That number doesn't surprise me. Your quick $1000-$2000 estimate is probably accurate for a typical office worker, but the more specialized positions skew the average. I work in mechanical/aerospace engineering for a large company. A lot of the software we use is very specialized and very costly. Here's the yearly costs from the top 4 softwares I use based on a quick google search:

1) $35,000

2) $15,000

3) $10,000

4) $4,500

So I'm costing the company ~$65,000 per year in software licenses alone.

Even for a typical office worker, based on my experience at a large company, there might be 10 to 20 enterprise apps that include:

  * Tracking work hours
  * Communicating within teams
  * Entering and managing yearly performance reviews
  * Managing IT tickets
  * Catching spyware, phishing, etc.
  * Key and click logging
  * Personality and other screenings for job candidates
  * Health insurance management
  * Jira being used outside of software development
  * Database for archiving HR announcements
  * Password management for the above

In general, the prosperity of a business is a balance of assets and liabilities, and a software purchase is both, since it involves a cost. Managers promote purchases based on a variety of factors relative to the business and their own personal ambitions. There's no magic that makes managers so brilliant in the face of a salesman that they only make beneficial decisions, or that purchases are inherently beneficial, just because the product is software.

> * Key and click logging

What kind of dystopian Corporate hellscapes have you worked in?

This is totally unacceptable. I would not submit myself to that kind of scrutiny or micromanagement, no matter how benign the intentions of it's implementor. Nothing good can come of it.

>> I would not submit myself to that kind of scrutiny or micromanagement

In many cases, you may not even realize it is running.

That just makes it super extra illegal.

IANAL, but my understanding is: - lots of allowances are declared by employers in their handbooks in the US. - unless there are specific union restrictions and/or state provisions, it is probably not illegal

OK, so the USA is mostly a dystopian corporate hellscape. Not that surprising, I guess.

Some people do. I still blame the human for the software we have today.

> I would not submit myself to that kind of scrutiny or micromanagement,

Says the gmail, google, facebook, android user.

Keylogging is illegal almost everywhere.

If you suspect that your current or former employer is monitoring people's keystrokes, please contact the appropriate authorities to start a whistleblower process.

Keylogging of any company provided hardware is probably legal as you have no expectation of privacy.

Fortunately, much of the world is more enlightened than this, and its legal systems do favour the privacy of employees over the voyeuristic ambitions of bad management under normal circumstances. In many places, the idea that you have no entitlement to personal privacy just because you are working for someone else would be widely derided.

There are often special cases in the laws for when covert monitoring is genuinely justified, for example when there is a reasonable suspicion of wrong-doing by an employee or there are serious security concerns that legitimately require stronger measures. But intrusive surveillance by default, even of employees using company resources on company time, is not permitted in these jurisdictions.

Beautifully said.

I would only add that in the extraordinary case of a legal investigation, there's still no room for vigilante spying by the employer themselves. Presumably, law enforcement would take necessary steps to intervene, not the employer.

Says who? I believe that you are mistaken.

https://www.quora.com/What-is-the-line-of-legality-of-hardwa...

https://nakedsecurity.sophos.com/2017/08/03/fired-employee-c...

https://www.grossmcginley.com/privacy-rights-in-the-workplac...

Maybe in your jurisdiction, but certainly not here in Germany.

I do expect privacy, and find the idea of a middle manager or hr person digging through a employee keylogger output file revolting. It's a truly degenerate state of employer-employee relationship if this is even conceivable.

Ladies and Gentlemen no fighting!!

Why bother logging keystrokes and clicks, when there is BlueCoat that in real time decrypts, reads, logs/reports, encrypts EVERYTHING that comes in and out of your PC?

Key and click logging?!?!?

Note, this list is based on things I've read about, but I don't actually know what specific security software is typically used by a large employer.

It is a good list, I would add: * Office software (Office365 or G Suite) * Record Management and Workflow * Regulatory Reporting Management * Contract Management * Financial ledger management * Data analytics / business intelligence * Logging and monitoring, log retention * Cloud hosting * Vendor Management * Travel Planning and Expense Management * Cloud Telephony * Mobile Device Management

But software in highly-specialized industries (i.e. needs a lot of functionality but the install base just isn't that big) has always been really expensive. This is pretty much unrelated to the SaaS boom of the past 10-15 years.

I don't think specialized positions have skewed the change much towards increasing SaaS costs.

But there would have to be 5 other workers for every you. I think it’s more likely that the number is around 1 in 200 for most enterprises. And maybe closer to 1 in 1000 for all enterprises combined.

Note: those numbers are pulled out of my ass.

CATIA is a beast of a bill!

And the licensing is not perpetual. Once you stop paying the annual licensing, you are legally obligated to stop sing the software.

That's per license, per employee? Or company-wide license fee? If the latter, you still need to divide by the total number of users of the product.

if GP works in aerospace, those are very likely per-seat license costs.

Completely out of curiousity -- what software costs $35k per seat per year??

VxWorks is about that I believe. When you reach these kinds of price tags though it's hard to evaluate them on a per seat basis, because they tend to come with built-in consultants, etc.

CryEngine 3 is notoriously $1.2 million, but I believe that's a "total cost" rather than a per seat style license.

Lots of engineering software does. FPGA toolchains, CAD, simulation. Not uncommon.

Having worked in several related areas, but not very recently, the costs for specialist software packages were certainly much higher than people think of for basic office software, but nowhere near the scale we're talking about here. Have things truly become so crazy that five-figure annual fees for these packages are the norm? A permanent licence used to cost less per user than that! But then I suppose this is the point the article is making.

Several years ago my university was bragging about a $200 million donation the engineering school had received from several companies.

Turned out it was just several hundred seat licenses for a bunch of commercial cad, simulation etc. software, which the companies valued at about $50k/seat.

A very cheap way to donate $200 million.

And to write-off $200.00 million.

it is. And especially for SMBs, the cost was way less in the past. Imagine a small mechanical engineering company: 10 years ago they'd have 5 seats of a 5 year old AutoCAD/ProEngineer/Solidworks version, sneakily locking them in but basically no recurring costs. If a new customer needed a new version, they bought one seat for that and kept the old ones, gradually upgrading. Nowadays they pay half the single-seat cost per year because of "continouus updates" (for the UI mainly, so that they can sell trainings)

I heard about 20k per seat for CATIA at a previous employer. 35k wouldn't surprise me if you start adding add-ons (simulation, PDM, etc).

Enterprise optimization software costs that. Cplex, gurobi, Xpress.

That is per seat license.

Do you mean that no one else at your company uses any of those 4 softwares?

Not if they're per-seat licenses.

Then someone gets Slack because they don't like Teams, and they think that's worth it. Someone else wants Flowdock. Your new exec used Zoom at his old job and wants everyone to have that for video calling. Your IT security team have half a dozen anti-virus tools, two data loss prevention tools, three monitoring solutions because they're overwhelmed by the amount of data coming out of them. You use a third party RAS solution that doesn't work as well as the one built into Windows, but boy does it add a chunk per-user. You're still running a few JVM applications which you now owe Oracle for the pleasure of using an old JRE. No-one uses the three knowledge management tools you've bought over the years to try and organize your documentation, but you can't decommission any of them yet, because you never migrated everything out of them.

Then someone in the finance team decides the way to tackle out-of-control costs is to buy a tool to monitor installed software on all the desktops. It has another agent.

Welcome to the swamp.

You speak the truth!

We - at Okta - publish a report on this every year. Here's the January 2020 study: https://www.okta.com/businesses-at-work/2020

A key finding:

"Over the years, we’ve seen app adoption steadily rise, across all industries and company sizes. This year, the average number of apps per customer reached 88: that’s a 6% increase from 83 apps a year ago, and a 21% increase from 72 apps three years ago. And now 10% of our customers deploy a substantial 200 apps or more. When we look at customers that have been with Okta for more than four years, they deploy an average of 190 apps."

Odds are, a good chunk of those are free but if the average subscription cost is $10/month => $10/month * 12 months * 88 apps => $10560/year aka well within the estimate cited.

Of course this also assumes every app is licensed to every employee.

> but companies wouldn't be buying them if they weren't providing more value than they cost

Companies do stupid shit all the time. It only takes one person with authority to spend money to sign up for a service. Personally I've seen many software subscriptions that are complete garbage.

“We’ve seen companies buy the same subscription over and over again—even within the same department,” he added.

I think that's telling

One of the worst things I've seen at an employer was more than one SSO. That's when you know the people paying your wages are truly dysfunctional. Because of course Fiefdom A doesn't want Fiefdom B's SSO to be used by their systems, that gives the person ruling Fiefdom B power - so instead get a separate SSO, what do you mean that's missing the point?

If I worked for an SSO provider I think I'd be tempted to expontentially scale corporate pricing. Want just one SSO system for (say) 10 000 employees? That'll be $5000 pa. Oh you want a second one at the same company? $20k pa please. Third one? $100k.

My reasoning would be: An outfit which buys more than one is completely irrational and so they are my best target to gouge as heavily as possible because they'll be least able to do anything about it.

I’ve mainly seen that situation in post M&A environments, and while fiefdoms are often a part of the problem, untangling auth across multiple enterprise systems is really hard.

The fiefdoms I'm thinking of were created naturally inside the organisation, not acquired. Somebody's power grows, a department with ten people becomes a business unit with a thousand people due to its success, other managers resent that, and senior management mistakes this as an opportunity for "internal competition" rather than a dysfunction which needs to be crushed, if necessary by terminating those who promote it.

Lots of things are hard about M&A but it's made easier if people remember from the outset that their business exists in the world. You don't have and can't build a business which functions independently from the world, stop trying. On the technology side that means things like using FQDNs in URLs (https://webinar.mycorp.example/2020-New-Products not https://webinar/2020-New-Products)

But the GP's pricing scheme would put a hard incentive on fixing it.

It’s not so surprising, if the owners of the original subscription prevent access to new people because ‘their costs will rise’.

I’m planning to request a new subscription for exactly that reason.

The benefits and pitfalls of multiple payment approvals

And don’t forget the vendor lock in.

why change what works and redo all the work done in that system. It would require a huge expense and time cost to port to another platform.

And there’s the fact that longterm employees and more importantly managers are likely familiar with the old software and will see little reason to even test the waters with something else.

And that’s how programs like emblem stay around.

It's probably total SaaS spend divided by headcount. There are lots of bits you may not interface with directly, e.g. backup & compliance, infrastructure monitoring, advertising. And as another comment suggested, certain specialized applications with sky-high license fees.

I used to work for a company whose licensing fees were mid-five figures a seat. Granted, not every person in the company needed a license; but nearly everyone involved in the production process did. The company also benefited from vendor lock-in, because skilled workers tend to get pretty attached to their workflows and competitors in niche software tend not to have 1-to-1 feature overlaps.

It seems like nearly every profession has high-priced software that's required: artists, engineers, accountants, lawyers, doctors/nurses, research scientists, architects, etc, are buying products from Adobe, Quicken, West Law, Reed Elsevier, Epic. None of those are small companies, yet all of them focus in somewhat niche information technology sectors. I'm struggling to come up with a profession that doesn't touch software anymore; even retail workers use point of sale and inventory software.

I do agree with your sentiment though. The software is expensive because it's so niche. The market for all of this stuff is pretty limited, meaning there's only a few products offered, and the capital required to build competitive products makes it prohibitive for a company to build their own. The companies making the software also understand their target industries intimately enough to know exactly what price the market will bare.

However, it does leave an interesting market opportunity for and engineer + domain expert to tap into the market with cheap, low-feature offerings. Or maybe we will see more companies bringing development back in-house.

Software isn't expensive because it's niche.

It's about case and effect: seat costs for specialised tools are high because they can be. People with limited B2B experience underestimate just how much cash large corporates can throw around without even noticing, and how rarely ROI is assessed on this spending.

The development costs required to create a competitor to an industry standard product can be relatively small. (Sometimes they aren't - but they can be.) The real costs are in marketing and sales.

Quicken doesn't do anything outstandingly clever, but good luck trying to sell your new competitor to existing accountants.

Generally there's only a change if the incumbent gets too greedy and complacent, or if the industry changes significantly and a new generation of companies appears with new ideas about which software is "standard."

Qualtrics, a company I have worked for in the past, specializes in selling huge experience management packages to global enterprises. Deal size ranges anywhere from $10k to $1mil+ (yearly). Then there's SAP which is something like $3k per user per year. These things can seriously add up.

SAP might be worth it, but my first experience with it has been absolutely awful.

Some buttons are hidden behind 3 layers of scrollbars because they’ve put panes inside of panes inside of panes. It’s ridiculous...

What about VMware, backup software, system monitoring software, update software, remote support and meeting apps. Spam filter, Terminal server licensing. There’s more I’m forgetting

Why would any of them be per employee?

Why wouldn't it be? The size of your infrastructure depends on the amount of employees you have.

per-user licensing.

Really every user needs a VMware VM and terminal server, and monitoring license? Maybe they do, but they better do something that makes a lot of money to cover the costs.

I think it may depend on the company and on how these "averages" are calculated.

For a company where almost all the workforce is white collar then yes, $10K seems reasonable. In fact, I'm surprised it's not more.

For a company like Wal-Mart, I'd be shocked to see that much spend on software subscription.

Well, it depends. Only considering Saas, i have a hard time to imagine that as well. If include highly specialized stuff, Catia and so on, SAP etcc.., and devide that by total number of users (not employees) the picture changes.

I am currently at roughly 40 per user. That includes MS Office 365, three mail accounts under Office 365 for the TMS / WMS suite, Wordpress and Slidebean. Hope I didn't forget nything.

On the other hand so, Catia liscences are usually part of the service (for engineering corps.) or part of the product development costs (for manufacturing corps). in both cases costs are covered by customers. Especially in Aerospace these costs are the least f the cost problems.

In addition to that, some equivalent of Gsuite, Jira, Confluence, Trello, Slack, Figma, Expensify, Github, Looker, Tripactions, Greenhouse, and Jenkins all feel like table stakes for an enterprise firm these days.

Yeah, those numbers seem very suspicious. Cherry-picked maybe.

Fifty dollars a month is a decently pricey subscription (like a lot more than Slack, JIRA, Lucidchart, Office, etc.), and you have twenty of those for every employee?

I've used specialized embedded system tools that cost $10,000/year per seat for tooling. Our QNX licenses were about $5,000 or $10,000/year alone. That's just to be able to run a piece of software. Autodesk tooling is $20 to 30k a year. Some of the more specialized tools cost six-figures.

So I guess if you're just doing some basic web development those numbers are suspect. But if you do hardware or embedded software projects $20,000/year per person is cheap.

For such products, there's the per seat license and the per device license. Depending on volume and vendor pricing model more of the cost will either be in the seat or device license. The value of these the seat license is so that you can distribute their software on your devices versus the value of the seat license of Adobe CC is so that you can use the software directly.

I agree, but how much employees at an enterprise have the software?

Like 5%.

Maybe 1% of enterprises do hardware or embedded development.

You can pick a industrial vertical and find analogues though. Aerospace, automative, chemical, materials, biosciences. And even within a company each departments like finance, marketing, supply chain, etc have their own specialized software. Inventory management isn't cheap. Marketing software like marketo isn't cheap. ERP systems for the finance department aren't cheap. Accounting and tax software isn't cheap.

We used Epicore Vantage ERP for manufacturing. The starting cost per seat was $175 per user per month. With many added modules it can easily reach twice that per user. Our $30 million a year company was spending about $150K per year licencing this product, and this was only one of our software packages. I think the $10K number is reality for many companies.

It think the point of the article is that with SaaS, the customer invariably end up spending more than she really wanted vs purchased locally-hosted software.

Which is a big reason why there is so much SaaS in the first place, in both the consumer and professional world: the customer _forgets_ about this recurring cost.

> companies wouldn't be buying them if they weren't providing more value than they cost

At first, but value may decrease in time and companies will still be dependent because it may not be possible to take the data out, logistics, contracts, bureaucracy, etc...

I'm with SonicScrub. In my last job, my yearly licenses for me and my group of about 6 were $1 million annually not including hardware. We likely heavily skewed the average workers costs since we used extremely expensive, specialized software

MS office is probably one of them.

Office 365 isn’t worth it but most people don’t seem to know that.

For whom is it not worth it? Software devs? Are they representative of the average white collar?

I couldn’t live without excel.

Sheets will fit a lot of excel use cases for those not doing serious heavy lifting with it.

FWIW, I'm a software engineer and our IT department actually let people opt out of Microsoft office if they weren't using it to save money, and encouraging people to use Google Docs/Sheets (as most do anyways). I'm guessing a good deal of software engineers did that but there are plenty of non-engineers that probably also did outside of finance / some sales people.

I am a big fan of sheets, but it is not Excel. Some of the functions are missing after all these years, not to mention charts and pivots.

I think Google gave up on trying to compete with excel on features.

The overwhelming majority of people who double click the Excel icon would be equally well served by sheets or localc. It's fine if you're an analyst and are more productive with Excel, but if you're the rest of us, it doesn't matter what spreadsheet app you use. For most of us, a spreadsheet is a spreadsheet and don't need anything more complicated than sum().

In most companies, it's silly to have Office installed by default for all employees. If you need it, fine, put in a request and we'll get it done.

(please note there are a few things I'm NOT saying: 1) localc or sheets are as good as Excel for all users. 2) companies should save money by never paying for Excel, even if an employee wants to use Excel. 3) all companies should follow the rule of thumb outlined in my second paragraph.)

You’re right for creating. But many people read spreadsheets that are created by someone who needs those functions. If only 1% of spreadsheets use that function, the entire organization needs it. Training users how to double click icons is surprisingly hard. Trying to train them how to open some spreadsheets in Sheets and some Excel is a support nightmare.

Maybe I could see an argument for localc, but sheets is actually pretty costly at $50-150/year.

I think it’s fine for non-business people to just use the free sheets, but an org would have to not care about excel to use sheets for everyone.

With 365, it’s sort of a no-brainer as while it’s not as good as sheets for accessibility, if I’m going to pay $100/year/user then it’s easier to plan for 365, than sheets, I think.

> Maybe I could see an argument for localc, but sheets is actually pretty costly at $50-150/year.

Where are you getting that from? I see Enterprise GSuite at $25 a user (max) and that includes mail and drive. The cost of sheets here is probably $10 or less.

It does seem like the cost is in line, but if you're already paying for Gmail/Drive or other Gsuite things then saving the office 365 cost absolutely helps and Sheets is essentially a no-cost add-on.

https://gsuite.google.com/pricing.html https://products.office.com/en-us/compare-all-microsoft-offi...

i think you are severely underestimating the amount of people whose entire job is excel

Sheets has had pivots for years. It's become very rare that Sheets doesn't have a feature I want, whereas it's become more common that I'm in Excel and wish I could use Sheets' query function.

Pivots exist, but aren’t nearly as functional.

Sheets has charts and pivot tables. It definitely lacks some features of excel, but it also has some nice new additions that I love so far - e.g. Showing the return value of a formula while still editing.

Sorry, I didn’t mean that sheets doesn’t have charts. I meant that the charts in sheets are missing substantial features that have been in excel for years.

Meh, you should probably be using either python or an RDBMS. Most non trivial applications of excel come from a lack of IS knowledge IMO. It’s easy to do but it makes everyone around you less happy.

I disagree as both a python and rdbms user. Excel is great for millions of one off use cases by users who don’t know how to program and don’t know sql and/or have access to rdbms infrastructure. And I think that’s ok.

If I want to create a reproducible data process then I’ll build it in python and maybe some data share or database.

But tons of work can be done in excel that isn’t worth the cost to build in something else.

I don’t include Macros, if I’m programming in Excel, I should probably do that in something that is better designed.

I use spreadsheet programs all the time during software development. it's a great way to quickly look at data or do some calculations.

I use Numbers. Is it as good as Excel, not really, but it's good enough (although data import is still a bit lacking), and it's not a subscription.

I have a data import task I run about once a week - I've found Numbers does a better job not screwing the date field up I add than Excel does when I export to CSV (for import into our relational database)

Office 365 is a bit more than some office apps though, you have teams, OneDrive, planner, forms, Todo, powerapps, stream and so on... It actually replaces a whole stack of SAAS apps most companies are already shelling out for.

Shutter.. hate the msft sticky apps. They are giveaways simply to not lose market share. Can someone please make a free version of sharepoint already so I can be productive.

All companies I've worked at had dev environments that did not require any licensing. The tools used where mainly free or under the free tier (sublime, eclipse, CurcleCI, AWS...)

For larger products those will require to purchase certain usage since the workload will be higher but that's a company product cost and not per dev.

Unless one is developing MS products or is dependent on MS software I can't see how the numbers mentioned add up

Right but MS has such a stranglehold that no business dare run without office. It's a shame that no one really has competition for them

I know plenty of companies that are on Google apps.

Even with that they're probably a still running windows

once you start talking about SAP and other enterprise software you are talking big $$

and even if it is worth it, Why aren't they switching to equally good subscriptions that are cheaper? that's the real question.

> Between Office and cloud and HR/payroll and a few other tools I can imagine $1,000/year.

Really? You can imagine only #83/mo in software costs for a working professional? I think you're being really rather unimaginative.

I'm not trying to be super-imaginative, I'm trying to be realistic. That's the point.

Considering Office 365 is $10/mo (before volume discounts) and is probably the main tool most office workers use, I am having a hard time how on earth you get to $10K/12=$833/mo.

I'm supposed to believe the average office worker uses a total of subscription software that is eighty times more expensive than Microsoft Office?

Accounting software, payroll software, financial planning software, supply chain management/inventory, health insurance/401k/benefits/PTO software, JIRA/Ticketing, knowledge management (sharepoint/internal wiki/confluence), data warehouse licenses, reporting software (tableau, looker), IT and device management software, expense and reimbursement, business travel scheduling, performance management, contract management, backups and disaster planning, etc. And then any specialized software for actually doing different jobs roles (CAD, photo/video editing (think of the marketing and design departments of any F1000 company), IDE's for the developers, operations software for running a warehouse or factory, etc.

You've listed a ton of tools, but not every office employee uses those, and I hope that payroll software isn't costing $1000 per employee/year.

To get to those large numbers, you'll need to hand-pick companies that have few non-specialized employees.