only consideration.

carschno 5y ago
This sounds so familiar. I have worked in several startups that were commercializing NLP-based solutions for different problems. The approach of management (although relatively educated in the field, but obviously not knowledgeable in everything) was essentially expecting from their research engineers: - look into state-of-the-art related to our problem - think very hard about how to apply the academic state-of-the-art to our problem - stitch a fully fletched software solution together The problem obviously emerged reliably in the last step, which was supposed to take negligible time and should be done by more junior team members (because they were not smart enough for step 2). The result was a bunch of prototypes running in production, and huge costs for keeping the whole thing somehow running.

snowwrestler 5y ago

This question may be easier to understand in the general case: why don’t people do everything themselves? Why don’t people paint their own houses? Why don’t people fix their own cars? Why don’t people sew their own clothes? Why don’t people cook their own food? Of course a lot of people do do these things themselves! Just like a lot of people do use free and/or open source software tools. But a lot of people don’t do these things, at least not all of them, and probably not all the time. If you can think of the reasons you pay for things you might be able to do yourself, you can start to understand why a business does too. It usually comes down to opportunity cost and specialization—answering the question “how is my limited time best spent?”

deleted 5y ago

[deleted]