The redefinition of T&M: Team & Method

Last week, someone who read my article on the agile company asked me how we at AOE manage to live this agile culture and also manage it economically. The project business is known to be tough, driven by deadlines and stints. Self-determination and corporate democracy don’t fit in at all. That’s true, of course. So it’s time to explain why we don’t see ourselves as an agency and why we only see projects as an emergency solution. And what our business model is and why I think it is groundbreaking for the digital economy.

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The truth is, we’re not actually that good at projects. Of course, it’s not that we don’t do successful projects. But if you compare us with companies in the US, for example, who are able to complete 2-3 medium-sized (100 PT) Magento projects per month, we have comparatively little knowledge of fixed-price projects. And that’s ok.

Not projects – but customers

Our business model is not primarily based on projects, but on customers who deploy permanent teams for their strategic platforms over a longer period of time. And we are leaders in this and can do it like no one else in the web development environment.

That’s why we are not looking for projects, but customers. Clients who are considering whether they should set up an internal web development department or find better support from external partners. Customers who build large, strategic platforms and release new functionality every two weeks after the initial launch of a minimal viable product.

For us, a project is therefore only ever a bridge to a long-term relationship with the customer. It is a first joint attempt, which is designed from the outset to allow the project team to continue working for the customer after the project to the same or a greater extent.

While we were rather hesitant to communicate this to our potential customers until a year ago, our strategic mindset has now matured. Two weeks ago, I visited a potential customer with Kian Gould, our CEO and founder. After spending a morning talking to the client representatives about their requirements, how we would put a team together, that we would only accept T&M as a contract and that we thought they should hire a team for two years, Kian blurted it out:

“You know what? Honestly, we hate projects and we are not really good at doing them. Projects at this scale, lead to bad products, to a lot of frustration and a very long time to market. This is not what you want. What you want is a team going places for you and iterating on a project efficiently. Launch, test, correct etc…

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That was pretty bold from a traditional sales perspective (after +10 days of preparation, 4h flights and a more or less sleepless night in the hotel room…), but it was honest. And after a second of silence in the room, which felt much longer, the customer went for it. And we introduced him to our concept:

T for Time Team

We believe that a good team is the most important success factor for a project. The team must have the right skills, it must take responsibility and be there for the customer with enthusiasm. But it must also be able to have a life outside of work and cultivate a good team spirit. It’s not something that can just be thrown together and it’s not something that can be perfected in 3-4 months. The best teams at our company have all been together for at least 6 months. What we see in terms of output, quality and velocity is without comparison. They don’t work on a project with a fixed timing and scope, but continuously on a platform. The customer decides how this is further developed, and it is not uncommon for the team to be involved in the decision to a certain extent.

M for Material Method

The team model only works if you work with an agile method. And this is where our second strength comes into play. We work exclusively agile according to Scrum. Our teams (no larger than 8 people) work on user stories from the backlog in sprints defined together with the customer and generally release new functionality every two weeks. This enables the customer to decide for themselves which features and which pace they want to go at. We believe that agility is a key success factor in digital transformation. We give this to our customers with the “Method” and of course we train the customer and make sure that agile is done properly, because we have hardly ever seen real agile development, mostly we see waterfall with stand-ups and retros.

Redefinition of T&M

In every traditional Internet agency, billing according to T&M, i.e. time and material, is the absolute ideal scenario. The idea is that you can simply bill everything and a project will automatically be profitable. To be honest, I think that’s rather romantic. The client usually understands this to mean billing on a time and material basis with a cost ceiling. The agency is held accountable in exactly the same way as with a fixed-price contract.

Team & Method is not a carte blanche, nor should it be. We want to be successful with and for the customer. This is always a joint effort. Rather, Team & Method enables the customer to develop large and complex software products while benefiting from the advantages of a well-coordinated team and clearly calculable costs. We simply offered the customer mentioned earlier a team of 8 people for a period of 18 months. This is the time frame that we consider realistic for implementing the product in all release stages.

It is unlikely that he will do exactly that with these 2800 person-days. Instead, the customer will find out along the way that other features are more important than those set out in the original specifications. And thanks to “Method”, they will also be able to implement them. Without any contract renegotiations, change requests or long, drawn-out planning meetings. He will simply do it with the team. And save money in the process. We know from experience that in traditional fixed-price projects, a team of 6-8 people needs one person almost exclusively for contractual agreement and coordination. This time is completely saved in the “Team & Method” model and is available for actual implementation.

Pioneering business model

Many people will say that’s not possible for us, we don’t have any major project requests. That’s true to a certain extent, of course. A new team always needs a certain storming phase. But that’s no different in the traditional project business.

For us as a software service provider, this business model is a win-win situation. The long-term contracts give us much more stability in our business than our competitors. By focusing on customer business instead of project business, we build long-term customer relationships. A team that brings a lot to the customer is very reluctant to leave. Basically, this is the driving force behind our strong, above-average growth in recent years. And quality, unconditional quality.

Nevertheless, I think that our model can be groundbreaking for the entire industry. There is far too much quick & dirty and far too many employees who get burnt out. The customer is always the one who suffers, because the agency somehow manages to remain profitable and the employees simply change jobs. But the clients fall by the wayside. With pale projects, solutions that cannot be expanded, insecure platforms. And this at a time when digital competitiveness usually means or will mean everything.

Win-win-win situation

I think the model is also groundbreaking because it always creates three winners. On the one hand, the client, who builds good platforms with the freedom of their own team, the employee, who does exciting work in a good social environment, and the agency, which can operate in a much more economically stable way.

I am convinced that this model could also be implemented well in agencies with smaller clients. After 10-20 years in the project business, such a fundamental change is difficult. For us at AOE, I can say that we are well on the way to achieving this change.

(Originally published in English on www.aoe.com)