„Investing in software development is the same as any other investment. You need to take good care of it, be there and have a good partner with whom you get along and who will guide you through the development. Forget about paper tenders.“
Tomáš Páral is the founder and CEO of Morosystems. He started as a programmer and worked his way up through the roles of architect, team leader and designer to the top job. He and his wife are raising 2 sons. And when he has a moment to himself, he can be found playing soccer or volleyball, hiking in virtually any of our mountains or abroad, or in the kitchen where he enjoys cooking Asian food.
Tomáš founded MoroSystems with two friends while still at university in 2006. Today he has over 130 amazing colleagues on his team, providing services and products to customers all over the world. They are targeting 250 million in sales by 2022. They are driven by their vision to change the way procurement and suppliers work together by 2026 because they see that they are failing.
We discuss with Tomas mainly the following areas of his interest:
🔸 What is the No Pasquil Agile initiative?
🔸 Where do procurement make the most mistakes?
🔸 What to avoid as a software vendor?
🔸 When does custom development pay off?
🔸 How to attract people even when there is a shortage of them?
BONUS
How to know you're (not) throwing money out of the window? (Czech only)
INTERVIEW TRANSCRIPT
Martin Hurych
Hello, I'm Martin Hurych and this is Zážeh. Ignition is the beginning of acceleration, and it's something you need to get moving from a place. By finding this podcast, you've taken the most important step for your acceleration, which is the first step. In Ignition, we share our experiences in B2B business, especially in sales, in innovation, in working with people, but also in other areas of corporate life. Today we will accelerate with Tomáš Páral, co-founder and CEO of MoroSystems.
Hi.
Tomáš Páral
Hi Martin, thank you for having me.
Martin Hurych
You're welcome. Tomas, tell us, how do you build an IT company of 138 people?
Introduction
Tomáš Páral
I started the company with my partner Standa 15 years ago, we wanted to develop software, first we did it as freelancers, and then we started the company. We told ourselves some principles based on freedom and responsibility that we wanted to build on, that what we promise is what we deliver, that we want to work with friends, that we want our reputation to be gold, that we don't want to have any processes and rules, but we want to treat ourselves as we would want others to treat us. We hold to those principles and I think that's why it's a joy, we're doing it in a circle of now 138 colleagues who share that with us, and I'm happy about that.
Martin Hurych
I just vaguely asked like that at the beginning because I was fascinated that you guys hadn't known each other for a long time. You and your partner met on a project and you were told that it would be good if you started a company together, which you did. But usually that's not enough to build a big company with almost a quarter of a billion in sales and 140 people on board. There's more to it than that, Thomas. Is it really about the principles?
Tomáš Páral
I would say yes, because we have tried to follow them, and from the very first project, we have been able to meet our customers' expectations, and we have had fun doing it together. We've always prided ourselves on doing what we do well, and so it just kind of wrapped around us through good customers, good colleagues, that it just kind of worked itself out. Of course, we dealt with a number of screw-ups, but our goal was ideally not to repeat those screw-ups, but to learn from them and make a difference. But, I guess it was that simple.
Martin Hurych
So come tell us what it is that you do at MoroSystems.
Tomáš Páral
Everything we do at MoroSystems is based on the thesis that when people work together, they get better results. By combining excellent teamwork, technology and know-how, we help people in companies collaborate and process data. We develop customized software and through information systems, transaction systems, process digitalization, fintech solutions we fulfill this goal. Today, we do this for customers all over the world.
Martin Hurych
Any narrower definition, you said fintech?
Tomáš Páral
We don't have a narrower definition at the moment. The majority of the projects that we do are just fintech, but the typical project that we can do is a customer comes to us, they have the know-how and they need to do software development. We take him into our team, we make the team collaborative, because that's the best way from our point of view we can deliver software, and we realize the fulfillment of his needs. The customer has the expertise, he participates in the development and we guide him through that and deliver a technology solution that fulfills that business need.
Martin Hurych
You are not only active in the Czech Republic, you also work abroad. How does it happen that you start supplying for eBay, for example?
Tomáš Páral
By chance, eBay has an office here in Prague and on January 2nd 2014, the manager of that office wrote to us that they needed to make a calendar to show the managers in America what they were doing here in Prague, and I replied to him that very evening. The next week I was in a meeting. When the competition called, we had already agreed on how we were going to do the whole thing. What emerged was a collaboration that has now lasted 8 years, where we supply eBay with a system that manages the marketing process across the globe from America to Australia, organising 2,000 people and running 20,000 campaigns a year that eBay sends out. So serendipity willed it, and we were instrumental in responding quickly while fulfilling what the customer needed from the beginning.
No Paskvil Agile
Martin Hurych
And now the most important thing, why we agreed to have you on the podcast. I was intrigued by the title, and I better get my glasses on so I don't spoil it: No Paskvil Agile. What's that?
Tomáš Páral
No Pasqual Agile is an initiative that MoroSystems and I founded, the primary purpose of which is to improve the collaboration between contracting and software development vendors, in a supplier-customer environment. What we see around us is that even in 2022, it's not working well, and the procurers are throwing a lot of money at systems that they don't need, that don't meet the business needs, and then the procurers are dissatisfied, and at the same time the suppliers are dissatisfied because they want to do their job well, and the whole system is not working right.
We commissioned a survey of 100 procurers and contractors in 2020, and we found that 13% of software project procurers are satisfied with the status of their projects. 86% of procurers have experienced that their projects were not completed on time, on cost or were not useful. We know from customer feedback that we're doing well, that we're getting results, that our customers are comfortable working with us, so we thought we'd talk about it publicly to educate the environment.
The idea beyond that is that basically every business is going to be digital, whether it's using digital processes or having digital products. The way I like to talk about it is that a radiator used to be just iron, but today a radiator is a digital or technological piece of work that has a hardware part and a software part, a refrigerator is the same, and for me what is needed is for the manufacturers of these devices to be able to develop software and approach it in the right way that software production should be approached.
Where do procurement companies make the most mistakes?
Martin Hurych
Well, let's look at that, because my target audience is largely smaller IT companies, and another part is maybe industrial manufacturing companies, where I see exactly what you're saying. At least everybody today is thinking about how to digitize processes in manufacturing or anywhere else. Let's break down where outsourcers most often make mistakes. You said that mistakes are made throughout the process. I would imagine that a person who has never had anything custom developed in their company or never digitized in their life and doesn't know what to expect, how to outsource, is going to make a bunch of mistakes. In your experience, where are those mistakes, what do you look out for?
Tomáš Páral
I would say that it starts with the fact that you need to approach the production of non-trivial software like you approach the production of hardware or the construction of a house. There are things that have been tried and tested 1000 times and can be approached as a commodity. Software development is a complex activity where, especially when something new is created, it is impossible to see all aspects at first glance. It needs to be handled from the beginning, at the same time it is an investment for the client and the investment needs to be taken care of. When you invest money, you usually look for a partner, a guide that you trust and that will help you. That's what I would recommend to anyone who doesn't have software development experience to find a partner to guide them through it.
Martin Hurych
How to know a good partner?
Tomáš Páral
Certainly not through a tender with the expectation of a paper offer where I'll choose the cheapest price. You need to approach it like choosing a partner, basically dating the partner for a while. Meet him, talk to him, find out how he thinks, what his vision is, his values, how he approaches working with a customer, go to his office to see how he lives there. Maybe do some kind of pilot project to test the collaboration, to see if it can actually work. Go to some customers, or have previous customers of that supplier come in for some reference visits or calls, and ask them how they found working with that supplier. Yes, it's a lot of work. It's definitely more work than doing a paper tender, but it's worth it in the long run.
When you want to spend units of millions of crowns, maybe tens of millions, which is what custom development costs, you're looking for a partner for a year, two, three, five, and you want to have all these things identified, mapped out and agreed before you go into that collaboration. In the course of a collaboration, to find out that you don't understand each other on matters of principle is terribly expensive and wasteful. I'm here today to make sure that sponsors don't waste money in software development.
What to avoid as an application supplier?
Martin Hurych
Breaking up with an IT company can be as expensive as a divorce at home.
Well, we have the procurement side. For your less experienced fellow IT contractors, for example, what do you avoid on their side when I want a job so that I don't burn my fingers?
Tomáš Páral
That's different. We start from the premise that the relationship between the client and the supplier should be balanced. Their joint efforts should lead them to produce together the best possible work, the work with the greatest added value. We don't want to spend the maximum amount of time with our clients talking about whether something was in scope or not, whether the budget needs to be increased or not. We want to create value, but that's not how everyone does it. That market then looks different, there are contracting authorities who just issue paper tenders where they want one price from a supplier based on A4 specification and they choose the cheapest one. The contractor then usually adapts to that, if they are used to working like that, and gives something to the contracting authority to win it. It may be a lower than realistic price, in order to get that money then, for example, on change requests or then follow-on operations. Or he puts buffers and reserves in the bid. So for that contracting authority, the price ends up being higher than it might have been if they and the contractor had worked on it together. We don't want to be involved in that kind of thing, we have an interest in making sure that our procuring entities and our customers are successful, so we try to educate them early on in the tender process so that they know how to do it and help them do it.
Martin Hurych
I would stop at the A4 full of requests. Does the person who is ordering the software want to push their supplier into a corner, or is it largely because of the lack of experience as well? And therefore actually treating it like a bathroom tile supply? How is that in your experience?
Tomáš Páral
I think it's both. There are companies that have years of experience in software development, but they do it just on the basis of paper tenders and fixed time, fixed price and they are used to talking about change requests. They're used to, they have the apparatus to be able to do that. But at the same time, there are contracting authorities who don't have that development experience, they have a great idea, they want to implement it, but they don't know how to develop software and they approach it according to the experience they have. I fully respect that, and we want to educate them, we want both of those groups to be successful, and that's why we created the No Pasquil Agile initiative, and that's what we're doing it through.
How do you avoid potential misuse of the agile approach?
Martin Hurych
I like that also because as we talked about, every company today needs to have some kind of IT partner, almost everybody is developing something. And there is no free hand in the IT market. And this overheated situation of course logically leads to very different quality on the supplier side. I've also encountered that agile often covers up not the supposed ignorance of where it can all lead, but the unclear processes in the supplier company. I don't want to say laziness or insincerity entirely, but there are other things. How do we uncover this, for example, and how do we avoid it?
Tomáš Páral
We see two extremes in the market. One extreme is that large projects worth tens of millions are competed on paper for the cheapest price. Companies think that the solution is agility, or the unbridled pursuit of agile methodologies, which are basically the opposite extreme. Well Paskvil Agile and our experience shows that we need to take the best of the traditional world and the agile world and combine them. This will lead to a balanced relationship between the client and the supplier, and at the same time give both parties some guarantees. It's best to bring those two worlds together and combine them.
For example, works contracts are signed so that the contracting authority has a guarantee of maximum price, terms and scope, and this is proving to be an unworkable solution. That guarantee, in our experience, has to be somewhere else. It has to be at the level of the competence of the team, at the level of the process that leads to the right solution, at the level of the contracting authorities being involved in the development on a fortnightly basis and being able to give feedback. So there is no waste because they are in constant contact. The guarantee is that on a 14-day basis, which is some minimum increment, that scope gets fixed and then the team delivers. It's not like I have a scope fixed 2 years in advance and I'm counting on it working out.
Martin Hurych
In that fortnightly communication, how should it be done, who do you need on the other side to make that communication a communication and not just information that something is happening somewhere? Does that mean that you need to have an IT knowledgeable person on the other side?
Tomáš Páral
I wouldn't say an IT knowledgeable person, we call that person a product owner, and that's a person who has a vision of the product or the solution that should be created. He needs to have decision making powers and be able to say what is important and what is not. The rest we can guide him through. We are the IT specialists here, the software development specialists, we know how, we know the process, we know how it should be done and we need someone in the party just for the client who has a vision of what it should look like.
Martin Hurych
So more of a business person.
Tomáš Páral
Yes, it's a business person who knows the needs.
If it's going to work in the long term, he has to be part of the same team. The product owner and the development team are part of one team and they work together to come up with a solution that covers those business needs. In the traditional way of working, the procurement people thought that the specification, no matter how big, was the basic governing document and they didn't want to worry about that software development any further. They delegated it to the contractor and expected the contractor to deliver a fully functional solution in 2 years, but in those 2 years the needs have changed. Pretty much everything has changed because the world today is awfully fast paced and it shows that a functional solution is that the contracting officer has to be there for the development and saves a non-trivial amount of money because of that.
When does custom development pay off?
Martin Hurych
You are a supplier of a bespoke solution. I would be interested in your personal or company opinion as well, when is it worthwhile to start thinking about custom development?
Tomáš Páral
It's definitely in some size, either it's according to the size of the company or it's according to the complexity of the problem that I'm solving. For example, if I were doing an e-shop today, I would take Shoptet, and I would run it in Shoptet up to some size. At the point where I find that the goods or my customers have different needs and I need a more complex e-store, I would consider whether I can customize Shoptet or another off-the-shelf solution, or whether I can have the system customized.
Nowadays, all the big e-shops are made to measure, they are not customized solutions, because those needs are so specific that modifying any ready-made solution would be maybe even more expensive than having it custom developed. It's more about what problem the client is solving, if there is a boxed solution, and if there is, I would definitely start there. At the very least, the moment I start a business, I would take some software that exists, if it exists, and only at the moment I find out that my needs or my customers' needs are different, I would consider whether it's worth customizing that solution or developing the whole thing.
Martin Hurych
So you don't have some internal figure, either for turnover or for the number of users in MoroSystems, where you say: Under 50 people in the company, maybe it doesn't make sense?
Tomáš Páral
When a customer comes to us, we recommend the most appropriate solution. So if something is worth doing in Airtable, we tell them: We won't develop it for you because you would be wasting your time with us, we want to do meaningful things.
So we don't have a cifier for how we would know if custom development is worthwhile for a customer. It's all individual. On the other hand, we as a company are built for projects that are in the millions of crowns. We can't do a hundred projects for hundreds of thousands, we can do units of projects for units of millions of crowns.
Where to look for the initiative of no agile?
Martin Hurych
I understand that, No Pasqual Agile is also materialized in the e-book. What is your website?
Tomáš Páral
We have a website www.nopaskvilagile.cz where you can download the e-book. The e-book covers the 3 basic chapters where we see that wastage happening. There is a chapter on selecting a vendor, a chapter on setting up roles within the development team, and a chapter on contracting collaboration.
Martin Hurych
I hear at least 20 times every day: I don't have time, the e-book is long. And I don't know how many pages it is yet, but it's already long. How do I know if I should read it or not?
Tomáš Páral
We've prepared a check-list that has 5 questions, which you can easily do, and if you're developing software right now, you can find out if there's a waste or not. If you find that it's not, congratulations and otherwise we're available.
Martin Hurych
We're going to put the checklist as a bonus to this episode, so that everybody who's developing for the first time has a chance to quickly see where they stand. Very likely infamously, but that's another chapter.
Tomáš Páral
I would like it to be glorious. I care about it working, because then it will help everybody, the commissioners, the suppliers, that this industry will be mature enough that great work will be produced, and it won't take energy away from the commissioners and the suppliers that they don't understand each other and that they have to deal with some crisis situations. I wish it would work out well for everybody, because ultimately it will help both sides.
How to use the crypto-world for charitable purposes for the Good Fairies?
Martin Hurych
Let's turn the page. What I like about you guys as MoroSystems is that you're stepping into teaching outreach, not only in your field, but in a field that is relatively distant to Ignition, yet I'm going to mention it here because I really like it. You're doing outreach to the crypto world combined with charity. How does this go together?
Tomáš Páral
Simple. We see Blockchain as the technology of the future, and we try to find use cases for our customers. In the last year, we've gotten into a bubble called NFT. Today, NFT is being used to speculate on the intellectual property of digital products.
Martin Hurych
Sorry, I'm going to interrupt you here, maybe not everybody knows what EFT is. Can you explain it in some short way?
Tomáš Páral
An EFT is basically a certificate of intellectual property of a digital artifact. It is typically used today for images. I draw an image and I create an NFT token for it, which says that I am the owner of it. And I can offer that token for sale. There are a lot of market places here where I offer it for sale, somebody can buy it, and by doing that they can prove that they are the owner of that image or that digital property.
It's widely used today to speculate on the growth in value of that image. We were wondering how we could use this for a good cause, and my colleague Petr Andrle just came up with the idea that we could use this principle for charitable purposes. We immediately grabbed onto that in the company because we were looking for a way to help. We created an NFT market place for the Good Fairies charity, where anyone today can buy an NFT token of pictures drawn by the children that the Good Fairies care for. The Good Fairies take care of children from orphanages, their motto is "hugs more than gifts", or bringing not material goods, but relationships, fun, hugs, care, and that's why we thought it would be interesting to team up with them for this initiative. We agreed and built a digital marketplace for them. It's a new fundraising channel that Good Fairies can use to have a bigger budget for childcare.
Martin Hurych
At least in my social bubble or what I can track, it's an unorthodox but all the more interesting approach. We may have missed Christmas, but it's never too late for good deeds, if anyone wants to support you, where can we find this particular project?
Tomáš Páral
You can find it on nftprovily.cz and you don't support us as MoroSystems, but you support children in orphanages just through the charity Good Fairies. I'd love for you all to check it out. If you want to try out what NFT is, if you want to buy some tokens and try out crypto wallets, work with Blockchain, here's an opportunity.
What are the innovation trends in IT?
Martin Hurych
To go back to what makes Ignition Ignition, going back to that domain of yours of software development and innovation, what do you foresee emerging in the coming months as something that will dominate the IT world, some innovative trend?
Tomáš Páral
It's hard to say, I've already talked about Blockchain, there's Machine learning, AI, etc., these are trends that are being talked about a lot. For all of them they are looking for use cases, how to translate it to meet business needs, so I probably won't say anything new here.
Martin Hurych
I'm hearing Meta everywhere, is that something that's going to have a real deployment anytime soon? Like metaverse, virtual reality, augmented reality, don't you have customers that would require something like that?
Tomáš Páral
Because we don't specialize in that, so no, if I wanted virtual reality, I would go to other specialized companies. But it's commonly used as part of training new employees in manufacturing, etc. I'm following the trend, but there are specialist companies I would go to if I wanted something like that.
How do you sell customized development?
Martin Hurych
Business. Especially smaller studios have a problem with how to actually sell custom development, because a lot of people don't really have an idea of what development as such means. They've never done it, there are development studios like mushrooms after the rain, small, big. How do you sell custom development?
Tomáš Páral
It's a complicated thing to sell, it's a thing that's hard to grasp, for example direct selling is very complicated. The way we approach it is we try to do brand awareness, we try to talk about how we actually work, how we deliver, what we deliver, and at the same time we look for topics that might be interesting for our customers, that's the Blockchain or artificial intelligence. That way we want to engage that target group and then talk about their needs and maybe we can figure out that custom development is the best possible solution for them.
Martin Hurych
So you're primarily acting as a consultant to the person who comes to you?
Tomáš Páral
Exactly. When somebody comes to us, that's usually the easy part. The difficult part is direct sales in the form of: I'll call 100 companies and offer custom software development to all of them. That's a non-functional solution that we've tried. We're looking for topics to engage our potential customers, and we want to talk to them about them, and if we bring value out of that, then some custom development may or may not come out of that.
How do we attract people, even if there's a shortage of them?
Martin Hurych
And the last area, we said there are about 140 of you. You told me before we started shooting that you wanted to grow, not quite by leaps and bounds, but that you've been growing steadily all these years since 2006. How are you able to attract people today to want to work for you?
Tomáš Páral
Through HR marketing, simply put. We described what our company culture looks like back in 2014 and in 2016 we created the HR marketing concept Together We Will Be Better. And we started to talk about ourselves in public, and as a result, we have candidates coming to us who are highly compatible with us. We compromised at certain times, but a few years back we said we won't compromise anymore. And since we don't aim to grow by leaps and bounds, we've been able to fill the units of seats we have with quality people we get along with.
Martin Hurych
What do you use to build your company culture? Most companies take on some kind of assistant to do that. A lot of times company culture is something that's ridiculed, and until someone comes along and explains why you should have a company culture, it's actually a waste. For a lot of companies.
Tomáš Páral
They say that every company has a company culture and I'm convinced of that. Now it's just a question of whether it's good or bad and whether it's helping to meet those business objectives that those companies have. In 2014, when we were 85, me and Standa and the other people who were with us from the beginning, we didn't reach all the people in the company in our daily communication. We were deciding between doing processes and regulations, or if we were going to describe our values, or some recurring patterns of behavior that held us together, and we decided, fortunately, to go with the values side.
We didn't know what to do at that point, so we brought in GrowJOB. He interviewed us, helped guide us through the process of identifying values, mission, vision, and so on. We described that and we just used that as a foundation in the hiring principles. Because we only described the behaviors we have in the company, we didn't need to change internally, we just materialized what was behind the success that got us to 2014 and what we need to repeat. And based on that, we started bringing in new guys and girls and we didn't need any other help. We try to treat people the way we would want them to treat us, so there's a positive side to it and a negative side to it.
Summary
Martin Hurych
Cool. Thomas, we always end the Ignition with a few sentences of summary, some recommendation to the listeners and viewers. We've covered quite a lot here today. I'll leave it up to you to pick one thing that you think is the most important from what we've covered today and try to summarize it in some way in the conclusion.
Tomáš Páral
I'm here to make sure that the sponsors don't waste money on software development. And I think we need to remember that an investment in software development is like any other investment. It needs to be well looked after. Be there and have a partner to guide you through it if you yourself are not forged in it. So if I could recommend anything to the sponsors, it would be to find a partner that they really get along with. Who's going to guide them through the software development, and that they do it by having a meeting with them, talking about how they think, what their values are, what their goals are, how the collaboration fits together, rather than doing it on a paper tender basis.
Martin Hurych
Could it be summed up as you're the architect of your own destiny and if you just throw your software at the supplier, then you're going to suck it up yourself?
Tomáš Páral
Very figuratively I would say that's the case.
Martin Hurych
Okay, thank you, Tomas.
Tomáš Páral
Thank you, Martin, for the invitation.
Martin Hurych
That was Tomáš Páral from MoroSystems. If we've saved you even one penny in your app development, we've done our job well, and if we've got you interested in maybe other ways, then definitely tune in for more episodes of Ignition, either on YouTube or your favorite podcast app. Be sure to check out our website www.martinhurych.com, where you'll also find the bonus mentioned by Tomas in the podcast section, and checklists to see if you're throwing money away or not. And all that's left for me to do is to wish you success and keep my fingers crossed, thank you.
(edited, shortened, automatically translated by DeepL)