This document introduces TOCAT (Theory of Constraints Applied to Teams) as a way to implement Theory of Constraints principles to increase productivity and profitability in IT service companies. It discusses how TOCAT restructures companies into autonomous teams, tracks billable hours and bonuses for employees, and keeps team and company finances aligned. Implementing TOCAT revealed hidden issues and inefficiencies, and engaged employees who now understand goals. The company is developing a commercial TOCAT software to extend its benefits to other types of service companies.

1. TOCAT
introduction

2. What is TOCAT
TOCAT is a way of Theory of Constrains
implementation into IT services business in
OpsWay opinion. We believe that TOCAT
processes and automation could dramatically
increase your profitability through creation of
local operational excellence which can double
productivity of your employees.
Also, TOCAT reveals your constrains – not
effective production employees or even
production structures inside company.

3. The issues we’re solwing with TOCAT
For company:
• Boost CashFlow of your company
• Boost financial incomes of your company
• Minimisation of production debts
• Be faster than your competitors
For employees:
• Clear vision of what you should do to earn more
• Realtime feedback about your results
• The reasons to work as a team and not as an individual
• Be fast and effective

4. The main result of TOCAT
The VALUES are becoming synchronised for Client, Employee,
Management of IT company.
Client wants to finish the project ASAP
Developer really care to finish project ASAP
PM wants to finish project ASAP

5. TOCAT step 1: creation of teams
Your production have to be
restructured to several teams
with following rules:
• One team – one manager
• Not more then 10 persons
inside team
• Manager earns bonus (5-15%)
from team first margin
• Independent budgeting and
management
OpsWay 1
OpsWay 2
OpsWay 3
Central
Office
OpsWay 4

6. TOCAT step 2: personal bonuses
Let’s say your ideal Developer have to earn 5000 Units (U) gross
and create of 130 billable hours per month. This means that your
ideal developer have 38U hourly rate.
Let’s say that you need to have 50% of first margin. It means that
inside this model your minimal rate to your customers will be
76U – good to know 
Suppose you have junior developer with gross salary 2000 Units.
Tell him that starting from today he can earn up to 5000 Units.

7. TOCAT step 2: personal bonuses
Your developer with 2000U gross and 21 working days in a
month costs you 95U per day.
With internal rate of 38U he need to close just 2.5 billable hours
per day to get its salary. If he will close more – this means he is
closer to “ideal developer” and current salary is not relevant to
his productivity.
Make a daily balance for each developer:
Salary – XUnits/day
Values created – Y hours * 38U
Bonus balance: (Y hours * 38U - X) + Balance statement – this is
the bonus he can earn today

8. TOCAT step 3: team bonus balance
Team balance – is a summary of personal balances of team
members. Team balance – this is the maximum what Company
can pay as bonuses now.

9. Confused?  Better to see an example!
Play with Excel and see
formulas here:
https://drive.google.com/file
/d/0B1-
99de0PTKXaWV6eVFiOERrW
Wc/view?usp=sharing
- 200.00
- 100.00
0.00
100.00
200.00
300.00
400.00
1 2 3 4 5
Developer 1
Developer 2
Developer 3

10. Main rule
Task is done = accepted and paid by customer

11. TOCAT
is already integrated in OpsWay

12. We made a video presentation to employees

13. We made TOCAT billing pilot using Zoho Creator

14. … integration with Redmine

15. And we’ve got first results after
2 weeks

16. TOCAT showing lot of hidden issues
• We’ve found that around 10-15% of job were provided for
free to clients and decisions were made by developers and
not managers
• We’ve found some of employees can’t generate turnover even
for 10% of their salary (this was hidden before thanks to their
communication skills)
• We’ve seen that some of our teams have very poor workload
even they’re profitable and the number of hours sold is bigger
then number of hours team have
• We’ve found that using of Scrum is dramatically important for
teams balances (iterations of acceptance and payments – only
one way to keep balances positive)
…. and much more

17. Developers show understanding of goals!
“What I can do if my work is finished, but customer still didn’t
accept my project?”
“Can I participate in interview of new developers, I don’t want to
have negative balance due to wrong HR decisions”
“Why my balance is negative? What I did wrong?”
“I don’t want to have bigger salary - it will give negative impact
to my balance”
….
This is a dream of manager – have such level understanding from
production staff side!

18. Basic Workflow

19. Project Manager have to create an Order
Invoiced Budget – this is the budget
sold to customer
Max Allocatable Budget – this is the
budget allocated to team
(Invoiced Budget – Max Allocateble
Budget)/Invoiced Budget = First
Margin Rate

20. Create financing for tickets
You can provide finance using allocated budget of your team
orders. TOCAT is integrated with Redmine for simple order creation
and budget allocation.

21. Accept the ticket
After ticket is closed and confirmed by customer – Project Manager
have to “accept” it in TOCAT and set resolver of this task.

22. Paid orders
Your bookkeeper have to set the order as paid after money
received to your Bank account.
After this action for all accepted tickets linked to this order will be
created following transactions:
• Update of “resolver” balance
• Update of team balance

23. Salary payments
TOCAT is integrated with shiftplanning.com. Each time approval in
Shiftplanning creates salary transaction inside TOCAT. Each salary
transaction creates:
• Update of bonuses balance
• Update of team balance

24. Commercial version
we’re developing

25. Single Tenancy Basic Architecture
TOCAT Client DB
TOCATAPI
UI for Service
companies
Reporting DB
DASHBOARD

26. Features
• Extensions for: Redmine, Jira OnDemand, Jira Server
• Responsive User Interface for non-IT companies
• Extended reports using Business Intelligence tools
• Integration with QuickBooks
• Basic TOCAT features
• TOC analysis tools (constraints analyses, employees
comparing, teams comparing, KPIs analyses, sales
buffers analysis)
• TOC forecasts (CashFlow forecasts, Workload forecasts
based on team velocity)
• Management alerts based on pre-setted indicators

27. We know that you’re still having
more questions then answers .
Write me to semor@opsway.com