could be spared in any way.
Most IT service companies, which have usually produced services by responding to specific needs of diverse and varied clients, are called at some point in their existence to ask certain questions related to the sustainability of the classic service company model, when the age of maturity arrives and their need to move from the status of a young company to a champion delivering services to a multitude of local and international clients is born.
It is indeed very difficult to grow exponentially when you have to wake up every morning to respond to varied service requests, expose yourself to client whims, close sales, proceed to development and deployment, and then, from the following year, the maintenance of previously developed solutions.
The immediate solution to grow seems to involve expanding the client portfolio, a necessity to diversify and expand geographically to open new opportunities for the company. This de facto induces a need for all-out recruitment, and the urgency of knowledge management not only for the company itself but also for these clients. A question that arises for IT service companies illustrates this reality: “How to manage the multitude of new clients, keep the memory of old projects, even when each of the solutions has little common ground and shares few software modules or almost no functionality?”. This is accompanied by another even more crucial one: That relating to the management and survival of the relationship with the Client when a critical resource working on many projects happens to leave?”
“An SSII or IT engineering services company is a service company expert in the field of new technologies and IT.”
In the early years of a service company, it is crucial to ask the question of the sustainability of a business in which one provides a multitude of different services over time. This is the question to which the major SSIIs that are Accenture, CapGemini, Octo, as well as large consulting firms have managed to find an answer that varies according to each of their experiences. But not everyone can be Deloitte, Boston Consulting Group, Linagora or Octo Technology.
Reality must be faced: IT engineering service companies (network deployment, maintenance, software development on demand, integration) are destined to be at best medium-sized companies, because, forced to start essentially from scratch for each new different service rendered or each new client to satisfy, they reuse pre-existing resources only slightly and are rarely able to achieve zero marginal cost of production, the mandatory path to scalability.
The necessity to transform, or even specialize
This evidence established, the desire to grow and become an international champion in digital de facto calls for a profound transformation of the activity.
The most prosperous companies in digital are characterized by a constant: They sell to their clients, whoever they may be, for a specific business sector and a clearly identified need, a product or a service, which does not vary regardless of the economic size or functional specificities of the client.
Clearly, they are now the ones leading the game. They are part of an industrial approach, which aims eventually to achieve the zero marginal cost philosophy.
Read also: E-commerce in Africa, does the Jumia model work?
In an on-demand service company, the thousandth service rendered has a price determined by the complexity of the task, the quality and the price of the human and intellectual resources involved in its production, while in a tech startup that aims to become a champion or a unicorn, the service rendered to the thousandth client tends to have zero production cost. This is the theory of marginal cost, which by extension means that as the number of clients increases, there is less work to accomplish per client, and the profit per client is higher.
Let’s admit it, this is not only disruptive to common understanding but totally opposite to the model of IT service companies. Integrating the desire for zero marginal cost into the transformation of a digital service activity to move from a young company to an international champion and then to a unicorn is a very complex matter, which must go hand in hand with the desire to find several million clients consuming this standard service whose production cost becomes almost zero to infinity.
How to move from cost-based service to a service with near-zero production cost?
Let’s be clear: It has never been easier than today to have access to millions of potential clients in the age of the internet and the platform economy, but it has never been easy to build a startup, and even less so to transform it into a unicorn!
The mythological word is moreover aptly chosen, because to cite just these examples, INRIA has in 30 years produced a hundred startups, none of which has become a unicorn or an international champion, and Africa is still looking for its first unicorn twenty years after the advent of the Web.
Building a startup requires focusing on a specific trade, field, or usage, which can be technical (big data for example) and doing only that! It involves designing a unique service or product delivered in the same way to clients with the same need. Choosing a trade, a usage to digitize, a need, understanding it, and then creating a solution that corresponds to it can take a long time despite methods such as Lean Startup which are supposed to help the business leader succeed in their entrepreneurial adventure.
Read also: Startup economy: is Africa ready?
This can be greatly facilitated when employees come from an on-demand service company. They can bring to the new adventure their experience and their ability to deliver the best technical solution in record time, but they will have to learn to master new but critical practices and concepts in the platform economy: user experience, SEO, digital marketing, conversion, growth hacking, continuous deployment, monetization, time to market, to name but a few.
All of this takes time, requires focus, personal involvement, and significant financial investment; and it is in this transition that the trap reserved for startups and any process of transforming an on-demand IT service company into a startup can be found.
This trap is materialized by a recurring question today in the startup world: “How to maintain a competent and united team, make significant investments in human and IT resources at the very time when money is not yet being made, when the need is still being studied, the solution designed, and a business model tested?”
Here again, a recent life as an SSII provides part of the answer:
Maintaining an on-demand service delivery business unit in parallel can represent a viable solution in a world where funding for startups is not available in Africa.
Or even making a product developed on demand, for a universal need of one of its clients, a scalable service accessible via an online platform. This approach can be interesting in more ways than one because it guarantees an early adopter who pays, from whom the company can learn and ultimately hope for usage feedback in real situations.
Once this trap is passed, there exist in the very process of building the startup a few others related to the innovation process.
They essentially range from:
- complacency in the principle of permanent iteration,
- underestimating the beneficial effect of the unexpected,
- unwavering attachment to the MVP principle,
- erecting the principle of continuous development into a growth scheme,
- the race for funding that makes you miss the time to market,
- iteration on a pre-project under different conditions from those of the final product,
Without forgetting:
- the refusal of the maturation time for usage or adoption by the user,
- the fear of failure, the blind and exclusive trust given to user feedback, through the refusal of the value of invention which takes time and which is protected (for non-disruptive solutions in a search for quick and easy gains)
- and the unwavering attachment to methods that exclude from the design process of an innovative product the part that must irremediably be left to the unforeseen and adaptation.
These traps seem numerous but they have paved, in Europe as in the United States, the road that led GAFAM and NATU to the unicorn statuses that we all envy, and made them the international champions who haunt our nights and our dreams.
