If you are already spending >$200K per employee, spending another $10K to make them even 10% more productive is a bargain.
Then what happens is somebody making $100+/hour would spend several hours to do the job that would be covered by a tool that costs under $50/month.
FTFY
At least for Medium, "Holacracy" pretty much imploded. Zsppos switched from it to an internal marketplace - which is, oddly, controlled by excecutives.
Flat organizations beyond a certain size either move away from flatness officially, create unacknowledged hierarchy, or fail. I'm really not aware of a single large-scale example that still works.
This is much different for small orgs - there's something about org size that requires some sort of centralization. (I think it's communications overhead + complexity exceeding the limit of what a single person can keep in their mind. I'm not 100% convinced, but these are the pressure points I usually see)
Flat organizations are unusual, but survive about as well as other similar organizations. The difference is when a giant reorganization/buyout etc hits, they more obviously change into something else.
But that all aside... I mean they have a new Half Life game on the near term horizon (later this month apparently) and they have done a ton of work on VR and Linux support.
Summary: the game was brilliant ("uniquely amazing") if you were really good at it but was essentially impossible to get into, and its economy was badly constructed.
Most Startups are at least trying to change the status quo.
Steam certainly challenged the status quo when it was released, and several times in its life.
Hell, who else is working on Linux gaming right now? They were relatively early on game streaming, VR. Steam Workshop? How cool is it that a large amount of one of their flagship games, Team Fortress 2, not only integrated a lot of third party content, but also paid creators back? How cool is it that many games like Counter Strike began as Half Life mods?
I don’t really use Steam much anymore, so it’s not that I’m personally attached much, but I will admit to being pretty impressed.
Also, valve's ther ventures are....massively successful. The microtransaction model in gaming originated with Valve, and now the entire mobile and freemium gaming markets use that business model.
So in this case...I would say yes, everything valve has done as a company trying to make money in the last 10 years is par for other successful SAAS platforms.
Xbox Live.
Steam/valve was brought up because they have a successful cloud SASS model with no subscriptions oand a flat org structure.
Xbox live has a subscription fee since day 1, is maintained by MS (the definition of "non-flat organizational structure"), and is vendor locked. Not even remotely comparable.
Here is evidence that claim CEOs produce more value than they are compensated for (i.e. they are underpaid): https://faculty.chicagobooth.edu/steven.kaplan/research/kceo... https://econpapers.repec.org/article/inmormnsc/v_3a60_3ay_3a... https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1686068
Just because they are there doesn’t mean the achievements are due to them.
There have been a number of attempts, tens of millions of dollars spent on one study alone, trying to quantify what technologies and people generate value.
The meta-conclusion considering all the studies I know of (traveling and not looking them up), is the math becomes so Byzantine it’s a pointless measure and we should just stick with ideology to avoid blowing up society in people’s minds (an idea that was peddled for thousands of years already, reaffirmed by math, glad we spent the time on it.)
Just because we’ve emotionally conditioned ourselves to engage our mechanical agency towards these ends does not imply it’s because of management.
Manufactured consent is a thing.
Management is necessary to allocate resources (including labor) efficiently at scale, but it comes with overhead.
As such, at smaller companies, startups, small businesses, the overhead of management can be outsized, the pain felt acutely when compared relatively to the actual output of ICs and such.
At larger companies, the massive cadre of management which is necessary to keep the machine running is also very obvious, as the overhead of a large organization is very large, even if the management itself is excellent and highly efficient.
As such... How does one allocate credit? An analogy would be like financing or investment. Necessary. A filtering mechanism. Sometimes helpful in an advisory mechanism. But are they the ones creating output? No. But do they deserve some credit? If something cannot be done without it, then they must deserve SOME credit, it's just a question of how much.
A healthy society takes a village. IMO there’s plenty of literal history to show isolating a minority from the demands the rest of us face is ripe for abuse at scale.
One person did not invent languages, lay down the highways and invent computers.
All the people we hold up relied not just on the historical invention to push them forward but society giving them space and not killing them. Every individual inventor is outnumbered.
IMO that space to be and do is what we should optimize for. Not a tether to tradition of emotionally wanking off a handful over what is ultimately a linguistic twist on an idea that was discovered/defined collectively
Github made it all the way until 2014 (and was a massive success by then) too, IIRC.
This is what 'agile' is supposed to emulate for larger businesses.
Yeah, you can fake through it more than half of the time, comfortably. Just be eloquent, tall, and loud.
Sure, but then there's the slightly more complicated economic calculus: do we build our own tooling now, for a significant up front cost, or do we buy the SaaS which we might use essentially forever for an unknown future TCO?
The slightly more complicated question is "do we invest in optimizing SaaS costs/utilization? Or use those resources to start building our own?". But even for this question the right answer is usually fairly obvious.
If it was so easy, why are the companies in the article "fretting"? Because putting values on "good", "opportunity" and "makes sense" (not even counting the fact you have no control over the SaaS raising prices or going out of business in the future) is harder than we can spend $400/month or $50/month.
Absolute zero ongoing commitments? Very rarely.
Negligible ongoing commitments compared to the outsourcing alternative? Many, many times.
I don't think it's clear-cut. Some SaaS has worked out remarkably well for me and others I wish I had just built the thing in-house. Also, few providers give a way to actually get your data back out in a usable fashion, so you tend to get locked in without substantial cost to back out.
It's never that simple, though, is it? Suppose that tool solves a problem that a $100/hour employee would have solved manually in a day. How long did it take the employee to identify and choose the tool, arrange the purchase, and then learn to solve the problem using it? Probably a few hours too. So that $50/month tool had better be useful for replacing that job several times in a year or it's unlikely to be a net win in terms of time and money. It's certainly possible that good tools are far better than that cost/benefit ratio and using them is easily justified, but I'm guessing that in these organisations with hundreds of different SaaS subscriptions only a few of them are in that class.
Of course the elephant in the room is that there used to be another alternative, which was buying a tool outright for say $1,000 and then using it indefinitely, which would be a financial win compared to an equivalent $50/month SaaS tool in well under two years. Yes, there are factors like CAPEX vs. OPEX to consider so this isn't so simple either, but ultimately paying much more money for the same thing is still paying much more money, however you slice it.
Some people might hope for that. Personally, if I'm buying a tool for professional use, I want to choose my preferred one and then have it be reliable and future-proof. Things like security updates are one thing, but the last thing I want is random changes in functionality or UI being forced on me.
This worked just fine in the traditional model where you bought a version of some software, and then if there was another version released later with something more that you wanted and adequate compatibility, you bought the upgrade too. The user gets stability and new developments if they want them. The developer gets paid for new developments, though only if they are actually valuable to users. No-one gets forced into anything unexpected changing, or going missing, or breaking compatibility.
Tragically, the whole SaaS, insta-deploy anything we feel like culture that has evolved in recent years has utterly destroyed that stability and reliability. I regard this as possibly the biggest retrograde step in the history of personal computing (and that "possibly" is mostly because the walled garden culture that has also become so powerful in recent years might be a larger backward step).
Giving individual contributors purchase authority and then supervising spend -- the model implemented in every major cloud -- is a much better compromise, because it lets management prioritize where they spend ROI calculation cycles which are not free. Very not free!
It’s hard to find a good SAAS privacy policy actually, and they target businesses who are theoretically more “serious” than individuals
That project died the following year, and I believe the opportunity costs of that work were substantially responsible for the demise.
They had. We sent someone eight timezones away to find that out.
1. Enter salary of engineer.
2. Enter cost per engineer of product (subscription, one time, etc.).
3. Enter required minutes to make worth your time (setup per employee can be factored in).
This may already exist, but if it doesn't it could be a useful tool for Saas companies. Something you could drop into emails to potential customers ("see how much you would save").
Would pay for this monthly if it works.
Once I've plugged in the values, I go back and ask if we really want to spend 30 hours a year updating intranet employee profiles or if we should use that time to fix some bugs or code a new feature.
Its quite effective to pushing back on unneeded tasks.
$200K is not a good benchmark for what companies spend.
Median salary in the US is about $50K [1]
Average overhead per/employee is 18-26% [2]
So a $10K spend for 10% increase in productivity on someone earning about $60K ... is not a bargain.
But there's a problem with this, because SaaS can be
1) Individual productivity 2) Operational productivity 3) Product spending (i.e. like GMaps integration as a feature in your product)
So 1/2 and 3 represent a very different type of calculus to the point wherein that kind of spending should definitely fall into different buckets for accounting.
[1] https://www.thebalancecareers.com/average-salary-information...
[2] https://beebole.com/blog/how-to-calculate-the-real-cost-of-a...
> Median salary in the US is about $50K
The median company isn't necessarily spending $10k per employee for software.
- Process mismatch / impedance : The software is unlikely to be able to do exactly what you want how you want. The human likely is able
- Vendor lock in: If the SaaS decides to change how it works, or the prices you now have a leaving cost
- Expenditure on someone else's competitive advantage: If you use tool X likely there is no reason your competitor cannot. You both use it, no net advantage gained over competitor. If you develop the expertise in house (likely the harder thing) then you have an advantage over your competitor. Of course this has to be balanced with what will be your competitive advantage and what will not
- Harder to manipulate: You cannot fire 1 of your SaaS and tell the other 2 to do the work
And the productivity increase using certain SaaS tools is not 10%, it can be an order of magnitude in certain instances.
https://money.usnews.com/careers/best-jobs/software-develope...
https://www.glassdoor.com/Salaries/software-engineer-salary-...
https://www.payscale.com/research/US/Job=Software_Engineer/S...
The vast majority of users of SaaS are not software developers.
well... my productivity isn't always increased, regardless of what tools someone wants to buy. and... sometimes it's a drain on my productivity, but using tool ABC increases someone else's productivity (at the expense of mine). How do you account for the productivity increase of -5% for 30% of your employees, but 20% for the other 70%?
FOSS as much as possible.
There's plenty of situations in business where using it is an incredibly good idea. There's even more situations where you're better off just paying for a service.
2. You can still be locked into a single-supplier when you pay for third-party FOSS support. In fact, most third-party FOSS support comes from a single supplier.
3. FOSS that doesn't have a sustainable business model attached to it rarely serves the needs of enterprises. There's FOSS alternatives to Sharepoint, but what's your FOSS alternative to Tableau? Salesforce? Slack? Will you actually save money by using it, compared to just paying a vendor?
From a purely technical POV, I'm pretty sure that feasible alternatives exist to all of these, e.g. I don't think Tableau's data viz product does anything that couldn't also be done with relative ease in R. Of course, these commercial offerings extend way beyond the purely technical domain where FLOSS makes the most sense; but that has little to do with "sustainable business models" - R itself is plenty sustainable on its own - and a lot to do with extremely niche or obscure "needs of enterprises" that FLOSS projects are either not clearly aware of, or not very interested in supplying. Niche and obscure problem domains have always been problematic for the open source model, this is nothing new.
It's zingers like this that keep me coming back to threads like this one! "No wireless. Less space than a nomad. Lame."
I use FOSS when it makes sense but 90% of the time the answer has been, 'just use what AWS has.'
OSS is all about leveraging "hidden" advantages agains competitors that have clear and obvious financial advantages over you. If you get it right, you win!
Of course, if you don't like risks and don't like "uncomputable" prices, or "prices unique to each buyer", then sure, be conservative, and stay away from FOSS.
Some will translate to increased revenue, a few times over, (which incentivizes the vendor to increase the price accordingly) and some will be net negative.
It's a lowest common denominator product. Which is fine. I use it for anything I need to share on and Trello for organizing, "in my own head."
I won't even look at sharepoint.
How much does it cost you for Jetbrains? How many technical books is that? Is in worth that many books a year for a decent tool?
Is the expectation that your employees cost > $200k or is that not qualified?
In some companies / countries you spend $10k per employee.
all of these three are included in the gross in france
Remember, many people in USA believe that corporation has duty to increase shareholder value. And similar stupid ideas.
And on the productivity point, that makes a good theoretical case but it is just not demonstrated by historical data. In the US, in the past 50 years, it even has a name (the pay-productivity gap or the wage gap). You can look at productivity vs wages since 1970 and see how they have not correlated. Further, you can go into income and wealth inquality growth over the same time (https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...) and see how the wealth generated by the productivity gains has been highly concentrated in the top 0.1% and 0.01% wealthiest. Some people will talk about real or nominal wages (adjustments with something called the Implicit Price Deflator) that show wages purchasing power increasing, but I think one can look at costs of home, college, and medical care and other critical things in social mobility that have increased in cost far exceeding inflation as complications to that idea.
Fiduciary duty means that the board is supposed to be honest with the shareholders and not actively work against the corporation. That does not mean, in fact, that they are required to put growth of shareholder value to any respect.
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668 (Mich. 1919) is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a charitable manner for the benefit of his employees or customers. It is often cited as affirming the principle of "shareholder primacy" in corporate America. At the same time, the case affirmed the business judgment rule, leaving Ford an extremely wide latitude about how to run the company.
[...]
> In the 1950s and 1960s, states rejected Dodge repeatedly, in cases including AP Smith Manufacturing Co v. Barlow or Shlensky v. Wrigley. The general legal position today is that the business judgment that directors may exercise is expansive. Management decisions will not be challenged where one can point to any rational link to benefiting the corporation as a whole.
The caveat is important. If a company says, "Customers don't like it when rich people in suits treat <x> like shit. Therefore, if we spend a small amount of money treating <x> better, this will make our customers happy, and they will buy more of our products, recouping the cost and bringing in more profit for our shareholders." Substitute the environment, animals, customers, employees, people in Africa, cancer patients, the children, etc. It doesn't matter if you're completely full of shit, you just have to make the argument.
So while you're correct that companies have a primary requirement to increase profits for their shareholders, in practice, this requirement is incredibly loose, to the point of not actually being a requirement at all.
But that's beyond my knowledge on this matter :)
No more stupid than the idea that companies are supposed to exist solely for the benefit of the employee. Shareholders are the ones that put the money up to start and grow the company in the first place, so yes, there is an obligation to shareholder value.
Don't like that? Then you are free to start a company that doesn't take investment.
There's however no law that holds a figurative gun to the heads of corporation that their duty is to increase the value of those shares.
It always seemed to me the value an employee brings is the upper bound on pay (demand drops near 0 over that), but the pay is determined by supply and demand for that labor.
Yes, pretty much so.
> lowering pay?
Nope. Reality is way more complex than that.
"The fully-loaded costs of employees are much higher than their salary: exactly how much higher depends on your locality’s laws, your benefits package, and a bunch of other HR administrivia, but a reasonable guesstimate is between 150% and 200% of their salary." -https://www.kalzumeus.com/2012/01/23/salary-negotiation/
I'd hypothesis that most employees on whom companies spend $10k for cloud software are making $100k+.
But even so, the average salary in the US is < $60k. Use whatever multiplier you want, $200k is way high.
Companies are spending far less than $200k/employee all-in.
So to slightly rephrase the OP's question:
> Do people really believe that $100k is a normal salary?
But it's pretty obvious that a basic "customer support" combo like Office 365 + Okta + Zendesk + Intercom + Slack + Zenefits starts to add up to a meaningful percentage of the employee's take-home compensation. (Remember these are positions where $20/hr is a good rate.) And remember, the comparison figure for managers over 50 is roughly $0, which approximates the spend on these functions as far back ago as 2008.