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The Death of Licensed Enterprise Software?
tfsm writes "Andy Singleton wrote a short, interesting article about the looming death of traditionally licensed, proprietary, enterprise software over at The IT Manager's Journal. In it, he talks about the declining revenues of software giants such as Siebel. There are several causes, but one, he suggests, is erosion from Open Source offerings."
This is probably very true. I mean, recently I was looking into partition/harddrive/virtual drive encryption programs. There are a number of identical looking commercial apps available. However, TrueCrypt(sourceforge) offers the same or better features really. Honestly, if you have to choose between the free solution, which is a mature stable choice, and one that will cost your company hundreds of dollars per license.... well, it's not much of a choice, is it?
Great articles. No sales numbers. No real explination given. Just lots of guesses and assumptions my some guy. I'm impressed. About all I've learned is that Siebel's licensing revenue is down. That, and it's written by a guy whose job is to sell software to big companies. Wow.
I don't respond to AC's.
Do it Yourself. This is the keystone for future business success.
You don't run a business, do you? Any business person can tell you that this is 100% wrong. You should only design your own software if 1. Your needs can't be filled by off-the-shelf stuff 2. There's some kind of value or competitive advantage to doing it yourself 3. You can afford it.
Unless you're a software company, software is just a tool like any others. You may as well have said that the only way to success in any business is to build your own trucks instead of simply bying them.
I don't respond to AC's.
Rather than a product. The problem with software (any information) as a product is that there is no scarcity, it's easy to copy and make more.
Markets require a supply and a demand, to make any information a product rather than a service you have to find a way to limit supply of something which isn't naturally scarce, licenses, keys, dongles etc. Without these, limitations the supply increases to infinity and the price therefore tends towards zero.
You may not like him, but Richard Stallman is a bloody clever bloke. The GPL and similar basically eliminate the artificial scarcity limitations imposed by most commercial software vendors.
Deleted
Open source is taking a dent, but the biggest threat to enterprise level and vertical markets is the products themselves.
Typically they are low quality with bad quirks. So the company finally get's sick of it and has the replacement software written in house to replace them instead.
Now the company OWNS the app they rely on and pay's less in "annual licensing fees" for the maintaince of the software and codebase by having on-staff programmers that are NOT dedicated programmer positions.
I.E. the IT/Programmer is very common today. you change printer toner, install a new PC and add a feature to that Billing application, or squash a bug in the shipping application.
Corperations are now demanding IT and IS people that are capable of all aspects and are expected to perform all aspects. That "programmer" is expected to be at the office at 3AM to deal with a crashed database server.
It's silly to pay $60-100K for a programmer that you have to try to keep busy when you can hire someone that has good programming skills, good IT skills and actually understands Electronics at the board level for the $50-$90K. and usually get an employee that will happily work his butt off because of the diversity of the job.
This is my observation from work here. All new hires in the IT department MUST have some programming skills in C, Java, python and PHP. We intentionally do not hire anyone that has been a "programmer" or "developer" except those that have experience in OSS as a developer. But they also must show a proficiency at IT skills and prefer that they have some EE background.
this has lead to over 15 enterprise apps being replaced with in-house versions that work better and are far FAR cheaper in the long run even when ignoring the fact that it is an asset now because the company owns it instead of a liability when you "lease" or "rent"(buy) software.
The great part is that versioning systems like Subversion integrate so well with linux,OSX and windows that it takes less than 2 hours to teach a new recruit how to use our system and get them up to speed in checking in and out code.
Enterprise apps are starting to become in-house customized projects, and THAT is the biggest threat to that "business model"
Do not look at laser with remaining good eye.
This trend is definitely true in smaller companies. Why spend thousands of dollars on proprietary software when you can get an open source project for free that you can modify to your heart's content? Granted, you're going to spend time and money to make those modifications, but it can be worth it when you get exactly what you want/need.
Compared to 5 to 10 years ago, the number of open source software apps available now is mind-blowing. So much so that whenever we are researching and deploying a new application, we immediately go looking for the open source one. The proprietary version is a last resort.
Whoever Has the Most Toys Wins!
My skepticism grows with each time I see this topic posted somewhere. The deathknell of the proprietary has been hailed as a Roman general marching onward to victory, but let us remember this: despite the rosy forecast, proprietary enterprise software packages remain.
While OSS has inherent advantages, the non-savvy end-users of business systems prefer lack of change to robustness of operation. If they didn't, OSS would be more prominent on the enterprise level. We tried to implement various builds of *nix and X window system on workstations at my place of work, and there was REVOLT IN THE AISLES.
The business world is not yet ready for the intellectual (not to mention monetary) cost of full transition to OSS. As much as I love it, the end-user isn't ready. It should remain the goal of all OSS developers to give these people more and more reason to change their minds.
Let us keep in mind: there are other reasons for the drop in revenues for these proprietary software vendors as well.
The Crimson Dragon
Now they have millions of dollars freed up to give CEO bonuses, right where it should be ! Remember this the next time you see your boss driving his new Ferrari, "Should I really be encouraging the use of open source software, is that such a wise decision?" There are many children suffering right now that depend on the survival propreitory software.
The commoditisation of software that open source represents is a rising tide. There are two ways to handle a rising tide: float or sink.
Siebel, like many big software firms, are unable to float. They don't use open source for their processes, so don't benefit from it. They are stuck in a niche, so are basically anchored to the sea floor while the water rises around them. Their customers have the choice of remaining anchored with them, and drowing as well, or cutting free and floating.
It's a bit sad if you're in the position of the drowing man. But it's been the same in Big Auto, Big Steel, Big Textile, Big Science, Big Pharma, Big Business... competition is a tough game.
The smart money is on those firms that learn to float. IBM, CA, Novell, Apple. Maybe Sun and SAP. Apparently not Siebel, definitely not Microsoft.
My blog
If you're talking about boxed software then support is limited to a "knowledge base" database and rudimentary and usually dire scripted phone support.
Out of the box commercial software pretty much like this. However, if you're talking enterprise solutions from Oracle, SAP, IBM, EMC, NetAPP, and even Sun (unfortunately, whose support quality has declined recently IMO) then it's a different game. Pay for a contract and you will get highly knowlegable engineers to solve whatever problem that crops up within the confines of the contract. I've been very impressed by IBM in the past. DEC used to have pheonominal support. So, while your copy of TurboTax may not get you the support you feel you deserve, it's not the same with big iron hardware and enterprise software. At least, not in my experience. --M
There's no free ride anymore, it's time to innovate or die.
Depends on which side of the coin you are on. If you are on the consumer side, choose F/OSS and it can be a free ride. Unfortunately, shrink wrap software companies probably are going to have a hard time paying salaries of programmers so if you program, you'd better start liking jobs where all you do is tweek F/OSS for "customization" for your site.
So let's see you hire some high IQ people and start thinking up new ideas and industrial progress will be off and running again after a short stall!
And if you're a shrink wrap house, you'll pay these high IQ salaries with... what exactly? If you *do* come up with something great, you'll have 100 SourceForge copycats within a month and they will erode your market.
F/OSS is the great poison pill of software. If anyone comes out with something that is good (and it isn't you), then just put some effort into a F/OSS "alternative" and poison the whole market... basically make it where if *I* can't make any money in that market, then no one will.
I couldn't agree more. If you're not in the business of building software, you shouldn't be building software. Same goes for trucks, warehouses, cranes, desks, and anything else your business may require.
Hell, even if you *are* in the business of building software, you may well be better off buying it in instead. My company is a software house (we do web-apps), there's no way we'd write our own web server or RDBMs, we'll get one from a third party (be that mySQL, MS SQL Server or Oracle, etc).
It's official. Most of you are morons.
For example, when one clicks on a drop menu, there is a noticeable delay (up to 2 seconds) before the dropmenu is populated. The only reason for this that I can think of is that the app runs a DB query each and every time a dropmenu is clicked, even though the contents change very rarely. This is quite possibly the worst possible way to fill a drop menu, ever.
To add insult to injury, the thing is a "web app", but it makes such excessive use of ActiveX and other Windows-specific tools, it eliminates one of the primary advantages of web applications: Cross-platform compatibility.
To their credit, a rep from Siebel did say that this particular product was once a locally-run binary program, but Siebel was losing sales to competitors simply because their tool was not a web application. That is the only reason! Apparently, it didn't include a sufficient number of buzzwords, so they rewrote it to do just that.
How much do you want to bet they'll switch its data storage medium from a proper relational database (even if it is MS SQL) to a purely XML-based system? I am sure that will be plenty fast.
The irony is that this system was used to replace two systems that actually worked well--a OpenVMS-based control system and a Tandem-based logging system. Whomever implemented the old systems clearly valued uptime (neither OpenVMS nor Tandem/HP-Nonstop systems crash; at least, I have never seen it happen, and I've worked on such systems that have uptimes of decades), though admittedly both are rather proprietary and dated.
I've only used 2 or 3 Siebel products, so my experience with them is somewhat limited. Perhaps some of their stuff is non-crap.
Just goes to show--never let PHB's dominate your design decisions, at least if quality is a concern.
Computer Science is no more about computers than astronomy is about telescopes. --E. W. Dijkstra
it shouldn't be more expensive (even though, in the past, it has been). and the point of this article is that, in fact, software is getting easier, or else there wouldn't be so much open source software supplanting 'old-school solutions' in the first place ...
...
OK, I run a retail store. Are you suggesting that, instead of buying a working POS solution for about $800/workstation, that I should make my own? You can't really be serious...
if your business is selling pigs, and you need software to control the sale of those pigs, it is far better for you to have your own, purpose-built, customized software for the selling of pigs, than it is to 'copy someone elses model'.
Why?
it shouldn't be more expensive (even though, in the past, it has been). and the point of this article is that, in fact, software is getting easier, or else there wouldn't be so much open source software supplanting 'old-school solutions' in the first place
Fine. Who do I contact to write a point of sale system that handles inventory, purchase orders, vouchers, printing tags (multiple formats), printing receipts (multiple formats), supports all major POS software, has integrated credit card processing, tracks customer purchases, and seamlessly transfers data to/from Quickbooks for $2400 (we have 3 workstations)?
I don't respond to AC's.
Simply, the enterprise software vendors themselves. At this point, they'd all have to be wheelchair bound given how much they shoot themselves in the foot.
Over the years their prices have risen out of sync with target client business revenue, activity, and need not to mention the changing economic scene.
Their software often seems written explicitly to confound the most experienced users and administrators and effectively prevent any ease in enterprise-wide roll-out, installation, upgrading, and administration.
Their licensing models bear no relationship whatsoever to the realities of the usage of the target businesses, and frequently are outright hostile to newer technology usage such as multiprocessor workstations and thin clients.
For instance, I have yet to have a single installation of any Computer Associates offering go smoothly, or anything that might be mistaken for semi-smoothly. A demo copy of Unicenter once hosed a workstation I tried it on. Given the models, methods, and practices currently standard in the world of Windows programming, and the prodigious resources of CA, that takes Herculean effort to do.
Remedy ARS anyone? I'm sure this can't be the only software with an interface that would make a sadomasochistic OS/2 2.1 adherent's blood curdle.
Siebel? I worked for a company that tried their code. We lost 500% productivity almost overnight. Everyone rebelled by continuing to use Remedy ARS. You have to write some horrendously bad stuff to make people prefer RARS to your offering.
Open Source is of course, NOT a solution. Any corporation that isn't run by some weird eccentrics is going to avoid paying a code cowboy team to customize apps of all kinds, in all places in the business, and then pay their legal people overtime to make sure they are in compliance with three or six different open source-ish licensing models. As it is, there are major corporations shovelling massive greenbacks into Redmond to get Windows source access to get custom builds for their desktops. Or were when 95 was the standard. Now they might just put up with the comparatively less quirky WinXP Pro and pay a few junior desktop nerds a whole lot less.
Many companies today, trying to cut costs everywhere, are removing a lot of very useful software that their people got very comfortable with and were very proficient with, further eroding productivity. How sad is it that the vendor of the gui has overpriced it to the point that their client would rather do without and simply make use of the command prompt interface of the routers and switches instead?
All in all, things are not in the same way they used to be seven years ago. That does not mean however that Open Source is going to be the magic solution. OS still costs money. Programmers and support personnel and trainers do not work for free. I think neglect of taking that into account is the single biggest blindspot of the OSS boosters and if they don't stop acting as though the fruits of others' labors should be free on a silver platter and come with no cost, they will blow a golden opportunity to expand the usage of software in big business and simply hand it back to Microsoft, Siebel, etc.
If my grammar and spelling are off, I am [distracted/tired/careless] (take your pick)
Another employer, another year - I built a "Work in Progress" system using Oracle Power Objects. - Oracle scraps OPO because of major Y2K defects - project dies.
Now I use PHP and Postgresql - No chance of this happening to me again.
I have used other proprietry software since - and guess what - the so called "support" consists of some fool in Bangalore pretending he has an English name, and being unable to understand the problem I am reporting, consuming more of my time than it would take to fix the software myself. (Ten hours of my time, two weeks to NOT fix a misaligned columns in a report listing is what you get from paid support!)
Use proprietry software - get shafted! Yeah, that will make us buy it!
Sent from my ASR33 using ASCII
That isn't quite correct. If someone comes up with a nifty utility to base their business on, then yeah, the OSS community will duplicate it in no time, but then, so will commercial vendors.
It seems most of these complaints come from companies who charge money for the most trivial of crap, such as this password generator. Nevermind that it has one of the worst user interfaces ever designed (look at that screenshot), it's a freaking PASSWORD GENERATOR! Trivial software is trivial to reimplement. It's offensive that someone would even charge money for this.
Now if a company develops something non-trivial, for which there aren't already a thousand similar products, this shouldn't be a problem. For example, just try finding an F/OSS product that can compete with 3D Studio Max or Maya. Blender isn't even in the same league. Photoshop? The Gimp is neat for web logos or hobbiest graphics, but doesn't even fully support the most fundamental Photoshop features such as native CMYK color.
Siebel Systems makes non-trivial software, but it is only non-trivial in that it is large. It isn't innovative; it's just a lot of work. I don't know of any OSS products that compete with, for example, their customer management software, but if there are, I would not doubt that it is because Siebel's stuff sucks (I've used it), and some smart developer got fed up and decided to show Siebel how it's done. If they do a better job, should we feel sorry for poor Siebel for losing revenue to the F/OSS guy, or should we root for the OSS project because any multi-billion dollar company which can't make a better project than a handful of F/OSS programmers needs to die?
Another example is the game market. There are neat OSS technologies such as the Irrlicht engine, but Itari and Blizzard aren't exactly concerned about F/OSS games taking over their market. When's the last time you played an open-source game which was even comparable to Farcry, Starcraft, or Alpha Centauri in terms of refinement, scale, and fun factor?
With all that said, I don't see how F/OSS is any different than another commercial competitor. An intelligently run business targets their product to account for competitors' weaknesses and tries to downplay its strengths. Seems to be working for Microsoft, and every single one of their core products have powerful and mature F/OSS competitors, yet their revenue has grown every year.
Specifically, the F/OSS community may be great at making low-level technical stuff, such as libraries, web servers, and DBMS software, but it isn't very good at polishing user interfaces (compare Visual C++ to KDevelop or Anjuta, though this being Slashdot will probably prefer the latter two regardless), at making high-end enterprise software (MySQL is neat but it can't even touch Teradata), or making the absolute highest-performance software (Apache is sort of fast, but Zeus and even recent versions of IIS can blow it away, especially in static page serving [That said, most corporations are even worse at making performance software, using bloatware tools such as MFC to make bloatware apps such as Norton Utilities]).
In short, the reasons given sound like the kind of reasons given by the kind of companies that make password generators or horribly poor quality customer management software and then complain that the F/OSS community is stealing your marketshare. Hell,
Computer Science is no more about computers than astronomy is about telescopes. --E. W. Dijkstra
Read the author's bio:
Andy Singleton is president of Needham, Mass.-based Assembla, which brings "inspired by open source" applications and development processes to enterprise software.
His business is implementing enterprise open source software. Of course he's going to say that that's the future.
One thing I noticed about a lot of these packages is that they often have terrible underlying data models, or at least data models that do not fit a particular business well. They tend to throw indirection and duplication at the problem. Perhaps this would not be a big problem if the package hid the underlying mess from the users, but if you ever want to extract and use data from such monsters, which is a common request, you have my sympethy.
If you want to make a better tool, allow one to model the particular company, sticking with certain conventions for hooks into the package.
Or better yet, sell development and expertise to help companies build one to fit their own company. In other words, become a domain expert company instead of software box company, and market that expertise. "We know how to build sales-force systems" instead of selling a pre-packaged blob of software. Such a company could still sell software, but in bits and pieces or as part of a bigger semi-custom-built package. Build a Lego kit that fits sales-force software (for instance) instead of the whole deal itself.
Domain specialists seems to be a missing software-related niche.
Table-ized A.I.