Putting Code Together Since 1987

Archive for the ‘Business’ Category

Open Source Isn’t for Everybody – a thought experiment

In Business, Web Development, Wordpress on October 26, 2008 at 1:53 pm

I’ve been thinking hard about Open Source and whether or not to GPL all of our forthcoming themes at Spectacu.la, following on from Brian Gardner’s decision with Revolution.

And I’ve decided that it would be a rather bad idea for us.  In fact, if you’re trying to build a strong business up from Open Source you can never make everything truly open.  So for example, although WordPress is free and GPL, WordPress.com has lots of proprietary code that will never see the light of Open Source.  And you pay for various services that use this proprietary code.  At the same time, they can cheerfully absorb, at zero cost if they wish, various GPL licensed themes and plugins.

A Toaster Analogy

The broken toaster - by Charles Dyer (CC License some restrictions)

The broken toaster - by Charles Dyer (CC License some restrictions)

A toaster company realises that although developing toasters is hard and expensive, they’re practically free to manufacture.  So why not give the toasters away and just charge for repairs, and helping people install their toasters at home, cleaning services, insurance if it burns the house down and so on.

Where does the motivation for service rather than product related income then come from?  Well – it comes from not making a simple, reliable and easy to use toaster.  In fact, because anyone can copy your toaster, you have to continuously add new features to stay ahead of the rival toaster copiers and keep people coming to you rather than your rivals for help.  You can make your toaster corporate strength – a toaster for major organisations that need to make vast amounts of toast… and they’d definitely want support and help… but you end up with small users running vastly over-powered and over-complicated toasters.

Read the rest of this entry »

Advertisements

If You Want to Hire a Professional, Act Like One

In Business, Web Development on October 4, 2008 at 9:36 am

Now, this may seem a little bit of a testy post.  But ultimately I want to help.  The post’s being written because I was thinking back to the past couple of years, and the range of clients and potential clients I’ve met.  It’s also based on what I’ve seen in forums, on websites, and in other events.

To be honest, most of our potential and true clients are great.  True pros who value what we do, and trust us to do it well.  But there have been a few who tried our patience.

So here’s ten simple rules of how to work with web designers, developers and other IT professionals.  Most of it boils down to the headline.  Be professional yourself and reap the rewards.

1. Don’t Call Us Geeks

No really.  Don’t.

I can call me a geek.  I can call a geek a geek.  But just like I can’t call a black dude n**ger even if he uses the word himself, you can’t call me a geek.  It suggests a lack of respect.

And don’t even think of calling us nerds.  That might just add 50% to your quote.  Or at its worst, cause an undesired tension in your working relationship which is far worse than paying a bit more.

Read the rest of this entry »

Will The Financial Crisis Damage Small Technology Firms?

In Business on March 18, 2008 at 1:45 pm

The current crisis in the world’s banking industry is causing my quite a bit of concern right now.  Our web technology business is small but growing.  When businesses are doing well they’re more likely to spend money on items such as web design and web applications and we believe we’ve benefitted from that over the past year or so.

But what happens if our clients and potential clients start to suffer as a consequence of an economic downturn?

Problem 1 – Spending Cutbacks

During uncertain times, many businesses choose to be careful on spending outside of their company.  In particular they may look to what are perceived as cost centres (website updates, build and application development) as being something that can wait for a while.  If that’s the case, there’s going to be a slowdown in spending on technology unless it’s deemed as essential for the company to operate.

Problem 2 – Credit Freezes

Thankfully we’re based in the North of England – this is an area which is traditionally very conservative with money.  People don’t like to borrow money or use complex financial instruments and most SMEs in the North West still tend towards being self-financed.  However, this article’s aimed at everyone.  Business that rely on finance will face certain problems.  In particular, curiously, the ones that have a moderate but high risk position are the ones who face the biggest chance of foreclosure.

Why?  Well it’s time to think like a banker.

Example 1: This business has loans of £100,000, assets of only about £30,000, and sales have plummeted.  However, the business is still viable if it can renegotiate its loan terms.

If the bank decides to close this company it will definitely lose £70,000.  In renegotiating the loan the business will continue to  function, and the bank will get its money, albeit over a longer period.

Example 2: Another business has been far more careful with its money and has a £30,000 loan with assets of £100,000.  However, sales have died due to the downturn and income is poor.  They too need a renegotiation as their cashflow situation makes it impossible to meet the loan payments.

In this case the bank, needing to bring in money to improve its cash position, will be less inclined to renegotiate.  After all, if it closes the loan it will get everything back – the full £30k.  Their cash position is improved and everyone’s happy.  The business may struggle now because it’s now £30k down on cashflow.  In fact, it could even fold because suddenly there’s no cash left in the company to help pay its wages and bills.  Worse, it can’t even negotiate a loan against its assets because all the banks are being ultra-cautious, will take one look at the cashflow problems and decide to look for someone safer to lend to.

You also have to think very carefully about any secured loans.  In the event of a repossession it’s possible for the bank to get everything.  They may repossess your premises and resell them at a significant profit.  In many jurisdictions there’s no compulsion for them to share or give the profit to the original debtor.

Problem 3 – Price Inflation

Inflation is pretty steady in the UK still.  But we still have one massive problem – we’re starting to sell internationally.  Countries that trade internationally in dollars will have found their costs rising dramatically when dealing with EU based economies.  It’s not that long ago since a British pound was worth $1.5 – yet now it buys $2.  But thankfully there’s an upside – the more steady, more sensible and less loan happy mainland Europeans have found their Euro increasing dramatically in value.  It makes our holidays to Europe more pricey, but the upside is that our services look a lot cheaper to Europeans – so as one market declines, another has grown.

But it’s not all bad….

Opportunity 1 – Competitive Pressure

Businesses that are struggling will need to fight to compete.  No longer will money simply roll through the door as naturally as leaves through a courtyard.  Instead some firms which have experienced an easy ride lately with their easy finance, will need to get out there and find customers.  They’re going to need to invest in technologies that help push them up ahead of the competition.  This is where there could be some real growth in the web technology market – at least, for the companies that can give the best results.

Opportunity 2 – People With Time

If there is a downturn it’ll mean more people with less work to do – perhaps not needing to work so many hours, or even higher levels of unemployment.  For them the web will be one of the cheaper forms of entertainment available to them.  They’ll be getting into blogging, Web 2.0 applications such as Facebook, and even maybe dabbling a little and learning how to code themselves.  They’ll help the market to grow and will be enthusiasts for the business in the future.

Opportunity 3 – Weak Rivals Will Decline

One of the best things about a recession can be that the really weak rivals will suffer.  Web designers, for example, who churn out poorly thought out and over-priced websites will find themselves at a disadvantage to those with a reputation for positive results.  They’ll either have to reposition themselves more truthfully (at the economy market perhaps) or spend some time improving.  It’s also worth looking out for closing companies and seeing if you can pick up their past clients.  Filling a dead-man’s boots may not seem too ethical, but chances are it’ll be a relief for those clients to know there’s still someone around who they can rely on.

Why We Hate American Software Companies (Well, Adobe)

In Business, Web Development on March 13, 2008 at 9:00 am

Actually, that’s a contentious one. We don’t really hate US software companies. Just some of them. Adobe in particular is winning no prizes for its pricing policy.

See the image below:

Adobe software is really expensive in the UK

Now, you may notice something… The purchase price of the UK software is, before taxes, £705 while the US software (presumably with taxes) is $999. I’m going to compare our tax free price with the US full price, simply because I can’t assume that the US price includes taxes – I just don’t know the US system that well.
Now if you’re not well up on exchange rates the figures may make the UK copy seem cheaper. But every one of our Great British Pounds will buy 2.03 of your now considerably Cheaper US Dollars.

So let’s work it out.

If bought in the US, the cost without taxes is:

US$999 = GB£492

If bought in the UK, the cost without taxes is:

GB£705 = US$1431

So there we go – we pay over 40% more to download Adobe Software in the UK than in the US. And pity us with our taxes – if you add VAT the price goes up to an equivalent of a whopping $1682. If there were shipping costs, or shop costs to take into account we could understand it. But this is software. It costs the same to deliver wherever the end user is if you’re using the Internet. While there are costs with accounting, they don’t add up to 40% extra.

The US economy isn’t doing that well, but do they really need to rape the wallets of overseas developers in order to improve the situation?

Oh, and I’ll leave it as an exercise to you to spot just how much of a rip-off the upgrade prices are. I wish I had a daughter just so I could forbid her from dating Adobe accountants and marketers.

Does the web industry suck?

In Business, Web Design, Web Development on January 17, 2008 at 9:22 am

I’m not going to rant here about all the great clients, who understand that time is expensive, who listen, pay attention, and do their own research.

But what I do think is that there’s a significant chunk of people out there, with no clue as to the Web, what it’s for, and how it works, who currently seem to be desperate to jump onto the bandwagon. They sometimes actually have some pretty sound business ideas.

Thing is, they turn up at our office with these huge plans. And a budget of £250.

There then follows an awkward silence as we have to explain that £250, like in dentistry, doesn’t really buy you a great deal of cosmetic awe. Even if the underlying software is free, you still need someone with the ability and understanding to implement it correctly. And they’re in demand.

But then that brings up another issue – the one of the wannabe web designer. Very little understanding of the technology or business, but does have a copy of Frontpage, Dreamweaver, or worst of all – Flash and only Flash. And thinks they can design for the web because they’ve done some ok print jobs in their time. They over promise, often raising expectations, under-quote (causing pricing pressure) and under-deliver.

Not all are actually that bad in overall design terms either, but they have a habit of disappearing when things get difficult. If one of their sites is hacked they have absolutely no idea why, and can’t do much about it. They don’t understand what the difference between CHMOD 777 or 766 can mean to the security of their site. In fact, to make their life easier, they simply switch everything to 777. And they’ve got so little money from their £300 job that they most definitely can’t afford to pay a TruePro (my TM, maybe. Perhaps) to come in and get digging, and to configure their site correctly.

And clients sometimes need to accept that they can’t just say “gimme a website!” to a designer/developer and expect them to magically mind-read their true desires. For free, of course.

Thing is – how’s a client to know the difference between a good or bad web company? It’s no easier than knowing the difference between a good or bad engine design in a car. The only way people learn is by watching what or who gets the most reliable, dependable and economical cars out there. And if there are none, then eventually someone will come along and do just that. Like the Japanese did to the British motorbike industry, so, surely, will the good web companies overtake and close down the bad ones.

So to answer my own question – I actually think the web industry does suck right now. But it’ll get better – slowly, top web brands will move to the fore, and the rubbish ones will fade away. And it won’t be from expected sources either. For example, WordPress.com is likely to become a major force for many small business websites, with many moving to self-hosted WordPress sites once they need more control or uniqueness. Why does any startup in a non-tech field need to commission a custom site when there’s plenty of great, free or cheap designs available?

And that’s where the future website designing and hosting brands will come from. The small one man web companies need to adapt to this market and consider that the direct one-to-one model of web design & development is approaching its death knell. Instead, these small companies will become facilitators – finding the best solutions for the non-techie clients, setting them up, and then briskly moving on to the next client. The technical knowhow, fixing up and hacking will be concentrated in key points. They’ll set up or review systems like SugarCRM, Plone, WordPress, and more.

Bigger clients will of course still need their own web applications built to suit any unique business models they operate, and they’ll be able to afford the fact that few of these can ever cost less than five figures. So that business model will continue, and should pay more too as the solutions become critical to firms.

I know I’ve just had something of a ramble there – it’s purely a stream of consciousness thing. I think the web industry is on the verge of maturing. That doesn’t mean the days are over for specialists. Just that the mass market will move to commodity systems, while the specialised stuff will actually start to pay the kind of rewards that should be available to people who work with a difficult and challenging technology.