145bn is the size of the global IT industry. The shortage of IT talent, high talent costs and agility are the biggest obstacles for the industry‘s development to its current estimated potential of 250bn-450bn. The shortfall of IT specialists around the world is 4,5 million, whilst just in Europe it is almost 1 million.
Based on these large numbers, companies around the globe look for the means of attracting the best people in the most effective way.
How does Europe stand from a supplier base perspective?
Although software companies in the region cover a broad range of industries and technologies, most of them are small (especially compared to Asian vendors). Little consolidation has happened in the region either. This defines the market niche in which we can compete – high value-add. And high value-add, or simplified “more for less” requires constant innovation and agility.
Deutsche Telekom (DT) is the biggest telco in Europe, with 200.000+ employees and 142M+ customers. To be part of the innovation game, DT formed a division called „Group Innovation“ focusing on innovative product development projects. One of its principles is to pilot and establish a bestshoring practice in order to reach a wider talent pool. With the help of a big four consultancy company, they conducted a large research of the region. Many companies were screened, pilots were made, interviews and thorough checks conducted and finally, a vendor, based in Sofia, Bulgaria was selected. QIVICON was not the first project for the Deutsche Telekom and this service provider, but is a rich example of standard and off the beaten track practices.
QIVICON is the Deutsche Telekom Smart Home platform. QIVICON is backed by an initiative of leading industry companies dedicated to making the Smart Home available to everyone – on a single platform, across different manufacturers, brands and devices. The functions of diverse appliances and devices can not only be controlled individually or automatically, but can even be combined with eachother. QIVICON partner companies include energy providers and manufacturers of various household, home and garden appliances as well as telcos and security solution providers. As the number of involved brands continues to grow, leading to an increasing multifaceted array of devices and functions, the unique application possibilities of QIVICON for greater convenience, security and energy efficiency in the home are also increasing – for tenants as well as owners of homes and apartments.
QIVICON is a highly innovative project with a lot of challenges ahead – the business model, the technology and standards, the client penetration, the legal part and last but not least – the team structure and processes to achieve success. In an innovation environment, it is always good to have all the brains together in an active collaboration, but what if availability of people, ressources and time impose restrictions? In this case, the CTO of the project decided to implement the following approach: All development, quality assurance and operations sub teams have members both in Darmstadt, Germany and in Sofia, Bulgaria. This ensured two things – no encapsulation of a subteam and constant face to face communication among the different teams in both locations. The challenge is to ensure effectiveness within a subteam as if they are located physically together, but this is a much less of a pain than the separation of geographically distributed teams where day to day work pushes them to communicate anyway. The pack of measures taken to keep the whole project aligned, engaged and productive are both technical and soft and they evolve with the maturity of the project.
Here is how it happened:
Stage 1: Initiation
The start of the bestshoring initiative for QIVICON was in December 2013 after a series of business meetings and paperwork – the company has the standard layered structure of contracts where the frame agreements covers the heavy legal aspects whilst the specific project papers are left with the minimum needed attributes only.
For the first 6 months the nearshore team was on a “staff augmentation mode” – 5 automation QA engineers and developers joined 3 of the subteams of QIVICON. Even at that simplified mode, effectiveness and fast onboarding were key and preparation started for expansion – each person spent 2-3 weeks onsite with the core team and then for the next 3 months every 3 months, 1 sprint (2 weeks) was spent in Darmstadt. Distributed agile (both Scrum and Kanban) was used as a natural addition to the established agile process in QIVICON – now Daily meetings; Planning, Review & Retrospective meetings each sprint were done remotely. Infrastructure work was done remotely in QIVICON environment through secure channels.
Instant messaging, video & phone conferencing, email groups were used for communication and QIVICON Scrum and Kanban board systems for project management. Important part of the project governance were the dedicated Project Managers on both sides and the regular report and status update calls. The focus at that stage was on technology & processes alignment – to allow for seamless future expansion. Progress tracking on strategic level by high management was established on quarterly basis.
As a result, the QIVICON team successfully extended, foundation for scaling was established, remote team members’ productivity reached initial expectations and the service provider proactively started building capacity in specific technology areas.
Stage 2: Transformation
In the middle of 2014, and for the next 9 months, a period of transformation started. The service provider’s team grew to 17 members participating in all of the QIVICON subteams. For the Quality assurance element, a Competence Team formation started. The rest of the agile teams started taking responsibility for specific functional areas.
The initial onboarding for new nearshore experts continued with 2-3 week team visits in Germany with a small service provider presence. It was then shifted to the service provider for the teams with established nearshore presence. The practice of onsite visits for each team member for 1 sprint continued but because of the larger team size the frequency became every 4-6 months. Also German team members are traveling to the service provider’s office in Sofia from time to time to maintain the common team spirit which was growing in the meantime.
During this stage the Infrastructure was 100% aligned and specific devices integrated in the service provider’s infrastructure. The whole QIVICON team switched 100% to using electronic project management tools (the sticky notes kanban boards that look so good on pictures but turned out to be so bad in reality, especially when the glue dries, were now gone). The mixed German-English chats and documentation fully transitioned to English – which was a relief for those of the service providers employees in Bulgaria who did not speak German, but also a step forward in the internationalization of QIVICON sales.
On a governance level, the weekly report & status update calls and quarterly strategic alignment meetings continued to ensure sync on all levels at any time. The focus during this stage was on knowledge management to enhance scalability. Joint planning was done with a 3-6 months operational outlook.
As a result, during the transformation stage team members’ productivity was “maximized”, ramp up periods became shorter and overall price-per-value increased. The whole team proved ability to scale the nearshore part of the operation and the service provider started giving back operational and technology advisory.
Stage 3: Maturity
Since April 2015 fully-established Competence Teams are working for QIVICON Quality Assurance and one by one for the development teams. The Competence Team for QIVICON QA has nearshore Test Manager, Test Analysts and Automation Testing Researchers – 100% responsible for all QIVICON Testing and QA before sprint releases. Test Automation roles are delegated to the service provider 100% percent in all teams.
The onboarding of new nearshore team members is done in Bulgaria. Onsite 1-sprint visits are needed for some team members only each 4-6 months.
The whole QIVICON team is fully aligned for remote delivery. With the weekly report & status update calls, quarterly strategic alignment meetings with 6-months operational outlook and joint planning, strategic business alignment within the whole QIVICON project. The focus is on keeping the core collaboration in a long-term sustainable mode and explore opportunities for collaboration in new fields, involving QIVICON clients and partners.
As a result team productivity and scalability is now at planned levels, the operational model is self-sustainable and aligned and two of the functions are fully outsourced to the service provider‘s competence teams. QIVICON is bringing more clients and partners on board and the management is comfortable that there is a team to service them, moving the product to next level.
The technologies of QIVICON
This article was published in the Outsourcing Journal Special Editions “Nearshoring Europe Edition” Q4/2015. 150 pages, PDF. You can download this edition to gain better insight into the European ITO/BPO industry. The download is free of charge for personal and corporate members of the German Outsourcing Association (free membership available, sign-up 2 min). Sign-up here and download this edition free: https://www.outsourcing-verband.org/en/membership-services/ (scroll down and choose subscription membership)
About the authors:
Martin Hund is Head of Technology at the QIVICON Smart Home-Platform since August 2012. Martin Hund has headed various technology departments in the area of product development, initially with T- Online International AG and later in the area of Products & Innovation at Deutsche Telekom AG. His responsibilities include the development of consumer products like client software and various communication platforms such as Voice over Internet Protocol (VoIP), e-mail and other messaging services as well as lifecycle management of all value-added services. He holds a degree in Telecommunications from the University of Applied Sciences Wiesbaden Rüsselsheim. > LinkedIn
Elena Marinova is a President and a shareholder at Musala Soft JSC. She holds BA degree in Economics and MA in Strategic Management. As a President of Musala Soft she is responsible for the company strategy, paying special attention to image, market positioning, company culture and team spirit. She is currently member of the boards of BAIT (the Bulgarian IT Association), AUBG (American University in Bulgaria), the Alumni Association of the Business Faculty of Sofia University and a distinguished Member of the European Parliament of Enterprises.In her public activities Elena Marinova is committed to the recognition of Bulgaria as an internationally recognized attractive IT destination for both businesses and IT talents. She is actively engaged in activities dedicated to the promotion and support of the Bulgarian business climate and brand and to the increase of the quality and quantity of IT education. > LinkedIn