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Enterprise Software Sales Dried Up In September
CurtMonash writes "As I predicted a week ago, it looks as if the third quarter was ugly for software vendors, due to the economic crisis. SAP said 'The market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter.' My old acquaintance John Treadway, who used to work in Sybase's financial services vertical unit, reports that things are even worse than that in the financial services industry, Wall Street and retail banks alike. So now what? Well, IT is a huge part of capital spending, and at enterprises that have to cut back capital spending, IT is going to get hurt. On the other hand, high-growth companies — Web businesses, analytic services providers, etc. — may try to power through the downturn. And the more directly an IT project affects near-term profits, the more likely it is to survive."
Right, if you are programmer and are willing to accept minimum wage, with no benefits.
Spoken like a kid who never had a job. Tell you what, we are a software company, and I can tell you that programmers cost a lot. Software development is darn expensive too. And you have to add up all the continual training cost for our staffs, not just the initial training to get them up to speed.
I hate to break that to you, not all softwares can sell millions of copies per year, certainly not enterprise softwares. You are not selling burgers here. A lot of companies would be really happy if they can sell 50 copies per year. Customizations, services, support, etc, all very expensive work.
Go to take a look at the "enterprise softwares" first, make sure you even know what all those terms mean (I'm not even talking about implementing them), and make sure you understand all the regulations/rules involved in the industry, yada yada yada... and then, we'll talk.
Some of this is good advice even in the best of times.
No matter what the job market is like, it's a good idea to keep at least 6 months worth of money in savings. One of the most important things people can learn is to live below their means. I learned this one the hard way when the company I was working for went under during the downturn. I was suddenly put into a situation where I had an almost $2000/mo rent to pay and only enough savings to last 2 months after accounting for other recurring costs (cell phone, food, etc). Needless to say, I had to break my lease, borrow money from parents and otherwise stop spending money...the whole thing was incredibly stressful and very humbling.
Now I make a bit more than twice what I used to make and yet my monthly expenditures are well under half what I was spending. I've got enough in savings and investments to last me 5-10 years at my current spending level. The result is a piece of mind that's worth a lot more than all the shiny gadgets and expensive living spaces that I passed up to be in this position. And when housing prices bottom out, I'll be able to buy a place without a mortgage.
If more Americans would learn to live within their means, we wouldn't be in this mess. It's a lesson our government could use too...Iraq is basically just like those 60" 1080p flat screen that everyone feels they need...we could have bought the smaller Afghanistan model for a lot less. What we really need from our next president is to raise taxes *and* cut spending to start to pay down all the debt that we've accumulated. Yes, it will suck for a few years/decades, but if we can get to the point where the debt is manageable, things will be better. Our taxes will be lower and the dollar will be stronger so our salaries will go further. And the sooner we bite the bullet, the shorter the painful period will be. It's no different than large amounts of credit card debt people have...the sooner you realize that you need to start whittling down the principle, the sooner you'll be free of the debt.
But instead we're going to get another president who promises to cut taxes and increase spending (unless hell freezes over and neither Obama nor McCain wins) and we'll just continue down this road to the complete collapse of the federal government. This is how empires die...they're not conquered from without, they rot away from within.
Short answer: Yes. If by normal you mean recurrent.
Slightly longer answer: The number has in the past been greater than 5 years, but recently we seem to be tightening the loop between boom and bust. Likewise, many of the past booms and busts have not appeared to be quite so catastrophic as this one.
I've been in the workforce since the late 70s, and paying attention since a little before that. I've seen downturns of various kinds in every decade.
And yes, the US economy is more or less predicated on a boom/bust cycle. But don't take my word on it; greater minds than mine have looked at the phenomenon. Start with wikipedia and keep going from there.
Crumb's Corollary: Never bring a knife to a bun fight.
If you're paying a lot of money for software odds are you are being taken advantage of. No software should cost more than $10k Exception: scientific software (and I mean the really advanced stuff, simulations, etc), math analysis, etc, etc AND EVEN THEN
Well, as much fun as sweeping generalizations are...
There is some fantastic commercial, enterprise software out there, the likes of which FOSS cannot touch. I'm a DBA and love Postgres, and to a lesser extent MySQL, but neither has the breadth of features or capabilities that Oracle has. Postgres is a great product, but it's like Oracle 7...there's a big difference between it and Oracle 11g. And yeah, there are a lot of shops that don't need that difference, but there are a helluva lot of shops that do.
That's just to take databases. There's a wide variety of engineering software that I've supported over the years that is just not going to be touched by FOSS people any time soon and represents literally tens of thousands of man-hours of development time. My employer uses some really intricate software designed for our old-school industry that would take hundreds of thousands of dollars to develop in-house...and no FOSS group is going to say "hey, let's do that in our spare time for fun! And also make sure it works with everything else!"
I agree that big ERP packages are often big nightmares and yes, there's a lot of junk out there, but you can't just say "if you pay a lot for software, odds are you're being taken advantage of."
Advice: on VPS providers
This is a silly question. Windows of course has nothing to do with the problem. People are putting off software investments because they can't afford it. Credit has dried up and businesses can't get capital to spend on expansions. Smart businesses see software as an investment to grow, but if there's no business to grow into, or they can't get the money, then they don't invest and grow slowly, along with the rest of the economy. Now instead of floating loans they have to save money.
Automobile repair shops are doing very well, because more people are repairing cars rather than buying new ones. Same goes for software. Why buy new software and hardware when you can maintain the old.
"All great wisdom is contained in .signature files"
Yes, I recommended they "look" as SugarCRM. I told them we that we could extend it and plug it into lots of different systems with just our in-house knowledge. But they have already gone too far down the vendor selection path and don't want to confuse the business folk, blah blah blah. Those managers are closed minded when is comes to FOSS. I told them there was a pay version, but I don't think Sugar showed up on the Gartner report they are using to pick a vendor.
> No software should cost more than $10k Exception: scientific software (and I mean the really advanced stuff, simulations, etc), math analysis, etc, etc AND EVEN THEN
Obviously, you work in the scientific sector, and also have a pretty narrow-minded view.
Having written other kind of software, I can tell you that you the complexity involved in "enterprisey software" can be mind boggling. For instance, think about reading, implementing and deploying some of the complex financial rules (we're talking about thousands upon thousands pages of regulations, with variations per countries) out there, in a market composed of a handful of customers.
In that case, the cost of the software is directly related to the cost of building it (ie: how much it would cost for the customer to build his own), and such customers are perfectly happy to pay millions (yes, millions) so a software vendors take care of all the issues related to said software.
Most major financial institutions are undergoing a major deleveraging process which decreases the overall debt to equity ratio in the economy. This leads to a massive destruction of money supply and a crash in the value of assets in the economy, which we are seeing a start of with continuation of decreased real estate, equity and commodity prices, and unavailability of loans even to the largest and most stable entities in the US. This value destruction definitely exceeds 5,000,000,000,000 dollars over the last 12 months at this point in time.
It is getting to the point where some states are facing bond defaults because they cannot borrow at reasonable terms. Giant corporations like GE are facing a real prospect of bankruptcy because they cannot borrow working capital despite having a 22:1 asset to debt ratio. If the US Government were not trying to counter this by pumping money into the economy we would surely be looking at the stark reality of a depression.
The US dollar is appreciating greatly vs. the Euro, because at least the US realizes the problem and are acting with concerted vigor. The EU's economic policy is total shambles with individual countries acting unilaterally rather than in concert, and the refusal of central banks to lower interest rates. Some analysts think this may get bad enough to destroy the Euro as a currency. At the very least it has put an end to any talk of the dollar losing it's special place as the international reserve currency. Some small countries like Iceland, Ireland and Greece are on the edge right now. Iceland's problems are so bad that they are having difficulty importing food.
There is no practical limit to the ability of the US Treasury to pump money into the economy by loans against hard assets. The question is how much and how fast is needed to accomplish the desired effect, and can it be done without overshooting on the other side.