Since May 2010, the Swiss ERP manufacturer has been developing the new generation of its solutions in Ho Chi Minh City. Why and how the Swiss software company produces in Vietnam was explained to us by Development Manager Daniel Gauch on-site.
"Hopeless." This is how Development Manager Daniel Gauch describes the attempt to recruit, within one year, enough (approximately 30) software developers in Switzerland to develop the new versions of Soreco’s solutions. According to Gauch, Soreco simply does not have either the recognition or the financial means in Switzerland to hire the necessary specialists. We met Gauch in the Vietnamese “software factory” of the Lucerne-based company Axon Active, where 35 mostly young people are already working for Soreco.
In May 2010, after an attempt with partners in Ukraine showed little success, Soreco started with a team in Ho Chi Minh City. However, Soreco does not operate classic offshore development, says the Development Manager. Tasks such as recruiting employees, establishing the company, complying with laws, creating a good working environment, and much more are taken over by Axon Active. Unlike project-based offshoring, Soreco also formed mixed Swiss–Vietnamese teams that work on new modules of the Soreco software families according to the SCRUM principle. Whether the goals were realistic will be shown in the near future, since the first additional modules in the areas of recruiting and skills management are scheduled to be delivered to customers later this year.
What does the decision to develop future versions of Soreco’s business solutions partly in Vietnam mean? How does the profile of developers in Switzerland change—and how does the life of the involved software specialists change? Read our conversation, which took place last week in Ho Chi Minh City.
Offshore and the Consequences in Switzerland
I have experienced an impressive little software factory here in Ho Chi Minh City. Has Soreco now abandoned development in Switzerland? Have you cut back on developers?
Daniel Gauch:In the ERP area, there previously was no Java development in Switzerland and, therefore, we are not relocating anything. The maintenance and further development of existing products—which were built with “CA Plex” (a development environment from the iSeries world)—remain in Switzerland. Moreover, software development does not take place solely with those who write code but also where market needs are analyzed. That has to happen close to the customer, i.e. in Switzerland.
We are developing a completely new technology stack here in Vietnam. Our first team here is building an additional module in the recruiting area. Overall, we are not addressing the core products first but rather developing relatively independent additional products. For us, the attempt to build a development center with perhaps 30 people in Switzerland within just one year would be almost hopeless.
Then one might accuse Soreco of having delayed the technological leap for too long so that now one practically has to develop on the other side of the world?
Daniel Gauch:No, we have not missed anything. The situation was similar a few years ago, and I believe we are well within the cycle in which the software should be renewed.
The old versions of Xpert.Line will eventually be replaced. Will there be no developer positions in Switzerland, or only a few?
Daniel Gauch:The replacement will not occur anytime soon. Even today, there are customers who work with the predecessor versions of Xpert.Line, that is, with green-black screens, and this software is still being further developed. We still need people who are familiar with the former development environment “Synon/2E”. “CA Plex” will certainly remain a topic for another 10 years.
A 55-year-old programmer might say he wants to work with “CA Plex” for another 10 years. But a 45-year-old must consider whether he should learn to write requirements for Vietnam?
Daniel Gauch:One option could be to set the goal of becoming a “Product Owner” (according to the SCRUM method, the “PO” is the interface between the user and the development team). Alternatively, a developer in Switzerland could make the leap into the Java world. Because the products developed today in Vietnam will in the future be partially further programmed in Switzerland, for example in customer adaptations. Also, a large part of the software for smaller, customer-specific projects will never be developed offshore. But there is no rush for the developers to decide. There are various paths, and our world will not change in a few months.
There are perspectives for programmers toward business—as a PO—toward the maintenance of existing solutions, toward new technologies like Java and Xpert.ivy, or toward customer projects.
What should someone do who does not like dealing with customers and does not want to engage with new technologies?
Daniel Gauch:You cannot create software merely out of a love for technology; it has to provide benefits to customers. Therefore, developers must deal with the customers.
The SCRUM programming method seems important for your offshore project. Why is that?
Daniel Gauch:Feedback is crucial in offshore development. With SCRUM, we receive feedback every two weeks through a working product. In my experience, the waterfall approach—where you specify all the requirements for software that you want to have in a year all at once—does not work. I do not think that the approach works in Switzerland, and certainly not offshore.
Especially when there is a great distance between the developers and the customers, one must be able to continuously sense what is happening. Agility is also important to me, meaning that the requirements for the new software can change over time. They change precisely when the customer sees the application. Then he can indicate where he would like changes and additions.
Let’s talk about money. How much cheaper is development in Ho Chi Minh City compared to Switzerland?
Daniel Gauch:When you include the positions in Switzerland, travel, and communication, a team here costs about 40 percent of what a team in Switzerland costs. However, only about 25 percent of the budget of a software project that we develop in Vietnam is actually spent here. The majority of the value creation also takes place in Switzerland through offshore programming.
What difficulties and hurdles did you encounter in the Vietnam project?
Daniel Gauch:You have to sell this project properly in Switzerland. It is about seizing an opportunity that is necessary for the company’s very survival—and it isn’t just about money. Yes, it is cheaper, but we saw no alternatives. And you have to make it clear to people back home that jobs are changing.
Have people in Switzerland quit their jobs because of “Vietnam”? And conversely: What are the biggest problems here in Ho Chi Minh City?
Daniel Gauch:There were some disturbances. However, we were able to reduce the discomfort through open communication. For example, we made a short film in which you can see that colleagues who are very close to the company are working in Ho Chi Minh City. Here in Vietnam, it is difficult to find developers with many years of experience. Many larger companies have set up branches here and are looking for people. You have to respond to that. For instance, we need—and would welcome—support from Switzerland here in Vietnam for fundamental architectural issues.
Does that mean that the employees in Switzerland must be willing to travel a lot and spend long periods in Vietnam?
Daniel Gauch:From our collaboration with Ukraine we have learned that the willingness to travel is, in any case, a prerequisite for offshore development.
To summarize: What are the most important prerequisites for successful offshore development?
Daniel Gauch:First: an agile approach.Second: being on site.Third: integrating the development departments here (Switzerland) and there (Vietnam)—there must be no “us” and “them,” only a “we.”Fourth: daily communication.Fifth: the employees in Switzerland must be willing to communicate on equal footing with the people here. The model does not work from “above.”
What are your goals with the engagement in Vietnam? Where do you see yourselves in 2015?
Daniel Gauch:I want to expand the competencies of the employees in Vietnam. Moreover, I want us to be capable of executing larger customer projects here.(Conversation: Christoph Hugenschmidt)
(Foto: hc. Welche Tagesszeit haben die Kollegen in Bolligen?)
published on inside-it.ch https://www.inside-it.ch/post/exklusiv-soreco-baut-entwicklung-in-vietnam-auf-20110621
Translated from German: https://www.axonactive.com/post/soreco-in-vietnam-das-grosse-interview