Oleg Khalilov, Director of Neti group, shares his experience.
11 years before the company was founded, my future business partner Ruslan and I had worked as consultants – we managed projects in information systems implementation. We used to spend half the year on business trips, living in hotels or rented apartments in unfamiliar cities. Unfortunately, being a “road warrior” was the norm for this type of business. However, even back then, we understood that accounting systems could be developed and fine-tuned without needing to be present on the client’s premises. When we were finally fed up with the nomadic lifestyle, we tried to create a company that specialised in remote development of 1C and its western counterpart – Microsoft Dynamics AX. It worked!
We entered a niche that major integrators used to avoid. We started to recruit employees from all over the country and made remote support and development in 1C and Dynamics AX normalised. Considering our competitors are trying to copy our format, I think that we’re on the right track.
How it all started
Having a wealth of experience in implementation and support of accounting systems, we understood how the market worked from the inside. We saw obvious disadvantages and felt that they could be turned into growth opportunities.
IT- integrators usually don’t like to provide support to clients after a project is completed. This is because clients are used to spending money during the project stage and then try to save on support. It’s like buying a car at an authorised dealer and servicing it in a cheap repair shop.
However, the stability appealed to us. ERP support is not such an extensive market as implementation, but it is constant like an assembly line.
The market was short-handed. For companies involved in projects, the number of employees changes like a sine wave: it grows when the company has projects in progress and shrinks during a respite.
We wanted to become a resource centre that helps smooth such fluctuations, providing temporary staff for seasonal work where required.
Refusal from implementation and selling licenses
It’s common practice in this market to deal with implementation and the selling of licenses together with development. We immediately declined both.
Implementation makes you dependable on each project, while support is a flow – boring yet stable. That’s why 100 projects in support are better for business than 5 projects in implementation. Although it involves inexpensive clients and ordinary projects, at least there are constant orders.
Furthermore, we are not comfortable working for the accomplishment of a license’s sales plan. Just imagine, a client bought licenses for twenty-six thousand euros, and then it turned out that the product did not suit or business processes had changed. A vendor wouldn’t take licenses back. As a result, sellers fulfilled a sales plan and got their bonuses, while the client is left feeling jilted.
From the very beginning we wanted to focus on measurable value. When a client needs a certain report to be finalised, and they can see the proper numbers – this is an obvious and useful result.
During the first two years, we limited ourselves to Kazan oriented projects. We, like everyone else, considered it more reliable and appropriate when people are sitting supervised in the office. Until one day, discussing the future of the company, we realised that we should search people throughout the entire country. It is very difficult to grow the company to even a hundred employees within a certain city (if it’s not Moscow or Saint Petersburg), let alone get to one thousand.
In 2013, at an AX Forum, we offered a remote job for the first time to a skilled programmer. We did not know him personally, but understood his qualifications through our communication at the forum. At that time, he worked in Moscow, away from his family. Accepting our proposal, he would slightly lose in salary, but the bottom line was that it would still be more profitable than living in Moscow. Having weighed everything up, he moved back home to Barnaul and started working remotely. Our belief in the model of remote employment grew after this. He is still working with us.
After that, we recognised that people with a kindred spirit live not only in Kazan, but also in other cities of a big country. They meet our values, they are driven and have self-initiative, they are customer-focused and skilled, and they can work independently.
Besides, remote work is an adequate option for those for whom Moscow does not suit. Smart and capable people live in the regions; they do not want to move to the capital, but they want a good job with interesting projects. You may employ them to a company that works remotely. It is of no importance for a developer where to write a code – nearby or in another city. Then we understood that the same works with consultants.
Earlier, it was a common stereotype that you should definitely meet your clients in person. Actually, technical staff do not even visit users within a single enterprise, but connect remotely. Face-to-face communication is important at the stages of analysis or learning, but there is no sense in being constantly present.
Today, we support and develop accounting systems 95% remotely. Thanks to this, we managed to hire a lot of skilled and experienced employees that were tired of constant business trips. Consultants may work entirely from home, without going anywhere. In this regard, we are a rare company for the Russian market of ERP-systems.
Why not Muscovites?
90% of our clients work in Moscow. That was the reason why we did not look for Muscovites as our employees. There is no contradiction here: wages of developers in the capital are higher than those in the regions.
We cannot compete with Moscow wages, and our experience shows that there is no need to. Our employees get 10-50% more than their regular wages in the region.
Clients have the choice: to hire a programmer, to work with Moscow companies, or to employ us. We are slightly more expensive than staff developers, but definitely cheaper than capital integrators. The cost of our services is lower than that in Moscow due to difference in wages. Thanks to this, our regional specialists regularly participate in large projects and support capital clients.
In regions, we cost higher than staff specialists, and thus are of no interest to customers. Though sometimes, companies are ready to pay any price for our services, because large companies have great needs and there are not so many specialists in the region. But this is rather an exception.
Internal workings of distributed teams
We now have 150 people work in our group of companies. Only one fifth of them go to an office regularly. The others are dispersed throughout the country and work remotely.
Unlike working in the office, distributed teams are more difficult to control, and the remoters themselves are hard to involve in the life of the company. That’s why we are anchored on two core principles:
To hire self-organised people you do not need to hover around. People that are used to waiting for instructions do no suit us. In the event our employees face any difficulties, they won’t conceal it, but will calmly discuss it and offer a solution.
To set clear tasks. Every morning, project managers have stand-up meetings with members of their team to agree upon the course of action for the day. In remote teams, it is necessary to always inform and involve all members of the team in company life. For that, we use chats and corporate social networks such as Yammer.
In remote teams, you should constantly inform and involve people into the company life. We use chats and our corporate social network for that.
Chats. Earlier we used emails instead of chats, but people write letters in a very formal and distant manner. It’s easier with chats: it is convenient to make a voice call to discuss all business issues, including non-work-related talk too. The frequency of communication between our employees grew several-fold, thanks to chats.
Internal social network brings people together as well. In thematic channels, employees discuss sport, kids, cars, compare smartphones and vacuum cleaner robots.
There is a project “Thank you” within it, where colleagues thank each other for the assistance rendered. Each “thank you” is equal to 100 rubles (about 1.5 euro). Accumulated gratitude can be exchanged for new chairs, notebooks, phones, cinema tickets, etc.
In October, we ran a campaign within the network: we compensated 500 rubles (about 6.5 euros) for hobby-expenses. To get the money, one should post a photo of their purchase. People bought skiing glasses, a soldering iron for microcircuits, and tracking boots for a journey to Nepal. It is very interesting to see and to discuss all this.
Virtual life flows similar to that of a real office when people work next to one another. Interest-based communication forms connections with colleagues. They become closer and get to know each other better.
Cordial relationship with employees
We view our employees like we do our clients, and understand the importance of keeping them happy. That’s why we constantly introduce things that will improve their working conditions.
- Individual approach to additional health insurance. We bought policies for everybody in the past, but really, they were used by less than one third of people. Now, we allocate a fixed deposit that employees can use at their discretion: membership in a fitness-centre, medicine, or that very additional health insurance.
- “Event-related social support package”. Each month we pay for different hobbies: we compensate lifts for skiers in February, car washes in April, and in December, our staff members with kids get prizes in New Year contests. Thus, the event-related social support package covers 80% of employees during the year.
- Summer corporate party. Each year we arrange a great corporate meeting. People come for 3 days to have fun and to communicate with each other. The company pays the way to Kazan for all employees – it costs about 1,000,000 rubles (approx. 13,000 euros).
- Review of wages. Every 6 months we hold professional meetings where we discuss achievements, plans and review of wages.
- Material assistance. We pay a premium for wedding parties and at childbirth.
- Personal massage therapist. Each week, a massage therapist visits our Kazan office. Our local employees especially like to boast about this to their friends and acquaintances.
To get a better feel of our staff, we use a “Mood barometer”. Every six months, we conduct an anonymous survey in our divisions. People share to what extent they are satisfied with their wages, working conditions, and provide feedback for their supervisor. The survey highlights bottlenecks that we try to analyse and eliminate.
For example, two years ago, many of our staff did not know that they could increase their income by doing some additional useful work for the company. Translate foreign articles, teach young colleagues, chair internal seminars – we have all in all 7 ways to earn more. We posted an article in the blog where we described the details of all options of additional income. Fresh surveys show that now 90% of employees know about these side jobs.
Every year we become a bit better in our relationships with employees. It’s nice to hear that people speak well of Neti in the jobs market.
Experiments with holacracy
The idea to implement holacracy appeared in the company in 2016, when the head of the Microsoft Dynamics AX department left us. We only managed to find a replacement for him 2 years after. During this time, we had a chance to feel the pros and cons of self-organising teams.
While there was no head of department, almost a third of AX department staff left the company. Although holacracy provides more freedom in business-related decision making, the energy of employees diminishes if it is not directed anywhere. That’s why there should be a leader who monitors the situation, encourages people and determines the strategy of the department development. When such a person appeared, the AX division began growing again.
After that we temporarily cancelled holacracy at AX. First you should get the department off the ground, and only then can you experiment with teal strategies. Once the head of department put all the right processes in place, the AX department was able to continue operating under Holacracy again. We continue to use self-organising teams in 1C, HR and Sales, although things do not always work out great.
One of the challenges lies in that our holacracy does not apply to all employees. Some programmers work 8 hours per day on clients’ projects without even communicating with their colleagues. We’d like to involve them in discussion of the company’s affairs as well. But we do not yet understand how to do this efficiently and doubt whether it’s worth consuming their time with such issues.
For the first half of the year, we administered invoices and documents in Word and Excel. When the amount of information increased, we started to look for specialised programs. We wanted to know for how long an employee worked and on which project. That is why we chose solutions for programmers that allow recording any and all activities. We tried several alternatives, compared paid and free programs; and in the end stayed with Jira.
In Jira, apart from registration of tasks and hours, there is document turnover, contracts signing and documents sending. Here, feedback and complaints of clients and employees come into account; the “Box of ideas” project works in order to improve the company and auxiliary projects.
We integrated Jira with 1C in order to see figures. Tasks and hours are automatically uploaded to 1C. 1С calculates wages, overtime, as well as economics of projects, profits of divisions and employees. At the output we get detailed information for business analysis: figures, reports and charts in any context.
In addition to Jira and 1С we use:
- Trello boards for small projects
- Google Drive with documents archive for working together
- Skype for communication with clients and business meetings
- CRM and HRM systems for client management and personnel management
- holaSpirit system for work according to holacracy principles. It represents the company structure, helps create and moderate projects, and organise business meetings and record their results.
- Corporate social network Yammer. It resembles Facebook, exclusively for personnel. Yammer allows everything that people usually do in social networks: create communities, post photos, comment on posts, like publications and conduct surveys.
Working with such number of programs is a bit exhausting. They are all autonomous and sometimes information is duplicated in different places. It would be great to combine all that functionality within a single system, but it seems hardly possible.
Registering of downtimes
Our downtimes are lost money. If we have downtime on the project, we may invoice these hours, having discussed the situation with the client. If downtime is on our side, we lose money. We learned to monitor and to manage downtimes in order to minimise such loss.
In standard timesheets, downtimes appear post factum. If an employee has downtime today, his supervisor will get to know about this only tomorrow, and there is nothing to be done with it.
In each of our departments, we have a special Skype-chat for registering of downtimes. There are no other records in it than “Downtime +” and “Downtime -“. When an employee registers downtime, one can involve them for solving other business-tasks – the company benefits from that.
Concurrently, an employee enters his downtime into Jira. In the comments, they write about the reasons of its occurrence. Thus, we analyse dynamics of downtimes for any period of time.
We follow advanced technologies of development and know classical and modern ways of project management. Depending on the situation, we take the approach of management that will yield a faster and cheaper result.
Agile and classical management
In long-term projects, we sometimes apply a flexible Agile approach. Certainly, not every client is ready to depart from strict technical tasks and fixed budgets. That’s why we work a lot in a classical manner, including some elements of interactive development. We explain, where it is possible, that thanks to a flexible methodology the clients will get a high-quality solution. But we do not insist.
Four years ago, an Estonian client came to us with a large project. Preliminary evaluation showed that the work would take hundreds of hours. The client was not ready for such huge expenses and we agreed to go step-by-step. We develop one capability – send it to the client – the client accepts – we then take the next capability. Two months later a step-by-step approach evolved to Agile with 3-week cycles of iterations and development. The total volume of completed tasks has exceeded 500 hours since then.
In short-term projects the admixture of Agile is negligible. Mostly we explicitly monitor deadlines, work according to technical tasks and meet limited budgets.
Agile sounds fashionable, but we choose a reasonable approach to development. The main idea is to be of benefit to the client; and with which method is of secondary importance.
The client’s control
We register hours in the client’s system or provide them access to our Jira, where programmers enter time worked for their projects. Employees constantly update tasks’ status so the client can know, at any moment, how the work goes on and what is next. For convenience, we go to any channel of communication the client wants: Skype, Email, Telegram, other messengers.
If anything goes wrong, developers do not await questions. They report unforeseen difficulties and together with the client think about the solution of tasks.
Western and Russian projects
We work both with Russian and Western customers. For the sake of a witty remark, we could say that Russia and the West are worlds apart, but it is not true. Clients are much alike, and project management is too. And proactive result-driven developers are equally needed everywhere.
The only difference between Western and Russian clients is the English language. Language barrier does exist. That’s why our work with western projects became more vigorous when a salesperson and a project manager with native English joined our team.
We are so sure in success of remote format of work that we plan to grow six times in number of personnel in the coming year. This is an ambitious goal, but we believe in its reality!
People come to Neti not to do hours for salary. They fulfill themselves and grow in what is important for them. Our aim is to give them faith in the company and freedom of development.
It does not really matter which method of management to use: holacracy or anything else. People are attracted by the possibility to change the world around them. The future is in the companies which employees will be able to improve their work independently and without boring bureaucracy. The sooner such culture is formed within the company, the richer is its future.