
How we’re spending $55,930.08 a year on SaaS products - vv
http://blog.sawhorsemedia.com/post/104076088572/how-were-spending-55-930-08-a-year-on-saas
======
mmahemoff
It's significant this is a SaaS company using these services. Some of the
services have a cost based on team size, while others have a cost based on
user base (and usage volume).

Services whose cost is f(team size): CircleCI, Trello, Github

Services whose cost is f(user base): MixPanel, Moz, Shopify

I mention this distinction because the f(team size) services generally offer
solid value to any team, being useful and less expensive than paying someone
to build the same thing in-house. OTOH the f(user base) products are a lot
harder for consumer apps to justify than business apps. They do occasionally
offer enterprisey premium features like platinum support, but the main pricing
scheme is based on X whatever's per month, and a SaaS company charging lawyers
$100/user/month is a lot more likely to afford it than a casual gaming website
with a million users and a some ads.

~~~
eitally
And this is precisely why many large enterprises build things in house rather
than license commercial tools. It's a lot more palatable to buy 3-5 full time
developers to build and support and internal helpdesk than license ServiceNow,
etc, for tens of thousands of users.

~~~
_delirium
There's also considerable risk-aversion at large enterprises. Getting
themselves into a position of significant dependence on a SaaS provider can be
unappealing for at least two reasons, even if the pricing works for them
initially: 1. risk that the pricing gets raised significantly, or the
business's employee/customer profile changes in a way that raises the price to
them significantly; or 2. risk that the SaaS provider goes out of business, is
acquired, pivots, or otherwise significantly changes the service.

Building something in-house probably doesn't usually result in a better
product up front (and _definitely_ not for less up-front expenditure), but it
can reduce some risks and be less constraining to future moves if you own the
app.

~~~
berkay
It doesn't work that way in practice. I've been to more than one enterprise
where an in-house developed application was no longer maintained, original
developers were not available, and no one knew how the application even
worked. There are very high risks in in-house developed applications,
particularly if they are not vital for the enterprise (harder to have
resources to maintain/enhance). Risk of SaaS provider going out of business or
raising prices is no higher than traditional on-premise enterprise vendors
(one can argue it's a lot lower). In short, there are risks in all approaches
and they need to be managed. Good application architecture help manage those
risks regardless of which route is chosen.

~~~
eitally
I disagree completely. Another benefit of traditional on-prem vendors is that
it's a lot easier to get source code escrow written into the contract as a
force majeur or bankruptcy contingency.

I was going to reply this to a different guy, but in my experience the risks
of the in-house app going out of maintenance due to dev attrition or whatever
are far lower than most people think. Stuff that's business critical is almost
always staffed appropriately, and stuff that people perceive as business
critical but actually isn't is usually the [large group of small apps] that
aren't well supported. The big problem is the rinky dink Excel macros,
VBA/COM+ add-ins, and random isolate single developer crap that nobody knows
about except the end users.

------
Jonovono
Interesting. Cheaper than the salary for an employee and probably together are
able to help you do more than a single person.

~~~
rlpb
> Cheaper than the salary for an employee...

True, but I wonder how much of an employee's time it takes to manage dealing
with all these suppliers, technology integration time with each of them, and
changing how these services are used each time a supplier changes its product
offering.

~~~
Jonovono
So you're saying we need a SaaS service for managing other SaaS services and
integrating them and keeping up to date with changes! :p

actually....

------
Wilya
It's worth pointing out that, according to their team page [0], Sawhorse Media
has zero dedicated backend engineers (apart from maybe their CTO). So, in
their case, the alternative would be to hire someone just to manage these
things (sysadmin, engineer, or whatever). In this case, I can see why they
would make the choice of outsourcing everything.

But if you already have an in-house engineering team who is reasonably
competent at maintaining services, the tradeoff is probably different.

[0] [http://sawhorsemedia.com/team/](http://sawhorsemedia.com/team/)

~~~
berkay
Agreed. Even when you have an in-house team, there are always other things
that are core to your business to do. Growing a team is hard and expensive
beyond the cost of the additional engineer. These SaaS tools let startups stay
smaller, and that's priceless.

------
Alupis
There's a lot of unnecessary costs listed. For example, they spend $165.00 on
dropbox for the team, but also use Gmail services (meaning they have Google
accounts which come with a free 10GB of storage).

The tier of MailChimp they use implies their list is in excess of 110,000
subscribers, and since I do a lot of email marketing for my company, I can
guess their open rate is probably somewhere in the 10-20% range, so they are
throwing money away on emails that go to spam boxes or never get
opened/engaged.

They use a 3rd party team chat service instead of hosting their own local XMPP
service (this is a non-critical service I would wager, and could afford some
downtime if the server needed maintenance).

All in all, they are spending a lot on things that aren't really necessary.
They could bring some of those things in-house and probably save a lot per
year as well (low-critical things that would require minimal maintenance).

This is not even mentioning the _lack_ of flexibility they get locked into by
using only 3rd party solutions. I've seen this at my company for the few
external things we do depend on -- you end up building business practices
_around_ the 3rd party service, which may or may not be optimal or how you
would normally do things. Having that flexibility, and assurance that service
X doesn't go away tomorrow really can improve work-flows and peace of mind.

Seems their business is based entirely around other 3rd parties ... something
that would make my company very nervous to say the least.

~~~
cm2012
Paying someone to micromanage the services to get cost savings would cost at
least $60,000 a year and make the company lose focus. There's no way digging
into the details of the Mailchimp spend structure, for instance, is worth the
time.

~~~
Alupis
> There's no way digging into the details of the Mailchimp spend structure,
> for instance, is worth the time.

Actually that's one point where you are not correct. For a good email
campaign, it's imperative that you manage your list. You need to be looking at
stats from the previous campaigns and making changes for future campaigns. If
you have a lot of low-engaged/no-engaged emails, you need to try to re-engage
them and/or drop them from your list. If you send 1 email a week to an address
for 5 years that never opens, you are literally throwing money away. MailChimp
(which we use too) has a lot of very good tools to help prune your list and
glean a lot of insights into your engagement rates.

> Paying someone to micromanage the services to get cost savings would cost at
> least $60,000

Not necessarily. Download a copy of Openfire XMPP server, stick it on one of
your spare windows/*nix boxes in the corner, and it will run un-maintained for
years. Just cron/schedule the OS updates automatically and it takes no more
effort/skill than logging into a website to manage user accounts.

And nobody says they need an expensive seasoned SysAdmin to manage these
services. Hire a college student for $15-$18 per hour part time to come in and
tidy things up.

There are other opportunities to be had with their list of services, such as
taking advantage of the drastically lower cost BitBucket (if they must have
their source code repo's external).

There's certainly a lot of waste listed here.

~~~
corkill
They aren't trying to reduce costs, they are trying to focus on their product
and growing their company.

~~~
Alupis
That's fine so long as the money flows nice, but if/when things get tougher,
they will have to scramble to find a solution.

There's 2 sides to this business -- the technical/development side, and the
business side. The business side should very much care about not wasting money
unnecessarily, even during the good times.

~~~~~~~

But it's not just about saving money -- the company has almost zero
flexibility when using all 3rd party solutions. If a vendor pushes an update
tomorrow and it radically changes the product and causes a large disruption
(it happens), or a vendor goes under tomorrow, or [insert dooms-day scenario
here], the company will be left scrambling.

Using 3rd party services also forces the company to build business
routines/practices around their current inflexible environment -- so if they
do have to switch vendors at some point, they will have to likely reinvent
business routines/practices too. For some companies/services, that is not a
problem -- for others, well, some companies have gone under during major core
software changes (imagine your warehouse management system having to change
suddenly and unexpectedly).

Just like software engineers try to minimize external dependencies unless the
dependency is absolutely necessary -- businesses should too.

~~~
roel_v
"The business side should very much care about not wasting money
unnecessarily, even during the good times."

How many businesses have you run?

------
chatmasta
I'm more certain every day that there is a place in the market for a company
offering "subscription management" service. Manage all SaaS for a business (or
personal as well!), keeping costs low and utilization high. Provide one
central billing endpoint.

I would definitely use a service like that, both personally and
professionally. The number of subscriptions I have is growing, and it's
frustrating to keep up with all of them. I would love to have them all in one
accessible place.

~~~
mattm
Actually, this is a pretty good idea! It's going on my idea list.

~~~
Argorak
Started working on one of those on a conceptual level. The main problem is
that some of those services provide no management API nor want to resell,
which would be the best source of revenue in my opinion. Without that, you
have a glorified "I'm using this/that" list.

~~~
chatmasta
Yeah, another problem stemming from this is that in many cases the user would
need to grant you full account access. Still, Mint is a good example of a
product that was able to gain enough trust from users that it had full access
to all bank accounts, so maybe such a requirement is not an inhibiting issue.
Any good product would need to be backed by a solid team with trustworthy
backgrounds, though. This likely wouldn't work as a side project.

~~~
Argorak
If the service just provided "add a user, remove a user (hired, fired) and
adjust billing appropriately", it would already be worth a lot and wouldn't
need full account access.

Its mind-boggling how many accounts I still have for companies I don't work
for anymore.

~~~
chatmasta
Yeah, that would work, but the issue is that if you want to support "every"
SaaS company, you need to solve the problem of integrating an SaaS product
that does not offer granular permissions. e.g. An "admin" account that could
grant/revoke access to users might necessarily also have access to sensitive
company data.

In fact, it's the sensitive data that is the issue that will generate the most
resistance from potential customers. Companies probably care way less about
trusting you with their credit cards than they do with trusting you with
sensitive vertical-specific data. THEN AGAIN, people are putting their entire
company communication into Slack so who really knows...

------
ckluis
I was thinking man - they don’t even have 1 really expensive SaaS product on
the list… $60k for all those solutions seems very very cheap. Just setting up
an open-source alternative to something that costs <$500/yr probably ends up
costing you more - without upgrades and management.

~~~
Argorak
I saw the setup of a ticket system (with some tayloring, server and user
setup, etc.) quoted at 20k EUR, which I found a reasonable price.

That's 20k upfront investment _before anyone has used it_. And this is where
the real value of SaaS lies.

If I throw away 1000 EUR in seat licensing just for finding out a system
seemed nice but doesn't work in the long run, I just saved 19000 EUR.

------
bdcravens
I wonder how many of those service are at a "just in case" level? I see a
number of products I have/do use, but the team only needed a smaller version
of. (for instance, $97 for Github when a $25 org plan would work)

~~~
vv
Since we run two products (both Muck Rack and the Shorty Awards), we end up
paying twice for some services like Github.

~~~
teacup50
I don't understand _why_ you would host your source code externally?

You can buy Atlassian Stash, once, for $1800/25 users, and use it forever:
[https://www.atlassian.com/software/stash/pricing](https://www.atlassian.com/software/stash/pricing)

~~~
bdcravens
Github is really attractive with all the services that integrate into it. A
service at $100/mo isn't much when you consider any labor time it saves
($50-$150/hour generally)

~~~
teacup50
... and Stash is really attractive with all the local plugins that integrate
with it, and allow you to do things that are _really hard_ when you're stuck
with web hooks.

Local installations don't cost hours-a-month to run.

------
joelhaasnoot
While interesting - there's often a free or opensource alternative for these
"generic" SaaS services. You'd probably be spending just as much on this list
if you used no SaaS products and hired an engineer to either maintain the open
source versions or add similar custom functionality to your
product/CMS/dashboard/somewhere. If you hired the engineer, you'd probably get
the exact functionality you needed too.

~~~
vv
We have engineers and we already spend a lot more on them than we do on SaaS.
But we want them focused on building Muck Rack into an awesome PR tool for our
customers, not internal tools unless they're specific to our product.

Even so I don't think there's any engineer we could hire for $60k salary (or
any salary for that matter) who could effectively maintain all of the
functionality we get from these products, but if you know of one please send
them our way! [http://sawhorsemedia.com/jobs/](http://sawhorsemedia.com/jobs/)

~~~
teacup50
And yet, you're paying those engineers (and every other employee) to waste
their time using N different non-integrated services, all of which change at
random whenever a new release is pushed out, disrupting your processes.

I've been involved in this side of a startup 3 different times over a couple
decades: IT systems are not a full time job for a startup. They're not even a
part time job. They're an every-once-in-a-while type job. At <30 people, all
you need is one engineer that can also run a single small internal server.
Just one.

~~~
kitsune_
> IT systems are not a full time job for a startup. They're not even a part
> time job. They're an every-once-in-a-while type job. All you need is one
> engineer that can also run a single small internal server. Just one.

Soon enough he or she will have to maintain your mail server, CRM, file
server, bug tracker, CI service, backup services etc. and woops, your
developer is now a sysadmin.

~~~
teacup50
From experience: That level of maintenance only grows to sysadmin proportions
at a scale where you can hire a sysadmin.

These systems largely run themselves, indefinitely.

~~~
Alupis
Not to mention there's a lot of SysAdmins out there that will do the job very
well for a lot less than $60K a year. You don't need to hire a SysAdmin who
used to work on Google sized infrastructure to run your internal startup's IT.

------
andyidsinga
this is really interesting - i work at an internal incubator at Intel ( new
business initiatives ) ...and we don't use nearly this many services in our
new ventures - so an interesting contrast for sure.

i interesting to see what breaks the 99 barrier

------
digital-rubber
That's a lot of money spend for not so much in return, imho. Not to even
mention the time spend on integration everything with each other. Which also
equals are certain money amount.

I'm quite sure that for a lot, if not majority of the packages you pay for,
there is a perfect open source, free to use alternatives. Which might require
just as much time to integrate as it's paid alternative, but you will have
full control, self hosted.

Also consider the impact of the information you are sharing with all these
third parties. Might be a bigger concern then currently estimated.

Example, the dead man's snitch, it kind of leaks every time a cronjob
runs/fails.

~~~
simonw
$60k/year is 1/3 to 1/2 a developer/sysadmin. If maintaining in-house systems
based on open source equivalents of all of those packages would take more than
1/2 a headcount, then they are making the right choice.

And even if they could do it all in-house, that's a developer who's not
working on the stuff that makes their product distinctive. Running your own
email sending / file sharing / customer support tracking / project management
/ sales lead management software has a massive opportunity cost.

~~~
digital-rubber
yes that's the tradeoff/investment, where people differ of opinion and I (very
technical person, not management/paper pusher), find it more important to have
in-house capabilities (even at higher cost) then to simply rely on a third
party vendor.

Plus that you are not making any third party aware of anything, as you don't
need them. And might save you a lot of hassle in the middle of the night and
you need vendor support, which generally at such hours could generate even
more cost.

In my humble opinion, technical pov, the more you do in-house, and the less
you rely on third parties, the more freedom the company has.

Also any in-house developed product, could be sold, generating income. Also, i
believe, that developing your own, gives you a certain knowledge which you
don't get if you are simply adopting third party software.

It's of course way easier/more clear to calculate ROI when you spending
specific amounts instead of investing in knowledge, control and self power.
The returns on that can very a lot.

But, generally speaking, things are only 'expensive' if you think they are not
worth it.

~~~
Alupis
I don't know why so many people keep tossing the $60K-$120K figure around for
a SysAdmin. Your startup is not on the level of a Facebook/Google and does not
need a SysAdmin who's background is managing systems at that scale. You really
just need a college student who can run a few small servers and knows how to
make backups for when things hit the fan. We're talking $15-$20 an hour, they
get a lot of great work experience, and you get manged in-house IT.

------
igvadaimon
Sorry for offtopic, but that animation on Muck Rack startpage is one of the
slowest I've ever seen. It really freezes.

