Blog — The tech-world ecosystem: can SMEOs survive?
Big Tech like to preset our world as ‘everything normal, nothing to see here. Buy our product and you will be fine.’ But somehow it feels more like triage in an emergency room.
For SMEOs, life is tough. They are losing ground to large corporations. Small businesses used to employ the majority of Americans; now large enterprises employee over 50%. That number maybe worse than it appears because franchises like McDonald’s or Taco Bell may be classified as small enterprises depending on definitions.
How Sumer might help
Unequal access to simple business management software is a significant contributor to disadvantage for SMEOs.
One problem is the expense of the software itself, especially as provided by subscription-based systems designed to enmesh clients in an endless series of modules.
A further problem is that SMEOs cannot afford the IT knowledge and staff need to accurately evaluate their needs; they end up relying on the very salespeople who are hawking the solutions. Despite the advertising about “partners,” software purveyors are profit-maximizing businesses looking to make the sale.
So regardless of advertising suggesting that all SMEOs are rapidly breaking new ground with thrilling software and even leaping into AI, this is doubtful. SMEOs do what they can, often installing small apps for specific problems and relying on spreadsheets to semi-automate their existing manual systems.
This is a rational response to the software challenge. But large corporations do have resources to make IT investments on enterprise-wide systems, and as a result the SMEOs fall even farther behind.
Sumer goals
Sumer from the start was intended as a transparent alternative to the expensive but often inadequate management systems peddled by Big Tech.
The vision is to create a resource that is so simple, inexpensive, open, and natural that anyone can use it with little more effort than taking pencil to paper.
The goal is to allow ordinary people, businesses, and organizations to regain control of their own data and restore SMEOs to equal footing as nimble competitors to large corporations.
In so doing, Sumer could become a tool as widespread as many current social media platforms.
Reaching this goal requires three conditions:
- A robust program than can be expanded—called extensible in computer talk—to add new capabilities beyond those enabled by the original creators. DONE ✔
- An organization to host and administer the program on a semi non-profit basis.
- An online community to encourage further cooperative development through crowd-sourcing.
Competition
The tools behind Sumer have been available since the early 2000s. Big Tech has armies of programmers that have given us Facebook, Google, online gaming, endless-scroll media, video streaming, and now AI. Some question whether these developments have truly enriched our lives, but they have provided vast profits to the tech industry.
No one has delivered anything as ordinary and unexciting as Sumer. They could have, of course, but didn’t want to—the current state of business management programs is highly profitable.
Challenges to Sumer are exactly the challenges faced by SMEOs competing in the cut-throat ecosystem of Big Tech.
We can consider important features of the business software ecosystem including:
- Continued promotion of Excel and other inappropriate programs as business solutions,
- Big Tech solutions supporting large enterprises and large software developers at the expense of SMEOs,
- Partial business solutions for SMEOs intended to lock clients into long-term module-based subscription programs,
- Market-splintering to create effective software cartels ,
- Private equity roll-ups using centralized management systems to lock out smaller competitors,
- Big Tech killer-acquisition of competitive software,
- Promotion of AI with intent to frighten customers large and small into investing in unproven and possibly unnecessary AI solutions .
The Excel problem
Microsoft realized by the early 2000s that they had made a mistake with Excel and Word. Office and Windows had reached a maturity that satisfied a majority of their users, and with that there was no need for consumers to continually upgrade with new software. A major source of income was quickly fading.
Their solution was to try to shift users into a subscription model to ensure a steady and predictable flow of income.
But they also faced a secondary issue: natural improvement in software would recreate the Excel problem with each new product. The only way to ensure continuous income growth would be to avoid simple solutions and embrace complexity to keep Microsoft at the center of the software ecosystem—essentially establishing a cartel.
This is why Microsoft could have, but didn’t, introduce anything like Sumer as the next natural step in business management programs.
Microsoft revenues now derive approximately 30% from Office subscriptions, 40% from Azure web services, and 30% from advanced software systems going mainly to downstream software purveyors that provide independent business solutions.
Protecting these revenue streams involves clever market planning: Office subscriptions providing 30% of revenue are easy money—the programs themselves have hardly changed in decades. Recognizing that most SMEO managers do not have expertise in IT, they promote Office as a “business program.”
Of course Excel and Word are office tools, not comprehensive business or production tools. The actual operations of business, whether retail, manufacturing, or services, require relational databases that are standard for large enterprises but available to SMEOs only with difficulty.
Shifting SMEO software development to downstream providers
Big Tech leaves creation of business tools with relational database technology to downstream software developers. For these, Microsoft provides Azure web services and the programming technical tools that make up the other 70% of their income.
Microsoft protects its downstream customers by staying out of their niche markets. They have no reason interfere because their Office 365 profits are in part based on it being the closest thing to a business product available from Microsoft. Nowhere in this environment is there any incentive to break out of the basic cartel models that successfully lock-up technology so that SMEOs can only acquire applications at a high price.
Ironically, most business managers know more about their business needs than any software purveyor could know. But the controlling factor in the unbalanced power relationship between business owner and software purveyor is that only the software purveyor can extract the data structure and build a functional database application .
Subscription-based modular solutions
Relying on business software purveyors to add applications using relational databases like Point-of-Sale (POS), Inventory Management, Production Management etc. can be daunting. Subscription-based systems usually try to lock in added expenses for expansion modules and new user fees. These systems are inflexible, often forcing clients to follow business models based on their software rather than their own business needs.
The business software cartel
“Big Tech refers to the largest and most influential technology companies in the world: Amazon, Google, Facebook, Apple, and Microsoft, and other influential players. Each dominates its respective market with size giving it significant advantage: the bigger it becomes, the harder it is to challenge.
Tech giants have a deep understanding of their markets and customers' needs, which enables them to deliver products that ensure customer satisfaction . This understanding has allowed them to stay ahead of the competition and maintain market dominance. Big Tech companies have been able to avoid major competition enquiries partly because they offer consumers cheaper services than ever before. However, there is increasing scrutiny of monopolistic practices.”
Amending the above assertion: Customer satisfaction can only be measured within the limits of what consumers think is possible. Market dominance means that whatever Big Tech offers may be perceived by consumers as their only alternative . Actually, surveys show that many consumers are highly dissatisfied with their products, but they see no other options. Big Tech is not motivated by maximizing customer welfare and satisfaction ; Big Tech is motivated by maximizing dominance and profits . Big Tech has a powerful weapons to shift economies, legislation, law, and social opinion to fit their needs. Destruction of SMEOs is not some malevolent goal; it’s just collateral damage. Securing a healthy middle-class economy and ensuring that SMEOs are not driven to extinction is not on their playlist.
Private Equity rollups
Private Equity firms are completely satisfied with the current state of business technology.
“Fragmented healthcare markets offer easy opportunities for PE [Private Equity] to quickly profit from merging multiple practices, centralizing administrative tasks, and, in theory, freeing care providers to spend more time with patients.”
“Centralizing administrative tasks” largely means software management systems. Healthcare SMEOs do not have the resources to compete against PE mergers with specialized IT skills.
Private Equity firms can divest themselves in a few years with significant profit. The result is a monoculture chain or franchise. Arguments about ‘monopoly pricing’ are not relevant; the real loss to the community is about loss of diversity and the closing of opportunities for small entrepreneurs to enter a market already controlled by franchises, especially without the efficiency of ‘centralized administrative tasks.’
SMEOs are not competing with one another as much as they are competing with franchises and encroaching large enterprises. The best way for independent SMEOs to combat these threats is through the condition listed above, creating ‘An online community to encourage further cooperative development through crowd-sourcing.’
Killer aquisitions
Even casual observers of the computer software market notice the many programs that disappear after being bought up by larger developers. Sometimes this is because the purchasing enterprise wants to acquire the technology. Other times it is intended to reduce competition.
“Killer instinct is a key business asset. Firms live and die by their strategic choices, and the desire to outcompete rivals colors most business decisions. While many firms strive to win market share on their merits, economists have recently identified an anti-competitive practice—killer acquisition—that enables incumbents to maintain market share by burying, rather than beating, rival technologies. In these acquisitions, firms buy competitors to prevent market cannibalization, preserving profits at a price that is right for both the acquirer and the target.”
Artificial Intelligence
The impact of AI is under fierce debate.
“Warnings that AI is coming for your job have become a familiar refrain in tech. OpenAI founder Sam Altman says AI could replace 40% of jobs, while Dario Amodei, CEO of Anthropic, warns that AI could wipe out jobs across several industries. The tone is urgent and the conclusion implied: disruption is inevitable.
What’s missing from this conversation is not concern for workers, it’s accountability for capital.
This fear-laden narrative is coming from the very CEOs who have received billions of dollars in funding–without the return on investment to justify the scale of those bets . Even as they forecast workforce disruptions and the end of software engineering, they’re still hiring thousands of engineers. The contradiction is hard to ignore.”
It is impossible to know what is coming, but the article concludes with
“...the “AI will replace you” narrative is useful for those whose valuations depend on massive capital spending and those hoping to distract from less visible disruptions already underway.
So the next time a tech CEO warns you that your job is disappearing, it’s worth asking a simple question: who benefits from you believing that?”
We cannot know what AI will look like, but unless AI Big Tech is radically different from current Big Tech, it will not be friendly to SMEOs. Deciding whether to invest in new expensive technology depending on advice from AI salesbots will be just as stressful.
It is certain, however, that AI solutions will be complicated and expensive because otherwise what is the advantage to AI Big Tech in offering AI?
On the other hand, it is possible that AI is largely irrelevant to SMEOs. Human systems developed as long as 6000 years are still relevant today because they are based on human nature: we understand them intuitively.
With 40% of the workforce displaced in the next few years, the drive to create new small enterprises could be huge. New enterprises will not be able to afford premium software. Consumer dissatisfaction with large corporate dominance could be intense, and simple solutions like those offered by Sumer might practically take small businesses off the grid. The drive to ever more massive concentrations of power is not a given.
SMEO managers have already found a balance—although often difficult—between jumping all in on over-expensive business software and maintaining paper or spreadsheet based systems. Sumer-type programs can efficiently bridge that gap.
Using expensive AI to write programs for SMEOs that can just as easily be developed cheaply in-house by SMEO managers offers no advantage.
It is worth asking: where will AI bots get the input information they need to write the business management programs?
The answer: probably from the already existing in-house spreadsheets. But if the spreadsheets already exist, why not just use Sumer?
Strengths and Weaknesses, Opportunities and Threats
Having surveyed the weaknesses and threats to SMEOs in the current economic and technical ecosystem, we can note that threats to Sumer are identical. A range of actors including Big Tech, existing down-stream software purveyors, private equity firms, and new AI players would all be unhappy with the goals of Sumer.
- These actors have remarkable financial power. It would be naive to think that they would not think of using it against a perceived challenge to their interests.
- Sumer’s stated goals are to provide an inexpensive, simple, and powerful alternative to existing systems; there is little to attract high-powered investors seeking maximum returns.
The strengths and opportunities are more moral that financial.
- The benefits of Sumer are immediate and obvious. SMEOs are shamefully under-served in the current ecosystem. By experience, even a brief demonstration of Sumer brings enthusiastic interest from SMEO managers.
- Many non-profit organizations or philanthropic investors would be strong candidates to back Sumer development.