Few days ago I met with Bart Kroon, CEO of Agiboo. Agiboo decided to outsource a part of their software development to Xplicity in Lithuania, Kaunas by the end of 2018. Time to have a chat with Bart about how things are going.
Jos:
Good morning Bart and thanks for having a coffee with me. First of all, can you explain a bit what Agiboo is all about?
Bart:
Thanks Jos and I hope the coffee tastes good, because there is a possibility that the beans of which this coffee was made, were traded using the Agiboo software. And that is in essence what we do. We develop software that makes the lives of commodity traders easy.
Jos:
For the not specialist amongst us, Bart, can you explain what is so unique about commodity trading and why they need specific software?
Bart:
In general, commodity traders are companies that, by buying and selling, connect geographic markets for physical commodities. For example, coffee beans, chocolate beans, sugar, soy beans, etc. What makes this business unique is that in these markets the goods are traded physically (a contract and a physical delivery of raw materials) and through financial markets (derivatives such as futures and options).
As you can imagine the physical markets bring requirements that are related to the products, such as quality and supply chain. Meanwhile, the financial markets bring requirements that are related to financial instruments and settlements. Since Physical contracts and Futures are, to a certain extent, exchangeable, traders work with a blended portfolio of physical and derivative contracts. The trader’s role is to combine purchases, derivatives and sales in such a way, that supply and demand are bridged and price risks are managed. The combination requires a variety of trading process. In this process traders continuously manage their market risks and the values in their trading portfolio. So, you can imagine that there is a market for specific software that supports this complex and versatile, I would say almost unstructured, process. And that is what the Agiboo software does. We offer a tool to manage this complexity and bring efficiency and transparency and insight to it.
Jos:
Clear. Back to your decision to outsource development capacity to Xplicity.
Bart:
Yes, we took that decision for a few reasons: we had already experience with outsourcing but it was scattered all around Europe. Bit in Belarus, part in Romania other team members where in our HQ in The Netherlands. We lost a lot of productivity because of communication and people not being together in one physical team which was difficult to control as well. Secondly, it was difficult to find developers with the ability to pick up commodity trading knowledge quickly being first class developers as well. Last but not least, we had a look at the costs of course.
Jos:
And? Did you make the right decision?
Bart:
Absolutely! Xplicity found smart developers in Lithuania. We had a very structured hiring process between HR manager at Xplicity and the Agiboo development management. That resulted in a team of six developers within 5 weeks. Very impressive! Next, we started an on-boarding process in which we involved as many people from Agiboo as we could to teach the new developers at Xplicity the essence of what commodity trading is all about. In our vision developers can only excel and bring first class applications when they understand the domain they are working in. As you called it outsourcing, given the long-term orientation and continuous knowledge transfer, I would call our relationship a co-sourcing relationship. Knowledge transfer in general takes time and I can guarantee you that understanding the concepts of commodity trading from scratch is not easy. But after three months we saw already the first deliverables from the team in Kaunas. Much faster than we anticipated when we started.
Jos:
Going forward, what are your plans for the near future?
Bart:
Well we are early in the process and we have still a lot of domain knowledge transfer to do with the developers. But, if we keep up the pace as we did in the last couple of months, we plan to double the amount of developers in Kaunas before the end of the year because we have a “road map” to cover and are pleased with the capabilities Xplicity offers. But keep in mind, this does not come automatically. It requires continuous investment in communication from both sides on a daily basis. We learned not to take things for granted. But once you are up and running and find your way, the advantage could be much bigger, than we anticipated before we started this cooperation.
Jos:
Thanks Bart, I will take that as a complement and pass it on to the team in Lithuania.