Wednesday, February 27, 2013

Fractured Product Syndrome

How do you sell your software product? Do you fork the source code of your previous customer, modify it a little and deploy it as its own instance with its own database? Maybe each customer even has their own server? Their own set of servers?

You are suffering from the Fractured Product Syndrome.

Let me tell you a story.

Colin and Alex have a little web development consultancy, called Coaltech (get it?) they are pretty handy with ASP.NET and SQL Server and already had a respectable list of satisfied clients when a local car hire company, Easy Wheels, asked them if they could build them a car booking system. It would keep a list of Easy Wheels’ cars and allow customers to view them and book them online.

Colin and Alex signed a contract with Easy Wheels and got busy. Their “just do it” attitude to getting features done meant that the code wasn’t particularly beautiful, but it did the job and after a couple of months work the system went live. Easy Wheels were very happy with their new system, so happy in fact that they started to tell other independent car rental companies about it. A few months later Colin and Alex got a call from Hire My Ride. They loved what Coaltech had done for Easy Wheels and wanted a similar system. Of course it would have to be redesigned to fit in with Hire My Ride’s branding, but the basic functionality was pretty much identical. Colin and Alex did the obvious thing, they took a copy of the Easy Wheels code and tweaked it for Hire My Ride. Of course they charged the same bespoke software price for Hire My Ride’s system.

Soon a third and fourth car hire company had asked Coaltech for their ‘system’. Each time Colin and Alex took a copy of the last customer’s code – it made sense to take the most recent code because they inevitably added a few refinements with each customer – and then they altered it to match the new customer’s requirements. Before long they had arranged a deal with another web agency to take over all their non-car-hire work and decided to concentrate full time on the ‘system’. It needed a name too, they couldn’t carry on calling it ‘Easy Wheels’ and they certainly couldn’t market it like that. Soon it became ‘Coaltech Cars’ with a new marketing website. They also found that they couldn’t keep up with demand with just the two of them doing customer implementations. Each new customer took around six weeks of development work with the inevitable to-and-fro of slightly different requirements and design changes. To help meet demand they started to hire developers. First Jez, then Dave, then Neville. They all modified the software in slightly different ways, but it didn’t seem to matter at the time.

Fast forward five years. Coaltech now has 50 employees and around 50 customers. It’s fair to say that they are the leading vendor of independent car rental management systems. The majority of their staff are developers, although they also have a small sales, HR and customer relationship management team. You would have thought that Colin and Alex would be happy to have turned their little web development company into such a success, but instead life just seemed to be one long headache. Although the company had grown, it always seemed hard to turn a profit. As it was customers often balked at the price of the system. The same bug would turn up again and again for different customers. There never seemed to be enough time to fix them all. Even though they might have delivered a new feature for one client, it always seemed to take just as long to implement it for another; sometimes longer depending on what code they’d been forked from. The small team that looked after the servers were in constant fire fighting mode and got very upset when anyone suggested ‘upgrading’ any of the clients -  it always meant bugs, downtime and screaming customers. And then the government changed the Value Added Tax rate. Colin had to cancel his holiday and they lost two of their best developers after several weeks of late nights and no weekends while they updated and redeployed 50 separate web applications.

The end for Coaltech cars came slowly and painfully. Alex had the first hint of it when he was made aware of a little company called RentBoy. They had a little software-as-a-service product for small car hire companies. To use it you entered your credit card number, a logo, a few other details, and you were good to go. They weren’t any immediate competition for Coaltech Cars, having only a small subset of the features, but they soon captured the low end of the market, the one or two man band car companies that had never been able to afford Coaltech’s sign up or licensing fees.

But then the features started coming thick and fast and soon Coaltech found they were loosing out to RentBoy when bidding for clients. Colin found an article on the High Scalability blog about RentBoy’s architecture. They had a single scalable application that served all their customers, one place to fix bugs, one point of scalability and maintenance. They practiced continuous deployment allowing them to quickly build and release new features for all their customers. The company had four employees and already more customers than Coaltech. They charged about a tenth of Coaltech’s fees.

Coaltech’s new client revenues soon dried up. They’d always made a certain amount of money from sign-up fees. Too late they realised that they had to start shedding staff, always a painful thing for a small closely knit company. The debts mounted until the bank would no longer support them, and before long they had to declare bankruptcy. Luckily Colin and Alex managed to get jobs as project managers in enterprise development teams.

The moral of the story? Try to avoid Fractured Product Syndrome if you possibly can. Although simply forking the source code for each new customer appears by far the easiest thing to do at the start, it simply doesn’t scale. Start thinking about how to build multi-tenanted software-as-a-service long before you get to where Coaltech got to. Learn to say ‘no’ to customers if you have to. It’s far better to have a high number of low value customers than smaller numbers of higher value ones on a differentiated platform. It’s much easier for a low-value volume software provider to move into the high-value space than for a high-value provider to move down.

Learn to recognise Fractured Product Syndrome and address it before it gets serious!


Gene Hughson said...

Great post. Having a project-oriented outlook quickly degenerates into a mess (given the scenario, I find it hard to believe they'd make it 5 years before imploding). It may conflict with some of the YAGNI crowd, but a product-oriented outlook should provide a much better outcome.

Unknown said...

This. We made the investment to build multi-tenant right off the bat and it has paid off in spades. If only we had "brand name" examples to show to decision makers to make crystal clear why clone and port is the wrong answer.

James Lind said...

Interesting article, based on your very real experience.

I guess the advantages to customers of the fractured model is

1) non reliance on vendor (if you go bust, and they have source code they can find someone else to maintain the system).
2) absolute control over their own custom mods (rather than relying on the one-size-fits-all approach of SAAS).

But food for thought all the same.