Back when I had my own HPC company, we often consulted on RFP specs for customers building clusters. After a while we started building our own clusters. A well known large/prestigious university on the East Coast US called us to help with the RFP, and bid. We did.
We found out later that they simply wanted help with the RFP. They never took our bid seriously. Small company with a great rep, they preferred dealing with the large companies with meh reps.
Another one ... a university somewhere here in Michigan, an alma mater of mine in fact, did something akin to this, but used another vendor as its stalking horse. We constructed our bid aggressively, and submitted.
Later that month, while on vacation with the family in Florida, the purchasing agent called me up. She wanted me to teach the other companies how to do what we did (much higher density, far better performance, etc.) I asked why. She said they liked our solution. They just didn't want to buy from us.
We'd won the RFP. But lost the business.
Of course, we declined teaching our competitors. They (the university) were unhappy with that, and didn't understand why we wouldn't do this for them.
I was then, and still am somewhat, blown away by the complete lack of understanding of how businesses actually work, on the part of the RFP folks, the purchasing agents, etc.
Another time, I had a university call us up asking for a bid for something. I asked if they had a preferred vendor (all do). She said yes, but state law said they need at least 3 bids before they can purchase. I asked if our bid would be taken seriously. She said no.
Yeah. I've shared some of these anecdotes with others in this industry, and we all nod our heads. All of us have run into this before. Some of the stories are far more outrageous than mine.
An interesting tangent: I currently work for a company whose RFP we won ~14 years ago for storage, but was rejected by the person who was my first boss here, as we (the company back then) were too small. That's happened multiple times throughout my career. Even though our solution was demonstrably superior in all technical and financial aspects, we "lost".
I'm sorry to tell you, but I am one of those people who frequently argue against a small less established vendor, at least for anything really important.
Why? I've been burned a few times. New (< 5 years) small companies can disappear overnight. If they don't simply disappear and have a bit of revenue then they often get acquired by one of the big players. Those players either:
1) don't know how to properly manage this new product and it stagnates, the 75% of account managers are fired and support goes to shit. Or:
2) the company has no intention of keeping the product, and despite initial assurances to the contrary a year goes by and I get a notice that they're shifting all customers of the acquired product to their own competing version. Sometimes this comes with a very sneaky hard sell to re-up on a long term contract before the announce the product EOL.
100% agreed. The time to work with startups is to try something cool and new but not business critical.
I've worked at startups and and big services companies. At startups, we've gone out of business in the middle of projects, or decided "we don't do that anymore" while we're doing it, and abandoned clients. As the lead of a small provider, I'm always a few screwups away from not being able to make payroll and losing all my staff, and if I'm hit by a bus or have a personal emergency, there is no backup.
At a big company, we had actual continuity plans, a diverse business that was not going to unravel over some minor thing, and thousands of employees that would be able to fill in if needed.
There are lots of exciting reasons to work with startups, or small providers, but there is a reason whi big companies exist and can charge a premium that covers their higher overhead
As a consumer, I also no longer use startup products if I can help it. There have been too many occasions where some product I loved got killed because either they went bust or because “we’re so excited to share the news that we got acquired by google (or whoever)! Wow! We promise nothing will change” a year later the product is killed. Sigh.
Oh, definitely. But once you've worked with them, you at least know what you're getting into: A metastable dysfunctional relationship that you'll at least both stick around in, for the good of the kids. (Money is the kids in this bad analogy)
No, the answer to buy vs. build is always to buy if you can -- building is a lot like buying from a startup, which one wouldn't do, only you own the startup and you won't be selling its products. You'll spend a few years looking for a product that exists, has a track record, and can be integrated into your environment with not that much effort. And buzzwords -- the product has to have those in its marketing, because you too have to sell it: internally. Oh, and it has to not be too expensive. I've seen godsends get adopted then dropped and replaced with a hodge-podge of in-house + cloud solutions just because the godsends turned out to cost way too much as deployed. Meanwhile the companies that would exist and have such products for you don't exist because no one wants to buy from startups (because probably fly-by-night), but also the bigger players won't build niche products either. Mostly you'll make do with whatever you have already in place, no matter the suckage. Then some day there will be an open source version of the product you wanted, and you'll still wait a year or three before you decide to use it, and you'll have to put a decent bit of effort into integration and maybe even participation in the upstream community.
This stuff ain't easy. Anything that is infrastructure is just hard to monetize. There's a tragedy of the commons sort of thing going on.
Capital-intensive infrastructure (i.e., tied to hardware) is easier: you up-charge on the HW. Think storage, where you can charge a pretty penny for chassis and drives (SSDs, whatever) and backup solutions, but the real hard and expensive part is in the software (it'd better not fail). It's like paying very little for a printer but being locked into unnaturally expensive ink, except backwards.
Of course, some places do end up doing all the in-house building because they are too dynamic to do anything else and they can't afford to wait. We call these places FAANGs (or is it MAANAs?).
Thank you - I was getting worried by all the "the real world is a tough place" comments - this brings it firmly back to the real world is populated by fools who don't understand it.
What happens is that when management gets burned by one of startups, big vendors, or internal dev teams, the response tends to be "ok, we're not doing that again!".
It's like all the silly legal disclaimers you see on... docs, email footers, etc. -- these all represent ways in which some lawyer's customers got burned once. You can't win this game. There's no real reason to think that because you got burned by option A once you always will, especially when you can get burned with all options. But we humans don't work that way. Traumatic experiences tend produce lasting negative responses.
There is just no substitute for understanding the technologies and the people involved. The problem with vendors is that they keep you from really knowing what's going on inside them. One problem with internal dev teams is that they can fall apart.
It's all just hard, and management just has to be very good.
Most of the large contractors are turning around and subcontracting to these smaller companies. At least, that has been my experience in government contracts and bids.
Probably better that way, since the contractor takes all the risks that are associated with smaller orgs. But, you would be surprised how many large contractors are bidding with absolutely no delivery capability. It's routine.
One of the contracts in a government group I used to work in was out for re-bid. No one expected anyone but the incumbent to win. When they didn't the new winner had no capability to actually put bodies in seats. They had to push the changeover date back 3 times while the new prime tried to convince all of the existing subs to come over. Their rate structure wasn't as good so they had lots of problems.
One place I worked at did contract with a startup and whose product I was involved in integration, and that vendor later failed. We had a source code escrow clause in the contract. That's a lot like using an open source product whose upstream dies, but you're still using, and now you get to be the upstream if you really want to.
Source code escrow is an option, at least for proprietary software products.
It's so frustrating from the other side. I've lost business to bigger companies because of size. Twenty years later and I am still supporting that software whilst the bigger companies walked away years ago.
Whether it's a big or small company, for anything vital, you will always need assurances for the continuity of the work. Large companies can also go bankrupt or decide this type of work isn't viable for them. What you need, in those cases, is access to everything: the source code, the deployment passwords, everything. Let them be kept in escrow until the vendor becomes unable or unwilling to fulfil their duties.
When faced with such discussions about small companies being higher risk, I'd trot out Sun Microsystems, GM, Chrysler, etc.
There is risk. There is always risk. Risk has little to do with size. It has a great deal to do with management, capital, ability to acquire and keep customers, etc.
As a "startup", we were in business for a decade with revenues of several million per year and growing around 30% YoY, successful/stable products proven in the field in which we were selling them. Dominating in most of the technical and support aspects compared to competitors.
What I found was that the people claiming "too small" were simply conflating larger/well known brand name with reduction of risk. This bias exists throughout this industry, and has for a while. The old "nobody ever gets fired for buying IBM" is a historical example of this.
Yet, when the market feces hit the fan, IBM was infamous for leaving the very markets that they had troubles in.
Google is infamous for its killing off things, effectively at random.
I could go on, but the point is that large well known brand is not synonymous with low risk. Rather the opposite.
But, I'm out of that market and that chapter of my life has been completed. Now that I'm in a small but growing company, it helps that I can see things from this side, in that I still see reluctance to consider worthy technology. Risk aversion takes many forms, and often the decisions made do little to mitigate the risk. Rather, I've seen it concentrate/increase said risk.
Then yours is not a company I would be concerned with. < 5 years and the leadership may still be looking for their lucrative exit. At 10 years I'm convinced that an easy exit isn't the short term goal and the business is somewhere near self-sustaining. I could be wrong, but there's always risk. Recently (well, 3 years ago) my workplace went best bread for a specific need and the vendor was about 6 years old. But in that time they'd grown so much by having an truly fantastic product that I was convinced that even if they were acquired, it would be for the acquiring company to adopt a truly superior product rather than convert customers to their own mediocre offering. Which turned out to be correct: they were acquired, but by a private capital group looking to pump $$$ into them to facilitate more growth & either flip/ipo them. Though to be fair, feature growth had slowed too, but it's also a mature product now so to much growth there would be bloat. Either way, it's an example of a relatively young & small vendor that had the characteristics needed to make me comfortable in their selection.
3) You do in fact get to keep the product you wanted but now a sociopathic sales team tries to get you to pay 3x as much for a long term contract to lock you into it.
The most understandable of all those is the "too small" - once you've been in the business long enough you realize that small companies can disappear quite quickly. Large ones can too, but it's much less common (and if they do go down, you can point to everyone else taken down with them).
The workaround is to sell your stuff through a larger company that's complementary.
On the other hand, if you are a midsize or large business, with minimal effort you can effectively own a vendor that will act as an unofficial extra department. You give them enough business to become their biggest customer and they are effectively hooked for life, because who's ever going to drop a client providing 40-50% of their total revenue?
Universities are almost a separate reality. Unless you happen to be dealing with someone who has prior experience in the private sector, they will have no idea how businesses operate or how money is earned. It's typical to be dealing with someone who has been doing the same job for 20 years and never worked anywhere else.
It’s not necessarily that they don’t understand, but rather that they have very different incentives. I remember talking to one university purchasing agent whose senior manager kept a detailed account of how many of their vendors went bankrupt. If this percentage got too LOW, they were instructed to just stop paying out any purchase orders where the goods had been received. Any vendors upset at providing their services for free could take it up with the legal department. Or go bankrupt. Either way, every dollar unpaid to a vendor was a dollar back in a tax payer’s pocket. Ignoring these bills was a civic duty.
A different university had a policy to prefer orders from small businesses for just the same reason. The local suppliers knew that, on any given job, there was about a 10% chance the university would never pay up. They could sue, but a) the legal department had handle thousands of these cases and had gotten pretty good at it, and b) they would be banned from any future bids. One percent of the time, some one would get stiffed twice in a row and go under, but, hey, if you aren’t okay with risk, then maybe the public sector isn’t the place for you.
Anyway, that’s the prevailing attitude that I encountered. They are ACUTELY aware of how money is earned and will do everything in their power to stop you from earning it.
At least in the UK I don't think that attitude would fly given the requirements for timely supply chain payments. They actively encourage SME use in some fields and the ecosystem is richer for it. An attitude like you describe would be seriously damaging.
How on earth does a legal department win cases where they simply do not pay for what they are contractually obligated to pay for? Sounds like a dystopian system.
This is common in healthcare, too. Both sectors then suffer from decision makers being senior academic/medical staff who think very highly of themselves but actually lack any managerial acumen, offering a sterling demonstration of the Peter Principle in action.
I just spent a year at a health tech startup where the primary prospects and customers were tier 1 hospitals.
Never, ever, ever in my life have I seen so much ego paired with such little decision making authority.
Pair that with an incredible lack of communication across each hospital group, jaded IT workers who see innovation as a threat to their jobs, and a sales cycle that can sit around 12 months on average, and voila: I present to you hell on earth.
This is still somehow ignoring how each hospital asks for insane amounts of personal customization on the product, development of features that aren't even on your roadmap, and accounting departments that consistently choose to ignore invoices.
And apart from university folks often not understanding the business side of things, vendors don't understand just how different university business needs are from those of normal companies. Oracle, via PeopleSoft, made this mistake when they first entered higher Ed ERP. They were a disaster on product fit, and in at least one case ended in a lawsuit that involved claims of fraudulent "working" demos of functionality that literally didn't exist.
- I try really really hard not to have a preferred vendor. Hilariously, a lot of companies ask me who my preferred vendor is... which makes it rough to do this. I list off a couple companies I've bought from and inevitably they go through one of those.
- The fact that manufacturers give preferred pricing to the first reseller to register the deal with them renders almost all competitive bidding kind of moot at this point for a lot of things. Basically means whoever I reach out to in order to get the ballpark numbers for budget purposes will win.
- Almost every time a third party comes in cheaper, they did something wrong. Literally once had a smaller party come in drastically cheaper than... the manufacturer of the products in question. Obviously, they misread what they were bidding on, it cost them time and money, us time and money, etc.
I often get corporates who won't buy direct, they will put out a request for a quote and I'll get four or five resellers asking for a price on a very specific configuration.
I never give any of them a discount, in fact I'd love to be able to charge them more because they always require more administrative work. Sometimes I'll offer the end customer a discount to try and route around them.
Recently one reseller became particularly agitated about this. After several emails he asked to speak to my manager (I own the business). The amusing thing was that he had lost the bid. I already had an order from one of his competitors.
I should add that I do have some resellers who actively promote my products, they are worth the effort and a discount.
> I asked if they had a preferred vendor (all do). She said yes, but state law said they need at least 3 bids before they can purchase. I asked if our bid would be taken seriously. She said no.
That is just a pointless law, if it requires 3 bids, but you can ignore them.
Mind you, fixing that isn't trivial either; the EU has very strict rules on government procurement, where the government organisation has to write down very detailed rules on how the procurement will work and will be evaluated, and then they have to follow those rules. Of course that has lead to companies gaming the bidding system: they design their bid to win, but it exploits all the holes in the rules; either it will be lacking in quality in an area the customer failed to specify, or it will go way over budget and the customer will be responsible for those costs, etc.
My wife has been involved in bids like these where one bid was clearly the best one, but another was technically the winner according to the rules. So they redid the bid and rewrote the rules to better fit what they wanted, but I think that had to go to court. It's a hornet's nest, no matter how you turn it.
In a distant past, I worked for a small web development company with a pretty good open source CMS, and we were hired to do a few government websites. The actual bidder wasn't us; it was one of those big companies that specialised in winning those bids. We just did all of the actual work. We probably didn't get all of the actual money. It's a weird market.
> That is just a pointless law, if it requires 3 bids, but you can ignore them.
Whenever taxpayer money changes hands it is very political. You elude to that a little bit in another paragraph, but governments can't just go out and buy things - their decisions will be held responsible politically so everything has do be done by the book. If someone goes off the rails, it potentially represents favoritism and people will protest. I see a lot of this happen in some of the more local politics I am involved in rather than the more routine world of software procurement, but people in my hometown are getting into quite an uproar over the local government trying to give tax incentives to develop an empty lot that costs millions in municipal taxes for yearly upkeep and appraisal.
This presents an inherent conflict of interest, because the RFP process is insane. Therefore there is always a compromise that needs to be made for government workers to investigate and decide on project requirements in a fluid manner, and the need to document those requirements, set them in stone, and allow bidders to respond to them in an impartial way. The compromise is that there is usually an RFI stage where the procurement officers are "gathering information" but that is where they are really deciding what they are going to buy before they formalize the RFP. I think this is fundamentally broken - we need to recognize that procurement involves some deferment to experts who know what they are doing, and we need to trust them to make good decisions about how to do their jobs and get the software they need. But there is still a huge skills gap in a lot of governments over technology expertise, so the more a beaurocracy leans on responses to prescribe solutions, the slower this will be solved.
> We just did all of the actual work. We probably didn't get all of the actual money.
Idk about your personal situation, but a lot of these times when you look at the RFP, there is a usually a clause to provide documentation, and training, and helpdesk support in perpetuity. Consulting and contract work is a field unto itself, and the big players are big precisely because they can organize large multiyear projects that will fulfill these requirements that cannot fail. I help run a partnership program at a software vendor, and we tell the smaller companies the same thing - don't market yourself to the government, market yourself to the consulting companies because that is who will be paying you at the end of the day.
We found out later that they simply wanted help with the RFP. They never took our bid seriously. Small company with a great rep, they preferred dealing with the large companies with meh reps.
Another one ... a university somewhere here in Michigan, an alma mater of mine in fact, did something akin to this, but used another vendor as its stalking horse. We constructed our bid aggressively, and submitted.
Later that month, while on vacation with the family in Florida, the purchasing agent called me up. She wanted me to teach the other companies how to do what we did (much higher density, far better performance, etc.) I asked why. She said they liked our solution. They just didn't want to buy from us.
We'd won the RFP. But lost the business.
Of course, we declined teaching our competitors. They (the university) were unhappy with that, and didn't understand why we wouldn't do this for them.
I was then, and still am somewhat, blown away by the complete lack of understanding of how businesses actually work, on the part of the RFP folks, the purchasing agents, etc.
Another time, I had a university call us up asking for a bid for something. I asked if they had a preferred vendor (all do). She said yes, but state law said they need at least 3 bids before they can purchase. I asked if our bid would be taken seriously. She said no.
Yeah. I've shared some of these anecdotes with others in this industry, and we all nod our heads. All of us have run into this before. Some of the stories are far more outrageous than mine.
An interesting tangent: I currently work for a company whose RFP we won ~14 years ago for storage, but was rejected by the person who was my first boss here, as we (the company back then) were too small. That's happened multiple times throughout my career. Even though our solution was demonstrably superior in all technical and financial aspects, we "lost".
Can be disheartening.