Tuesday, May 24, 2016

How much does creating an ICT service cost?

I have now been working with ICT service creation and development for over 10 years. I have been doing this in different telecom operators, in startups and IT companies. Here is my advice to investors and teams on how much money and time you should reserve for starting a new service creation project. I have seen too many times that you get into a new development with big enthusiasm and too little resources and the whole thing dies halfway through the MVP creation.

A service is usually a technology provided by a vendor or open-source community that you then develop into a form suitable for your customers. It consists of:
- "Backend technology" provided by a vendor or open-source community. (In many cases the vendors claim that their technology needs just "a little design and translations" for launching to the customers....well, it never is so.)
- A user interface, web-page, mobile-app that your customers will use and that you usually need to develop yourself.
- All the processes and systems around it. Like buying, billing and service support.

It usually makes sense to first test the market traction of a new service by creating a MVP (Minimal Viable Product). To see if your potential customers are really interested in such a service or you and your colleagues just think it would be a cool and useful thing. There is actually a nice rule of thumb for how "Minimal" your MVP should be - "If you are later not embarassed with your first MVP, then you launched it too late". So how does this embarassingly minimal service cost? Is it possible to make it in a weekend hackathlon. Well....unfortunately not. :-(

If you have a clear definition of what do you want to launch as your MVP (and yes there are methods on how to reach that definition) then it takes:
- at least 3-5 persons fulltime for a year
- at least 0,5 MEUR investment
to launch a proper working MVP.

Yes, that is quite a risk and a huge investment, but if you are an investor or looking for an investment then it makes sense to calculate with these sums...and that is for the MVP. Then you need at least twice as much to make it into a proper product.

There are ways to minimize that risk and move in smaller steps:
- Make a fake prototype and interview and pilot with friendly customers with that.
- Have less people and smaller investments, but do it slower.
- Co-creation with customers - where you work very closely with some (business) customers and create the service with them. This method has its downsides like longer creation time and a big influence by one customer who might not represent the whole market segment, but it is a viable option.

Monday, May 9, 2016

How to make a country prosper

Many nations in Europe are struggling with the economic growth and are wondering how to get the economy growing again. A tough challenge? I don´t think so.
I have lived, worked and done business in different countries and I think it actually is just doing the obvious right things that will get you there:
- It is getting all the small things to work and be as effective as possible. This means the public sector, eg. tax department, but also the private. For example in Estonia a bank account costs something like 2 eur/month for a company whereas in Finland it costs 50 eur/month. It seems a small issue, but it is one among many. In Estonia it takes 5min to register a company, in Finland you have to print and send an application on paper.
- It is looking at the big picture and not only optimizing the current budget. The government should not just look at the current budget (like in Estonia), but take care also of the term development, like education or solving the declining demographics, HIV, drug or alcohol problems.
- Eliminate the known real bad phenomena like corruption, arguing with your neighbours, oligarchy, giant firms and economic sectors living off the general population - banks charging ridiculous transaction fees, monopoly-utilities, pension funds charging too high management fees etc.
- Eliminate the obvious waste. People living in suburbs and driving 1+ hours to work and back instead of living close to their work and biking or teleworking.....or companies producing something that is only profitable due to government subsidies (agriculture in EU) or usage of free resources (producing oil from oilshale in Estonia)

So making an economy and a country prosper is not rocket science and it does not demand top of the noch innovation. Just do the right and obvious things properly and prosperity comes to you....because startups will start and intelligent people will come and start working.