[artemonster]

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.

[pembrook]

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.

[xtracto]

Let me give you a counterpoint on this: non-developed countries (non 1st world countires?).

A startup in say, Mexico or LatAm will look at the OpenSource version of say Business Intelligence applications (Metabase, Superset in the link), then look at the commercial versions of them (Tableau, Lookr). With the price needed to pay for the commercial versions, the startup can hire 2 or 3 developers (at local rates) to do whatever improvements they need to the open source application.

Something similar happened to me with Jumio about 5 years ago: I wanted to use it. I spoke with their sales 2 or 3 times in 4 years. THe problem is that, every "verification" was costing more than $1 USD... for less than that cost, my company could hire 3 people a month to do manual verification and more (considering the cost of hiring + cost to the company, including Mexico's hefty employer costs). It never made economic sense to do implement automation.

[ASalazarMX]

Mexican here. We used to run our own mail server ten years ago: it was fast, each mailbox had a lot of space, we ran our own mail campaigns, in general it was awesome... until it wasn't.

Doing your own maintenance, antivirus, spam detection can be a demanding job, but getting out of a blacklist is ten times worse. We gladly pay Google Workspaces to leave that suffering to the specialists, we couldn't do it better if we tried our best.

You either pay with time and work, or you pay with money. Sometimes spending the money is the better trade off.

[typhonius]

This is where the maxim of open source being 'free as in puppies not free as in beer/lunch' comes from.

I started my career in open source and still strongly believe in FOSS tenets, but enterprises are looking more to de-risk their projects and platforms.

Risk is reduced when you have a vendor you can hold accountable for issues in the product, hence making proprietary solutions (and sometimes open source but wrapped in enterprise support solutions) the only viable choice for a business.

[Andrew_nenakhov]

Any luck holding Microsoft, Google or Apple accountable for issues in their operating systems?

[xtracto]

I am sure large companies have that lever: I know of a large multinational company (around 150,000 employees along all contintents) that moved from SuccessFactors to Workday. Those are huge contracts.

[Andrew_nenakhov]

Reasons for switching contracts can be numerous, and, from my experience, the level of support and quality of the actual application is rarely one of such reasons.

[kube-system]

Yes, custom B2B support contracts that deviate from the terms of support that everyone else gets is not unusual.

For example: a large organization might get a "Microsoft Custom Support Agreement" if they want to get security updates after the date that MS stops providing security updates.

As with any negotiation, if you have leverage (i.e. dollars), you can negotiate.

[Icathian]

While I understand and generally agree with your points, I do find the idea of "holding a vendor accountable" to be more of a philosophy than something I've generally witnessed happen in real life. At some point that needs to stop being weighed on the scales when doing "build vs buy" math for any but the largest companies or most attentive vendors.

[TechBro8615]

Not OP, but I think in this context "holding a vendor accountable" means "if the product sucks, you will stop paying them."

[agentdrtran]

“free as in puppies” is an excellent phrase

[yakshaving_jgt]

> 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.

[KronisLV]

Pitching in to confirm - currently i work as a full stack dev in Latvia with 5 years of experience and a Master's degree, my net salary is around 1500 euros per month.

Most SaaS offerings without free tiers indeed are unlikely to be used.

I even had to buy the JetBrains tools myself to be able to navigate 1M SLoC Java codebases easily, refactor with confidence, whilst not resorting to piracy like some of my countrymen do. Even if definitely worth it, i still had to look at the price tag for a while, seeing as it's essentially food for a month or two: https://www.jetbrains.com/idea/buy/#personal?billing=yearly

Developer salaries vary wildly over the world, though i guess some SaaS solutions also do location based pricing, which may or may not have historically worked.

[pembrook]

> 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.

[pzduniak]

Most engineers in Poland prefer anything BUT full time employment, so all-in the tax for engineering work is like 8.5%/19% with a ~$120/mo mandatory health insurance. They'd rather get hired as freelancers and pay less taxes (and burn less money contributing to the broken social security system).

[yakshaving_jgt]

I run a business and employ several software developers. What you are saying has absolutely not been my experience.

[pjmlp]

In Germany average consulting rates, run around 100 euros per hour.

https://www.freelancermap.com/blog/freelance-market-study-ge...

Plus some management expenses, and it turns into around 1000 euros per delivery day for a FTE.

Then we can go to the companies doing high level consulting and pull some notches still.

[yakshaving_jgt]

Sure, there's ample opportunity for everyone in the industry to throw money into the sea.

The comment that I was replying to specifically referred to employee time per month. That's naturally going to be different from some high-rate consultant, so this is totally an apples-to-oranges comparison.

Furthermore, it's a large market and there are plenty of consultancies in Europe charging significantly less than that.

[wongarsu]

In Germany, the average Software Dev salary is about 50k€/year. That's a total payroll cost of about 60k€/year after taxes, social security etc., so around 300€/workday. Add some money for office space, equipment, overhead, etc, and adjust by factor of two in either direction depending on location and role.

Of course if you hire a freelancer, prices are very different and 1500€/day is very reasonable.

[rglullis]

Either I have been very, very lucky or you are basing yourself in outdated reports. In Berlin (one of lowest cost-of-living German cities) you will have trouble to find even junior developers working for 50k€/year.

[fnomnom]

if you look at the numbers raw it might be salary for a week but assuming your developer has stuff on his/her plate and this stuff actually will make you more money in the long run (why would they be employed by you otherwise?) its more than their raw salary and the cost of hardware and rent. opportunity cost.

[yakshaving_jgt]

I'm familiar with the concept of opportunity cost, but the question of whether to build or buy is highly context-dependant. As is so often the case in software development: it depends. Not all B2B tools are the same. Not all integration efforts are the same. Not all developer hours cost the same. Not every return on investment is the same.

[jasode]

>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]

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]

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.

[Radim]

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]

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.

[hdjjhhvvhga]

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.

[rozenmd]

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 if you're curious)

[TAForObvReasons]

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.

[snowwrestler]

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?”

[input_sh]

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.

[handrous]

I've worked at a couple small companies that strongly prefer self-hosting services that aren't core to their business. I'm at one now, in fact (though it's not nearly as bad as the first one). My conclusion from these experiences is that it's almost always a bad idea. It's a waste of money if you have people dedicated to managing them, and if you distribute the tasks to people who'd otherwise be working on your product(s)—even if their contributions to that would also look like sysadmin/ops work or whatever—then you're engaging in pointless distraction.

Some managers/owners seemingly don't mind spending $4,000+/m in payroll to chase $2,000/m savings in paid services, though, for whatever reason.

I say, just pay the $$-$$$/month for each thing, and be done with it. If paying for the service isn't worth it, paying someone to manage the tool internally almost certainly isn't, either, so prefer attempting to do without it over that option.

[EDIT] obviously, this can change with scale. If you're a huge company then putting an average of 1/4 of the hours for five sysadmins to managing a self-hosted chat tool can absolutely save you lots of money over paying for one—provided the reliability's at least as good. A small slip on that and you're back on the wrong side of things.

[kilroy123]

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]

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]

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.

[Irishsteve]

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]

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?