> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds"
Ah the typical European startup dilemma. The governments recognize that in an age of difficult unemployment and stagnating growth, new avenues of entrepreneurship need to be embraced, and so they set up all sorts of programs to encourage new startups. But then these startups get beyond the very early stage, and need to raise capital to continue their growth. And the look to institutional money in Europe. And no one will give them any. Because the European investor mindset is so risk averse, that only those who already have money are considered safe enough to start real businesses (continuing the old guard).
Personally, I think that's great. You folks in Europe are just reasserting that we in the US have the more opportune climate for startups. And so we'll continue to steal all your good ones ;)
I'm from California and currently work as a traveling circus monkey, otherwise known as a consultant. I've worked with startups in Europe, Japan, and the US, and while I don't consider myself an expert, I do at least have some idea of the differences between the various markets.
Europe is a big place, with lots of different countries, and much like states in the US, they work differently. True, the investment climate makes raising money much harder than for companies in the US, but on the other hand, there are sometimes fewer regulatory hurdles for companies looking into exploring new business concepts.
Take FundedByMe. They're fulfilling the promise of equity-based crowdfunding in Sweeden, and because they're not a US-based company, don't need to deal with the SEC and FINRA. The US has tried to set up something comparable via the Jobs act, but major players have kept all the regulatory hurdles in effect, and so for-profit crowdfunding is still a few years off, if it ever really happens at all.
Don't get me wrong -- we still have a big lead in the US, especially in the Valley, but don't get complacent about how quickly that lead can evaporate through the missteps of well-meaning regulators and politicians, or through the negative effects of software patent law.
I will not disagree with any of that. The US regulatory minefield is still a problem, though I do feel like the patent issue is going to become non-existent over the next several years.
Laws and regulations are often simpler to change (although still difficult) than the mindset of a bunch of old men sitting on the majority of investment capital.
Pretty easy to be dismissive of the startup scene from the outside. Reality is almost no one who raises something like $10mil is making a "social local public transit pancake revolution". Occasionally someone does raise a lot on a bunch of BS, and it makes a bunch of news sites, but ironically those are usually founders who have proven themselves successful before (and probably could raise money in Europe with that record). No one is going to give a first time founder, California or not, that kind of money for their hipster startup.
I should probably have phrased it better, I meant risk averse to new businesses. The market problems in recent years you're referring to were internal to the long existing institutional establishments.
> Most of this money doesn't come from banks or venture capital funds, however. "Newly founded companies are mostly financed by the founders' own funds"
Also happens to be true of the US as well.
VC funds only fund a minority of tech businesses, and for a good reason too, many tech businesses are simply unsuitable for that type of investment. VCs typically need to seek a 10x return over 3-5 years for the maths to work, and most tech companies aren't going to grow that fast.
Growing up I found that a tremendous amount of software I used was European, and most of it was free (as in beer). Not to disparage German software developers, but almost none of this software was German.
There's absolutely fantastic software from all over the continent, but due to various economic/cultural aspects doesn't revenue in quite the numbers boring SAP does.
edit upon further review I've found a bit more German influence in my software than I remembered, sorry Germans!
Growing up it was mostly music and games. On the East Coast, with parents tolerant of tying up the phone line with lots of BBSing, I waited for software to percolate over to my local BBSs, and probably half of it came from Europe.
An awful lot of stuff written for the C64 and Amiga. And then when the same dev traditions moved onto the PC, that stuff. The demoscene and peripheral software movements figured pretty heavily into it.
For example, I spent thousands of hours in Protracker (Finland I believe), Scream Tacker III (Finland), Fast Tracker 2 (Sweden I think)...there was also a few graphic programs I mucked around with Sculpt 3d (England I believe)..a few toy fractal programs, there was a great piece of music software I used for a spell from Spain that I can't for the life of me remember, some ANSI graphics editors. I'm currently keeping a copy of the pro-audio level Renoise installed (a pile of Euro-authors if I've ever seen one) http://en.wikipedia.org/wiki/Renoise
but I also spent thousands of hours watching the latest scene productions coming out of Europe at the time. Growing up on the East Coast, we ended up with a small, but relatively healthy demoscene in the early and mid 90s and productions routinely (and quickly) found their way onto local BBSs.
But don't forget that Linux is originally a piece of European software (Finland), UAE (which let's me relive some of my youth) was started in Germany, theproduckkt (Germany), and on and on and on...
and then there's other stuff I'm keeping tucked away for when I get some time to start playing around with micro-controllers http://www.linusakesson.net/scene/craft/ (Sweden)
most of this is just stuff I was interested in at the time, there's tons I never even touched
basically a tradition of software on a different axis from commercial proprietary and free (freedom) software, but I bet if you look at the contributor lists for lots of popular open-source/free (freedom) software, you'll find long lists of European contributors.
edit after review I've realized there's more German contribution to my software history than I expected, sorry Germans!
Also, glad to see lots of folks jumping up and calling out some great German softs.
"Scream Tacker III (Finland), Fast Tracker 2 (Sweden I think)"
Yeah, Scream Tacker III was made by demogroup Futurecrew, from which some went on to start Remedy Entertainment (Max Payne, Alan Wake) and other companies. Fast Tracker 2 was made by demogroup Triton, from which some went on to start Starbreeze Studios (Chronicles of Riddick/The Darkness). Also DICE (Battlefield series) has demoscene roots in the form of The Silents. Even Rovio (Angry Birds) got started after winning some compo at Assembly.
You're making a very good point. I don't have the hard numbers, but having observed the European software industry for a long time, my feeling is that it is _very_ tail heavy, particularly if you count all the custom development and services revenue.
Another important question is what counts as software revenue in the first place. What about London's heavily software based financial services? What about software embedded in Germany's massive industrial exports?
industry implies economic activity, so revenue is a really good metric for that. is it perfectly accurate? no, but it is a better metric than your anecdote that none of the software you used while growing up was german.
I don't really disagree with your point exactly. But something I've noticed with lots of the European software I've come across is that the makers are phenomenally bad at monetizing their work. Renoise is a great example, an extremely mature, very complex piece of studio ready software that you'd expect would run for industry standard prices of at least $500 per license, but runs for something more like $80.
Protools by way of comparison runs about $800-1000 depending on the package (the version upgrade to 10 runs $300-400).
As a consumer I'm very glad that Renoise is only $80, but I can't help but wonder if they might be taken more seriously in the pro-music industry if they just sold the same product for $500, and they might make a great deal more money.
A substantial percentage of SAPs revenue is from consulting, and if you're going to include that then why not Accenture who has twice the revenue of SAP and is HQ'd in Ireland. Or Erricson who might primarily do hardware, but make $8bn/year from software revenue.
Could someone give a brief example of what kind of SAP work require? I see constantly recruiters searching for people who know how to work with SAP, but I have not clue what it involves. ))
When I encountered SAP, it was still the SAPGUI client that you installed on Windows. As I exited my SAP-related job, I believe the change to Web/Netweaver was beginning to happen. I've written a few ABAP programs and 1 or 2 BSP pages. The way I'd describe SAP to someone who hasn't ever used it, is like a very complex & powerful database with many stored-procedures and triggers and functions and special forms(screens) to accept user-input for each of them.
I worked for a company that was switching over from old internal software to SAP. We actually had to change workflows to suit SAP. You see, they'd sold it on the premise that it was adaptable, and it was, but actually a SAP engineering team would need to make the modifications to every version and update that we were contracted to receive. This wasn't covered in the multi-million-euro contract, of course.
Way off topic: what accounting software is everyone using?
I've been hunting for something that is a well designed SaaS product, yet is highly scriptable with a great API to allow me to automate more of our transaction flow.
Right now we've got a part time book keeper whom spends most of her time copy and pasting things around in quickbooks, its just silly. Unfortunately we have a 'complicated' transaction flow, by 'complicated' I mean none of the ultra-simple SaaS models seems to allow modeling it correctly, but it could be done with a couple dozen lines of script if the software allowed that.
I'm currently stuck either keeping things as are, which sucks, or massively overpaying for SAP Business ByDesign to get the needed flexibility. It seems like there is a bit of a hole in the market between the ultra simple SaaS solutions and the SAP's of the world. It seems like NetSuite used to fill this gap but has moved up market.
Is Xero getting to the point where they can at least partially fill that hole? Anyone else out there that is close?
Stable, reasonably usable, most stuff written in python so easily extensible. You'd better use some consultancy to set up everything from the start, afterwards it's quite easy to maintain yourself (Free software FTW).
Meanwhile, SAP is (indirectly) funneling part of the revenue from clueless enterprise into... Hasso Plattner Institut! One of the world's hotbeds of computer science innovation (http://www.hpi.uni-potsdam.de/willkommen.html?L=1)
"Professor Hasso Plattner [co-founder of the global software company SAP and chairman of its supervisory board] has pledged the foundation from his private assets for the day-to-day running of the Institute over a period of more than 20 years. Due to his commitment, he is one of the most important private supporters of science in Germany."
Ironic? Visionary? Whatever it is, good work is being done, orthogonally to SAP's main venture.
The company I work for has an internal software suite (mostly Java EE) that's rolled out across Europe, and we have a SAP team too who deal with all the accountancy stuff.
Some aspects of the systems I work on have to communicate with SAP and I find the whole process quite frankly, bizarre. The way SAP names procedures is weird, it just seems so clunky.
Whenever the SAP team come to us to say they've added a new column and we need to support it makes me weep a bit when having to type in ZTRANS_TTP_ORDER_TYPE everywhere to support their bullshit.
You can choose to use any name for your custom objects as long as they start with Z* or Y*. This is the only constraint from SAP. And of course depending on the object you have a max length.
They were in the market early and profit from some "nice" lock-in effects. They have excellent relations with many large companies who tend to require that their suppliers use SAP.
The automotive industry is notorious for this but I also know of some small companies that were essentially forced to use SAP to even compete for contracts from some big companies (Bosch comes to mind)
ABAP is also fairly "consultant friendly" and extremly backwards compatible. Sometimes I jokingly call it the new Cobol. If you ever think "man my language of choice is pretty kludgy" feel free to look at some ABAP code/docs and you'll feel a lot better :P
If by "generally works and at a very, very large scale" you mean it's slow as molasses no matter how many or how few users there are, and you're unable to provide a decent user experience, than I have to agree. Otherwise, I'd say "feels kinda clunky" is a stiff-upper-lip kind of understatement.
I'm not sure I can agree with this.
Back in 2001, before I discovered the California bay area start-up scene, I worked in a very large telecommunications company that everyone has heard of. SAP seemed pretty good; albeit hard to master.
While I have barely used the SAP system where I work, I could intuitively sense its value. Only half joking, I have claimed that If i could get a half dozen good co-ops, we could build a far better system with LAMP in about 6 months.
( I know that LAMP is dated, but other than what I have read here, I know little about the more modern frameworks)
Which is very sad, because it is the worst crap ever.
Usually it works like this:
Specially trained sales people approach executives of a company with stable money flows. They tell all that nonsense about how prestigious SAP is, that all successful businesses runs SAP, that it is kind of a simbol of maturity of the company and that it having SAP installed is good for IPO. Most of execs who have no idea what crap it is just agree.
For IT execs it is even better. SAP installs a ready bureaucracy system inside a company. All those meaningless titles, training, certificates, as if you really learn something valuable. Usually IT manager involved in running or supporting SAP have a guaranteed position, they say.
Needless to say, that they have a ready "processes" based on paper-pushing inside a newly formed hierarchy.
Now about software. It is worse crap ever. It is a mess of Java, inhouse ABAP layers, and thousands of SQL stored procedures with meaningless names.
All technical and troubleshutting documentation, which is crap, available only with paid subsribtion, explaining almost nothing. What is available for free PR, success stories and use cases, which is completely meaningless lies.
Software itself is a mess. There are hundreds of different version which are incompatible with each other, and only this version people know what to do.
All installations usually performed by stupid drones without any background using detailed instructions with screenshots of each step. Usually typical SAP "certified professional" know nothing but a few such instructions.
Support is much worse. Nobody know anything, all they do is finger-pointing. All problems usually solved with a new re-install and then import whatever data we have in last backup.
Data loses are normal thing. Bugs and gliches are normal. Incompetence is rampant. But SAP bill you for each hour of each consultant involved, and each document passed through system. May be even for each transaction.
After all crap is installed and organization are shaken up it is already too late and too costly to revert. This is why SAP is so "successful" - when you "invest" in it you are done for, and you just sign the bills and have your "signs of maturity".
This is only quick overview. I can write a brochure what a crap it is.)
From a historical perspective though, 20-odd years ago large companies had their own massive in-house "concrete-ware" that ran on hugely expensive locked-in proprietary hardware with proprietary OS and DB, and huge cost and complexity of operation and changes.
SAP then offered R/3 which ran on whatever DB/OS/hardware brand you wanted. The other big difference was that it was multi-lingual and multi-currency and quite adaptable - and it had a GUI. It was so desirable - there was basically no competitors. All the bad points you mention were trivial in comparison to the benefits for a multi-national.
Now of course things are different. For starters, Mosaic and the web came along. SAP have tried to keep up with the amazing changes in ICT in the last 20 years but of course if you want to do that and remain profitable and look after your massive and diverse user base then things get complex. They haven't left anyone behind - there's been an upgrade path the whole time since the 70's and that's one thing at least that is admirable.
{The message I wanted to reply to, the single line quoted below, apparently was deleted while I typed it, so... sorry for the missing context and the long rambling rant. }
> SAP implements the workflow of their costumers (the process is called "tailoring"),
No. It implements workflows that one of the consultancy layers comes up with after having meetings with the wrong-inhouse people, because in big corporations there's politics involved about who gets to be responsible for the future processes to be implemented, by newly formed departments, with managers and budget and so on.
I'd be the first guy to endorse the point that a central accounting, order, inventory-managing, ... system is indispensable for any big shop, but the current way of getting this kind of "mission critical" software into big corporations is just a huge clusterfuck. Office politics more or less guarantee that the system will sabotage the work of the majority of employees, and I cannot even blame SAP for that ;-).
I worked in a >10'000 people engineering company (huge industrial plants) for three years which matches roughly the timeframe that SAP was introduced. I've witnessed pretty hillarious in-house advertising campaigns (video clips, posters, giveaways, mascots) to raise acceptance of the new software and meaningless presentations justifying millions of wasted $ (€) offset by future increase of efficiency. There were funny titles given to specially trained ("power user", I'm not kidding you) colleagues and in the end, complete confusion about how to work with what was given and a inhouse support staff no longer able to cope with all the problems after the hive of consultants, trainers and specialists went to assault the next company.
We had it all: Three digit months-entry fields, to be able to cope with future expansions (not kidding), thousands of people trained in creating multi-billion-dollar-project structures inside SAP, yet unable to order a €10 part. Billable-hour forms with a complicated permission hierarchy, that nevertheless did not detect people charge other random accounts, sometimes by accident.
In the end people developed mitigation strategies, so work can continue with only minor handicaps, inhouse departments get praised for "successful" implementation of the systems, rewards are paid out, but a lot of the promised advantages fail to materialize.
Indeed big ERP is like you describe; Oracle is no different there. I don't know why their users accept this, but then I don't know how it is to run a billion $ brick & mortar company which is the traditional bread & butter for large ERP companies.
And for consultants it's a definitely a great, stable and future proof moneymaker; if you are a freelancer with real-world experience (you worked on SAP in a biggish utility company for instance) then you can get hired whenever you want for insane amounts of money; E150-200 / hour, even in the current climate, is not an exception.
While all you say is pretty much true, you have to see it in the context of the service that SAP provides. SAP implements the workflow of their costumers (the process is called "tailoring"), not the other way around. As every customer has a different workflow, the maintenance nightmare you describe is always looming, especially as the systems are built to run for decades. SAP knows this, but sadly, there is no good solution for this problem.
Full disclosure: I worked for SAP Research, but not on ERP systems.
That's not a reason for the core tooling and docs to be crap, though. (I don't know whether they are, but this thread gives me the impression that they are)
Thats true and I don't want to defend this in any way.
But its a way to understand why SAP is like it is: the "core" you speak of is already fragmented and by chance, it can even happen that this core knowledge is invalidated by something further down the stack. Documentation of 100 edge cases wouldn't help you much in that regard. As others have stated, the oracle world is not much better in that respect.
Its a way to understand why anyone would even buy such "crap". Because thats the crap that solves the customers problem somehow and there is no competing company that would even come close to offering a similar service. I don't mean to imply that no one could ;).
My little short gem from being forced to take a course on ABAP (the SAP "programming language") at Uni:
If you have an error in your program, your editor crashes. You have to start a new editor instance by wrangling through a dozen submenus and entering cryptic commands.
The guy overseeing the course said "Yeah, just open a few backup instances of the editor beforehand."
What's actually happening there is you are executing the program directly from your editor, in the same work process. So if you get a runtime error, then you get the stack trace (dump) and you have lost your whole context so you are back to the menu.
Ah the typical European startup dilemma. The governments recognize that in an age of difficult unemployment and stagnating growth, new avenues of entrepreneurship need to be embraced, and so they set up all sorts of programs to encourage new startups. But then these startups get beyond the very early stage, and need to raise capital to continue their growth. And the look to institutional money in Europe. And no one will give them any. Because the European investor mindset is so risk averse, that only those who already have money are considered safe enough to start real businesses (continuing the old guard).
Personally, I think that's great. You folks in Europe are just reasserting that we in the US have the more opportune climate for startups. And so we'll continue to steal all your good ones ;)