While I have experience with Openedge in supporting ERP software in a couple of midsize companies, I would like opinions on the cost effectiveness for development in the SMB area. I know of one particular developer needing to transition from Visual FoxPro to a more current database development solution. I think Openedge would offer a great tool set and reliable database server but may be cost prohibitive for a customer base with typically 2 to 20 concurrent users.
Agreed - especially considering the cost of a MSDN subscription. If it was me, that is the route I would head down (sad to say)..
When I stated "cost prohibitive" I wasn't talking of the initial Openedge developer costs - I think those can be justified. What I am trying to determine is the database and licensing costs for distributing applications - server and client licensing costs ultimately passed on to the customer. Anyone?
If you've not already, I would certainly check out the latest Forrester Report :
which found "that developing with OpenEdge yielded 40% more productivity and 30% faster delivery!"
Thanks Mike for the link. I have heard of the benefits of the OpenEdge platform over the past 8 or so years of my related experience but relative to large developers.
Quote from study:
In this TEI study, Forrester has created a composite organization to illustrate the quantifiable costsand benefits of developing, deploying, and managing an application on the Progress Softwareplatform OpenEdge versus an alternative (non-Progress) platform. The composite organization isintended to represent:
• A $60 million US-based firm.
What questions my suitabilty for a small developer is the lack of response from Progress themselves. I have submitted similar questions a few times on the Progress contact page and have never received any response. I can only assume that a small business developer is too small a fish to bother to reel in.
Heck, a Google search finds nothing related to selling licensing of OpenEge products and/or anything related to development for SMB's.
Anyone? Am I barking up the wrong tree here on PSDN? If so, suggestions on where to look?
The answer I've gotten is do a "percent of application" deal where you give them x% of your sales to PSC in exchange for use of their product.
There are really two entirely separate questions here. One deals with perception and the other with reality. One also has to consider what software one is actually talking about, i.e., what role it is going to pay in the business. If the software is something fairly common and already available in the market at low cost or even free, then one is probably not going to choose Progress to develop yet another package because the existing packages will be using low cost deployment technologies and one would have trouble competing. But, if one was developing something unique and valuable in the perception of the buyer, then one is likely to be able to sell at a higher price and the Progress deployment costs become less important. I have, for example, sold systems to companies with as few as a dozen users, but where the business really needed a pretty high end ERP system ... even though they were only a $5M company with a dozen users, the complexity of their need was on a par with a much larger company. In fact, I have sold to a company with as few as two users because their business, food brokerage, was one where they could find no software that really met their needs. Indeed, I had to use the low cost development virtues of ABL to add features to my software to cover their needs, but the addition was then a feature which gave me competitive advantage in any food related business.
This brings me to the perception and reality part. If the customer thinks their needs are simple and they can just use any old canned package, one is going to have a hard time convincing them of the virtue of Progress. But, if they recognize that their needs are not being met by the software they have and it doesn't appear that they will be well met by the software they can find, then they not only may be willing to pay more to get what they need, but they are also open to persuasion that the sticker price is only the beginning.
This is a really key issue. If the customer thinks sticker price is the only price that matters, then a Progress solution is only going to be as attractive as its price. But, if the customer realises that total cost of ownership includes taking care of that application, the equation shifts. More importantly, if the customer recognizes that the cost of on-going modifications to better tailor the software to evolving business needs, then has an opportunity to show the customer that Progress will allow you to keep the cost of those modifications low which means that it will be easier to justify doing the modification which means that the software will better fit the business and that can easily turn into substantial differences in revenue and expense that dwarf the cost of making the change.
Years ago I had a prospect for a publisher who had been using one of the top packages in the publishing vertical for about 10 years and they were tearing their hair out. In particular, every time they wanted a change, the estimated price would come back in the 10s of thousands, the estimated time weeks or even months, and the quality of the result dubious. Consequently, they had pretty well stopped getting modifications. This is really bad in the publishing business because the way the business works keep changing, especially in terms of royalty contracts which is one of the most complex applications I have even worked with. I had an ERP solution, but no royalty contracts module at all. But, during the bid process, I did a series of modifications of what I had to fit what they wanted quickly enough to demonstrate that I now had a feature I had previously not had. The speed and price of these changes so jazzed the CFO that I won the bid against the top publishing vertical in the market. And, it was a very happy relationship. Over the years they spent several times what they paid for the original software on modifications, but they were just tickled to do so because the result had such an impact on the business. Among other things, they went from $10M to $50M in annual revenue without adding a single body in the HQ operations staff and I think only about doubling the warehouse staff because I kept coming up with ways to increase automation.
Consulting in Model-Based Development, Transformation, and Object-Oriented Best Practice http://www.cintegrity.com
Thanks Thomas for taking the time to comment on my question.
In most cases, the customers of this small developer don't care about the underlying database. It is the features and functionality of the purchased software that matters to them. For this small developer, they are looking for a database development solution for RAD, ease of use, and with reasonable database licensing costs. They are not proficient in .NET coming from primarily developing unique accounting solutions for SMB's with Microsoft Visual FoxPro. With FoxPro they did not have to pay royalties but realize it is time to move on. OpenEdge may not be a viable solution but it is hard to even determine that. Maybe that alone indicates it shouldn't be considered for their database application development.
From a deployment perspective, you are looking at only $1000 for a 5 user workgroup system using named user or registered client models. $180/year provides the site with support and free upgrades forever. That's not a huge amount of money unless your business model is selling thousands and thousands of copies at $29.95.
If your business model is 2-20 users and you need something more complex like AppServers ($400 for 5 users) and such and you think this is workable at 20 users but not at 2 because of the 5 user minimum, then you can always talk to your Progress rep about a pecent of sale agreement. But, you need to have your business plan reasonably together before you can expect to make that work.
Or, perhaps you should be thinking about a cloud-based SaaS model. If you thnk forward to Version 11, you would be able to design for a multi-tenant database and have only one database for all users ... at least up to some scalability limit. Then, you would be able to add one user to that for $200 plus $80 for AppServer as long as you kept in Workgroup limits ($585 for Enterprise). I believe that PSC will also negotiate SaaS pricing with you so that rather than purchase the license outright up front, you "rent" it so that you pay only as you get paid.
So, I think there are ways to offer ABL based applications at pretty low per user prices, but whether this is a right route depends on whether or not OpenEdge provides you will a compelling differentiator. Rapid customization to tailor to evolving business needs can be one of those differentiators.
Thanks again Thomas, this is the information I was looking for. I don't know if I was explaining my research clearly as this seemed to be priviledged information. So far I cannot get Progress to even return my call.
Would the customers need to purchase or could this developer resell the licensing? Is there a reseller network or would this developer need to purchase licensing directly from Progress?
The normal thing is for the developer to become an Application Partner. The partner then buys licenses at a discount and sells them on to the customer. The expectation is that the customer call the AP first for support. Maintenance is also purchased at a discount and sold on to the customer and thus becomes an additional profit center. I always included the Progress support in my own support for my own software at a single price. I think in 20 years I only had a customer talk to PSC directly 3 times and all of those were cases where I initiated the support call and then it was decided that direct communication would be more efficient in order to get the information quickly.
There are descriptions of the partner program on the website ... but I'm not sure where to point you since there are parts of the communities site that are accessible to me as a partner which you won't be able to get at, but I am sure there are some discussions available.
As a partner, you can also negotiate a percent of sale agreement. Apparently it has varied from year to year whether that is fairly simple to nearly impossible. It is pretty clear that having a solid, believable business plan is pretty important to getting the discussion to go very far. Likewise any discussins like SaaS pricing since those deals are negotiated one by one so they need a pretty solid basis on which to make choices. Just selling from the price list is straight forward as that is just published and your discount is clearly set up front.
Occasionally, I have heard stories of people making inquiries about becoming a partner and getting a run around or a brush off. Some of those I am sure are cases of the person making the inquiry not coming across as a believable prospect ... these are sales people, after all. But, some of them are probably rude sales people who don't smell enough commission so they can't be bothered. A bit of complaining seems to fix the situation, though, for people who are serious.
There is a theme here ... work out a real business plan before you talk much to Progress if you want them to treat you seriously. They aren't really motivated to add partners that will sell one 5 user system a year. But, they have a bunch of thinks to help if you do become a partner. In particular, you might be interested in the PSDN SDK which allows you to get a copy of everything OpenEdge and all of Sonic. There is a one person subscription and a 5+ person subscription. It may cost you more that basic licenses and annyal maintenance, but I think there is a lot to be said for having access to all the products for at least one seat.