So the rumours that ESRI was trolling for a bailout are true. As always, those who can't compete in business against more agile competitors are going to try to pick Uncle Sam's pocket to make up the difference.

Lucky taxpayers: ESRI now joins the long line of "stimulus" bailout welfare cases, gamely pitching their case for corporate welfare right up there along with the porn merchants and "liar loan" mortgage brokers. At least ESRI is only begging for $1.2 billion while the porn merchants have asked for $5 billion.

There is no need for any stinkin' bailout. GIS is booming. There is more demand for GIS than ever before, and those companies which are creating modern GIS software have more business than ever. Living fossil legacy companies like ESRI, which create obsolete GIS software that does less and costs 20 times more than modern software are getting killed by modern competitors, especially so since tough economic times encourage legacy buyers for the first time to think about moving to more modern software.

If ESRI faces extinction it is because intelligent buyers who want to make smart GIS choices in tough economic times are choosing other vendors. If the Feds throw taxpayer money at ESRI all they will do is burn taxpayer money to subsidize a company whose own customers are abandoning it.

This bailout plan would also perpetuate ESRI's obsolete technology to the harm of every Federal, state and local organization that will be tarred by it. It is like suggesting we should reform the air traffic control system infrastructure by spending a billion dollars on vacuum tube computers to provide make-work for vacuum tube manufacturers. Good for the vacuum tube vendors but a catastrophe for anyone who depends upon effective air traffic control.

I see James Fee's always entertaining blog has a fairly unanimous thread of criticism opposing this bailout. Good to know that ESRI customers are the first to demand that ESRI should have to earn a living and should not get away with begging for white collar welfare. see http://www.spatiallyadjusted.com/2009/01/13/economic-recovery-with-gis/

"This is not a bailout."

Nonsense. It is feeding time at the public trough. Besides bailing out a living fossil vendor that has been unable to transition to modern technology, all it will do perpetuate obsolete methods that have failed in the past and which will continue to fail in the future.

The reason Federal agencies have been left with "with substandard products and inconsistent data sharing," as Russ so accurately puts it, is because they persist in buying grossly obsolete technology for far higher prices than necessary and implementing it ineptly, spending money on obstacles to prevent anyone from intefering with the symbiotic relationship between inept agency and inept vendor.

People think they can do that forever, and they can indeed get away with it for a very long time, but what happens in high tech software like GIS is the same thing that happened in word processing: the mainstream becomes so powerful that the relatively small number of units purchased by Federal agencies is not enough, not even with profligate funding in the hundreds of millions or billions, to keep up with technology as powered by the mainstream.

That's why mainstream GIS packages are so far ahead of Federal usage of ESRI. Right now, today, mainstream GIS packages deliver supercomputer, 64-bit, massively parallel modern GIS performance with far greater spatial and enterprise sophistication than the living fossils, and they do that for a few hundred dollars. In contrast, Federal agencies buying ESRI don't get that even when they spend tens of thousands of dollars per seat. That's the situation today and it only is getting worse for the living fossils and their enablers in the Federal bureaucracy.

What happens is that eventually no matter how much money the agencies spend trying to prop up their symbiotic vendor partner it's not enough. That's how formerly beloved Federal darlings like Wang word processing died at the hands of mainstream word processing vendors. Wang just got so backward compared to the mainstream that even Federal buyers conceded it was time to modernize.

Instead of wasting new money on corporate welfare, during economic hardship it is all the more important to get everything you can out of the money you have already spent. In the Federal case, the biggest investment to date has been in the acquisition of mountains of data that have already been acquired and which continue to grow.

If anyone is serious about uncorking all that Federal data for which the money has already been spent the way to do it is to provide that data in whatever format it exists on a simple FTP site and then get out of the way. There are endless applications out there which can work with any format imagineable, spider it and make it available effortlessly just so long as the data is made available. Many private companies don't need no stinkin' Federal bailout to make that happen. They'll do it at their own expense. Just get out of the way and let them do it.

When Russ writes "for those who understand and deliver ROI" I get the impression he includes himself among those who understand ROI. OK. I'll respect that.

But if Russ is serious about ROI, he should be more serious about insisting that no agency be forced to spend tens of thousands of dollars when they could buy more reliable, higher quality, better performing software that provides far greater depth and breadth and sophistication of capabilities for a few hundred dollars. When you start talking about price performance and getting your money's worth, then we can believe you are seriously interested in ROI (that's "Return on Investment" for non-English speakers, a phrase which makes no sense at all if it is divorced from price/performance). ROI has nothing to do with how often ESRI has bought you lunch. It's whether or not they provide as good price/performance as more modern, more cost-effective alternatives.

Russ writes:

"It's not survival of the fittest but commitment to a space that should have gone mainstream long ago. "

No, actually, it is survival of the fittest. Let's hope that the current economic collapse doesn't deepen into a real depression to teach that lesson to those who can only learn the hard way.

I'd also respectfully point out that GIS joined the mainstream a long time ago, but not if you are so stuck with living fossil technology that you don't participate in the mainstream.

The mainstream does not buy software that costs tens of thousands of dollars for the configurations they want. Going mainstream means pricing in the $245 to $500 a seat range for the full market basket of capabilities (ArcGIS Server, SDE, IMS, ArcObjects, etc., etc) which ESRI sells in the $20K to $30K range. That's the simple economics of why mainstream, modern GIS companies outsell ESRI about 100 to 1 on a unit volume basis in mainstream Windows markets. Many more people and organizations can afford GIS at $245 a pop than can do so at $24500 a pop.

Some Federal agencies during fat times may have found themselves buying the GIS equivalent of $500 hammers and $2000 toilet seats, but that's not how the mainstream buys, nor does the Federal model have any real influence on how the mainstream buys. Ask Wang about how it felt to have their $50 million headquarters auctioned off for a mere $500,000 if you think differently.

Look, I realize there are plenty of people who are happy to take welfare and will move mountains to get a billion dollars poured into a makework program for ESRI from which they might benefit. That's how politics works and why so many people line up to pick Uncle Sam's pocket. They're not usually stupid enough to baldly announce they're out to loot the Treasury, they're usually more than politically savvy enough to mask their intentions with a veneer of "infrastructure investment" talk. Politics as usual.

Just don't even think about trying to fool people into believing that spending a billion dollars on this ESRI bailout plan has anything to do with ROI as people who are spending their own money use the term.

"it would have thought of a way to grab the attention of the industry and get some bailout money directed to the federal GIS infrastructure."

One almost has to go back to Roman times for such facile misidentification of venality as virtue.

Let me get this straight... you are actually suggesting that picking Uncle Sam's pocket for bailout money is a sign of managerial excellance. Poor America.

Russ, since you asked, let me restate my objection in clearer terms.

"I'm still not clear just what it is you are upset about."

I don't like government money being used to bail out a vendor who can't keep up with their competition. That money ultimately comes from productive people, no matter how many Ponzi scheme gimmicks are used to make it appear that it materializes out of thin air. The government either takes the money directly from productive people in taxes or it takes it indirectly form productive people by looting their equity through the inflation caused by debasing the currency when they print money.

I find it especially unpleasant because a lot of productive folks are working two jobs or putting off their retirements or other dreams in order to pay their taxes to Uncle Sam. My personal view is that it is corrupt and evil to take their money and to give it in corporate welfare to a bloated company that has become accustomed to a lifestyle of charging ten to forty times as much as more modern competitors while delivering obsolete junk. It's like starving the poor in France to buy yet another pair of suitably antique gold buckles for the shoes of the King so he could prance around Versailles in style.

Even if you don't share my dislike for crushing productive people to hand out money in corporate welfare to those whose pet Congressmen reserve a place for them at the Federal feeding trough, I point out that anyone who actually cares above having to use this stuff on the job should be careful what they ask for.

When you spend a billion dollars to perpetuate grossly obsolete technology you curse the users of that technology with a daily lifestyle using backward tools. It's like handing out a wooden plow and an ox to a farmer when everyone else is using a modern tractor or combine. Nobody likes to struggle behind a wooden plow while their neighbor spends his work day in air-conditioned cab.

You also raise the costs for everyone else who has to interact with the living fossil stuff you've codified into law. Every experienced state, county and local administrator reading this knows exactly what I mean given the Federal habit of dreaming up costly unfunded mandates to impose on everyone else.

The last thing any non-Federal administrator needs in rough economic times is yet another Federal program that saps the life out of their budget. Experienced hands know how it goes: it starts with big talk, a trickle of initial money gets handed out by the Feds and then you get left holding the bag of higher costs that go on and on for years.

It's like a Roman emperor coming to town with the front part of his army column tossing a few bronze coins to the crowd, some of whom are dumb enough to applaud the emperor and rush for the coins, while the back of the army column rounds up citizens to slave away in the emperor's mines and galleys. A few coins to end up a galley slave? The wise administrator has seen that proposition before and says "no thanks!"

To switch gears: Russ, you ask if any of the modern vendors will decline to sell to the Feds.

I don't know about the others, but the one I'm most familiar with does not respond to Federal requests for procurement. They literally don't bother filing the paperwork. Never have.

When you're selling GIS at $245 a seat with significant discounts on top, you have to move a lot of seats: although Federal procurements may be bloated with the absolute amount of money being thrown around being large, the number of seats they buy is very small compared to the mainstream.

For example, a Federal procurement for 1,000 seats of a full-featured GIS is a big deal for ESRI, but not for a modern vendor.

That represents about $20 million to $50 million in revenue for ESRI at legacy pricing plus all of the inevitable surrounding costs. But it is only around $125,000 in revenue (50% discount, don't you know...) for a modern vendor and much less in profit - not enough to make it worth filling out the paperwork and the costs and the hassles. It simply is not profitable for a modern vendor to chase after Federal procurements when there is so much other more profitable, low-hassle business to be had.

Will a bailout help the modern vendors as well? Sure, in the short run, for a bit. It will be like it is today where individual managers who need to get something done or who just want a more productive work environment (nobody likes to go to work for eight hours and be cursed with antique hassles when they know there is a much more pleasant way to spend their time at work) go outside the box to procure modern software on the side. Federal managers are pretty good at getting what they want so they know how to get those acquisitions through the system. But the modern vendor is going to get that business anyway.

Last but not least, Russ writes:

"Perhaps [...] can get its countless American users to advocate to improve this proposal so that any investment that Congress funds will not be vendor specific and will result in the advancement of the whole GIS ecosystem, regardless of platform."

Neither I nor the company I work for believe that Congress has any chance of being as knowledgeable about technology as the collective intelligence of millions or even billions of people worldwide.

It's the old centralized, time sharing thing as compared to parallel processing. A single, centralized server processor that is time shared out to thousands of users will not be as fast as thousands of processors all working together in parallel to serve a single user.

Even if you think that Congress is made up entirely of technology geniuses you do have to concede they have too many demands on their time to think much about GIS. It's like an overburdened time-shared processor that no matter how fast it is can't loan more than a millisecond or two for each time-shared user it supports.

In contrast, the worldwide technology community consists of billions of people with a wide range of expertise from the billions who use Google Earth to the few tens of millions who are total stars at development and technology and are eager participants in the lastest tech, including modern GIS. Even if only those few tens of millions of people are seriously guiding technologies of direct relevance to GIS, they'll do a much better job of picking out the right path, the smartest path, the most price/performant path than will Congress. [This is a matter of simple numbers and the force of this argument does not require any unpleasant suggestion that Congress is made up of people who are not technology geniuses.]

I and my colleagues believe the best way to advance the entire GIS ecosystem is to take advantage of the massively parallel intelligence represented by millions of GIS users worldwide. Those people "vote" their opinions as to what is right and wrong technology every time they buy a package or an accessory, every time they write to their vendor with a suggestion, every time they choose NVIDIA or AMD or choose a dual core or quad core or Core i7 or jump into the Windows 7 release or hang back with XP. The people who receive those votes are the genuine, acknowledged technology geniuses of our era, whether they work at Intel, NVIDIA, AMD, Oracle, Microsoft or any of the other companies large and small which have dedicated their lives to quality engineering as opposed to, ahem, politics. So it's a lot of very smart people working massively in parallel to get the best possible job done.

The way I and my colleagues participate in that is by listening to the collective intelligence of all those millions of people and then building the very best GIS products possible for what they want at the lowest possible price. But it is the collective, parallel intelligence of millions of people worldwide that drives the show with a secondary influence from billions of people setting the context.

That's a very different deal from the total arrogance of those who think a handful of easily-corrupted folks in Washington can do a better job of picking the best technology than all those millions of experts in the field. Or worse, it might not be arrogance but corruption, since there are plenty of people who are not at all arrogant but know perfectly well that their work in Washington is all about taking money from someone else and giving it to yourself and to your friends.

Interesting...

This proposal appears not to have made it into the bill passed by the House. See http://readthestimulus.org/hr1_text.pdf

I don't see it in the Senate version either. See
http://readthestimulus.org/s336_012709.pdf

That's a surprise. I expected ESRI would get this bailout. I suppose it there is still time to add it to the senate version and then get it through the house via conference.