JAMK University of Applied Sciences Jyväskylä guest lecture about running software business

1. RUNNING SOFTWARE BUSINESS
IN PUBLICLY LISTED COMPANY
JANI KYKYRI

2. AGENDA
TODAY’S TOPICS
▸ Bio
▸ Solteq Plc introduced
▸ Different business models
▸ Key processes
▸ Tools

3. BIO
JANI KYKYRI
▸ 15 years experience selling, delivering software &
services in mid-sized & large technology companies
▸ Companies: Landis+Gyr Oy, Samlink Oy, Digia Oyj, Yomi
Oyj & JYU
▸ Currently leading Customised Solutions team @ Solteq
Oyj - 27 experts and growing
▸ Targeting to recruit 7 developers during 2018!
1995 2000 2005 2010 2015 2018
Started
MSc @ JYU
First
SW developer
job
Graduated
MSc @ JYU
Started as
Project
Manager
Account
Manager
Sw Business
Portfolio
Manager
Sw Business Portfolio
Management for multisite
teams
Innovation Management
Technology Transfer
Business Unit
management
Services
Product
Management
Business Unit
management

4. Helsinki,
Jyväskylä,
Tampere, Kuopio,
Seinäjoki,
Stockholm,
Karlstad &
Wrocław,
Copenhagen & Oslo
63M€
Revenue
600
Employees
5
Countries
We are a Nordic IT provider and
software house that specialises in
digital customer engagement.

5. We provide digital services
from insight to implementation
and beyond.
World-class digital
solutions to deliver
outstanding
customer experience
SAP,NAV etc.
POS, LS Retail,
smart retail &
hospitality
solutions
eCommerce, PIM,
consulting,
Mobile & web services
Digital marketing, UX,
design, loyalty
BI, Utilities sector,
AI, IoT
Business solutions
Digital engagement
Store solutions
Digital commerce
ERP
Incubator
AI,
Blockchai
VR/AR,
Robotics

6. DIFFERENT BUSINESS MODELS
MOST COMMON SOFTWARE BUSINESS MODELS
▸ B2C
▸ Licence based, Software as a Service, Transactional,
Advertising
▸ B2B
▸ Product based business (traditional license, SaaS, …)
▸ Mixed
▸ Services business
WE FOCUS SERVICES BASED
SOFTWARE BUSINESS

7. SERVICES BUSINESS
“SELLING EXPERTISE”
▸ Typical delivery models
▸ Project - somewhat fixed scope to
deliver agreed functionality or
service
▸ Continuous service - either agile
development or maintenance
services
▸ Consulting or resource hiring -
expertise on hire
▸ Business models
▸ Time and material, based on effort
estimations - lowest risk and
margins
▸ Fixed fee - potentially higher
margins, but also higher risk
▸ Above mentioned with Service Level
Agreement (penalties & bonus)
▸ Contracting e.g. business design, software design, development,
testing, maintenance, & operations to solve customer problems
with software solutions
WAYS TO IMPROVE MARGINS:
BUZZ, QUALITY SYSTEM, SECURITY FOCUS, PROMOTING DOMAIN SKILLS, CERTIFICATIONS,,..

8. SERVICE BUSINESS
“MIXED” - SELLING EXPERTISE AND PRODUCT
Different ways to specialise and try gain better margins:
▸ Specialise in selling third party product, and customise it
e.g. Magento web shop based deliveries
▸ Develop own product, license it with customisation -
“Develop once, sell for many”
▸ Sell 3rd party licenses and improve margins with license
revenue
DESPITE POTENTIALLY BETTER MARGINS SEVERAL PITFALLS:
POOR PRODUCTS, EXPENSIVE LICENSING, POOR SUPPORT, …

9. THERE IS ONLY TWO FUNDAMENTAL PROBLEMS IN B2B
SOFTWARE BUSINESS:
1. SALES (LACK OF IT)
2. DELIVERING HIGH QUALITY SOFTWARE PROFITABLY
AND ON TIME
USUALLY COMPANIES ARE STRUGGLING WITH BOTH
Vanha viidakon sanonta
SOFTWARE BUSINESS

10. SERVICES BUSINESS
KEY PROCESSES TO MAKE IT PROFITABLE
Process Description KPI
Sales
Customer acquisition, creating leads, proposal and
quoting. Closing deals.
Leads (nbr)
Opportunities (eur & nbr)
Offers (eur & nbr)
Order base (eur)
Delivery
Software and service delivery process, developing high
quality solutions. Can be lean, agile, or traditional.
Invoicing, escalation management and delivery
approval.
Realised hours
Revenue & costs (profit)
Average hour price
Quality metrics
Resourcing & recruiting
Planning and implementing service and project
resourcing with skilled experts onetime. Transferring
people and competences efficiently to new domains.
Individual billability rate (%)
Unit level billability (%)
Attrition rate (%)
Offering development
Creating productized services offering to improve
competitive position by increasing value of services or
reducing cost of delivering it.
Reusable components
Productised standard services
Product based sales

11. TOOLS

12. TOOLS
EXAMPLE TOOLSET NEEDED TO SUPPORT PART OF PROCESSES

13. TOOLS
TRACKING SALES FUNNEL WITH CRM
OPPORTUNITYLEAD OFFER ORDER

14. TOOLS
FORECASTING REVENUE AND COSTS
▸ Usually 12 months running forecast of revenue and costs on monthly level
▸ Most important things to influence estimates: Order base, identified sales cases,
delivery quality (reclamations), subcontracting, poor effort estimations, ….
0
35
70
105
140
APRIL MAY JUNE JULY
Order base Identified sales New sales
Budget target

15. TOOLS
RESOURCE UTILISATION & FUTURE ALLOCATIONS
▸Team billable work utilisation and optimisation important to maintain profitability
▸Future resource allocation estimates and scenarios provides input for on time recruitments

16. TOOLS
EXAMPLE OF SOFTWARE DELIVERY MODEL

17. SUMMARY
RUNNING SOFTWARE BUSINESS IN PLC
▸ Excellent strategy, vision, products, services and people is
needed —> But without systematic execution business won’t
bloom
▸ Technologies change over years and software is always
implemented by talented individuals - but on high level
business steerings happens around the same couple basic
processes
▸ You need to master a lot of more that just coding e.g. basics of
corporate finance, SW development processes, sales support,
team work, …

18. QUESTIONS?
JANI KYKYRI
JANI.KYKYRI@SOLTEQ.COM
+358 50 566 0354