Hardware and software services: outsourcing or partnership?
12 questions on how to choose a technology development partner.
In this article, we discuss the reasons why many technology companies outsource part of their product development to external companies. These reasons are varied and can be related to economic aspects, but also to the possibility of exploiting specific skills that may be needed in a given project.
It is a growing trend and can potentially bring many benefits. However, we think that these issues should be approached strategically, so as to avoid the most common mistakes. We interviewed Simone Zinanni, CEO of Develer.
Simone: Hello, thank you for this interview.
Alessia: Simone, Develer has been working with Italian and international companies for years and provides software and hardware development services. But why do companies rely on an external supplier, such as Develer, for software development or electronic design activities?
Simone: There often comes a time in the life of a company when products need to make a technological leap. I am thinking, for example, of engineering products that must have an electronic part and internal software. I am thinking of electronic products that need to be connected to the internet or have cloud systems or multitouch user interfaces or mobile interfaces, and the examples could be many more.
When the market pushes a company to make a technological leap, it is not always ready to do so immediately.. Sometimes there is a lack of in-house expertise. In this case we take over the product, equip it with the required functionality and return it to the customer who remains its owner. In short, we help companies for a period of technology transition of their products. That is the main reason.
Then there are some other cases. For example, there are companies that have the in-house expertise to develop products, but perhaps cannot – in the current labour market situation – find the resources to do so themselves. In fact, right now there is a very difficult labour market for technical and technological figures, so they may need companies like ours to help them develop their products, at least for a period of time.
Alessia: You told me that we have the skills required to make these technological leaps. How does Develer master these technologies and have these skills?
Simone: Develer is 20 years old. In these 20 years, we have always been experimenting with new technologies. We have never stood still and used the same technologies, and we have never necessarily relied on mainstream market technologies. We are constantly experimenting with new things, perhaps on internal projects. When we think a certain technology is mature enough, when we think it is good enough and we have sufficient in-house expertise, at that point we offer it to our customers on the market and see that there is adoption. For example, I remember that twenty years ago we used Linux in the embedded environment: today it is taken for granted that in a sufficiently complex embedded project there must be Linux inside, but twenty years ago it was not. We were already using that technology and customers were calling us for exactly that. It was the same when we adopted Python fifteen years ago or when we started adopting Go (Golang) five or six years ago. Or even Rust. Rust is now very niche, but we already use it in some projects. If it were to become an established technology in five years’ time, we would already have five years of experience on the day that customers ask us for advice in that area.
So there you go, one strong reason is that we are always exploring new technologies. Another reason is that we do a lot of in-house training. All Develerians have a budget, both financially and in number of hours, that they can spend each year on their education.
We also organize many events and training sessions, covering topics ranging from the most current programming languages to soft skills. Clearly these investments have a strong return, because then it is the same technologies that are adopted by the market, that are requested from us and that our customers appreciate.
Alessia: historically we have also done a lot of dissemination work with conferences: I’m thinking of PyCon Italia at the start, then GoLab, RustLab, QtDay. Anyway, those were good investments too!
Simone: Exactly. This denotes a bit of our culture: openness with open source communities and wanting to spread technologies.
We have never had the need or the desire, for example, to lock in technology, to keep industrial secrets of our own or to entrench ourselves in our positions. What we always want to do is to expand knowledge as much as possible, without fear that it will somehow be stolen from us.
Alessia: But is Develer a supplier working in body rental?
Simone: I don’t really like the expression body rental. If it was translated into Italian it would mean body loan, wouldn’t it? It’s not an expression I like. I don’t like to spread it in the company. Because our corporate culture does not foresee this kind of expression and this kind of behaviour. But going back to the meaning of the expression, it’s also not exactly what we do in the market.
Alessia: And what exactly do we do?
Simone: We solve a typical technological problem on the customer’s products and we do this by providing a dedicated multidisciplinary team, which studies the problem together with the customer, proposes solutions and then is also able to design and implement these solutions. When I say multidisciplinary team, it is because our teams are certainly composed of software developers, but also firmware and cloud developers, and electronic designers, if there is an electronic component to the product. Also, if the product has a user interface, there is always an interaction designer to help design the interfaces, there is a project manager and a tech leader. In short, it is a multi-person team that is dedicated to the customer for as long as it takes for the product to be put on the market.
Alessia: How do we interface with the customer, how do we integrate? What can we propose so that the customer really feels helped?
Simone: Our development teams can certainly take on part or all of the product themselves. Usually there is always a technical reference figure from the customer who follows us during all development phases.
By adopting an Agile methodology, there is continuous communication between the development team and the customer’s technical manager. So that, in fact, it is not that we take on a project and then, after a number of months, we meet again and find out if the work is going well. It is a continuous work, in which the customer supports us and we support him to realize his product.
This is the approach we follow: if there is a user interface, we start with the design of the user interface with a study of human-machine interaction, we do an architectural analysis part where we propose the analysis of the hardware or software architecture until we get to the development and testing, testing and delivery.
Alessia: Develer has important customers, also in Silicon Valley. I imagine there are great difficulties with such a large geographical distance. What are they?
Simone: The main difficulties are what you can imagine, such as the time zone, even though these fairly large companies are used to working with collaborators all over the world and in all time zones.
We manage to overlap with the American time zone, in particular the Californian time zone, by a few hours. In those hours, we concentrate all the calls we can make. Our collaboration with the customer often also includes a service and maintenance part, so programmers working with these companies may need to intervene at any time. If necessary, we also organize ourselves to handle any emergencies, via an app that sends automatic alerts to the team in the event of problems that require immediate intervention.
Alessia: Still talking about foreign customers, why outsource software and hardware development to a company in Italy?
Simone: I think there are a couple of good reasons. One reason is that we have great talent. In Italy we have high skills and our universities provide very important theoretical foundations, although they are less practical than others and therefore do not immediately put our young people in a position to work right away, provide a very important theoretical basis, which is difficult to find elsewhere.
So Italian talent is really highly valued: this can also be seen from the number of our compatriots who are successful abroad, especially in the United States.
The other issue is that Italian costs are on average lower than those in the US and also in a good part of Northern Europe.
So, relying on an Italian company means having that right compromise between high quality and reasonable cost.
Alessia: Many companies are considering the prospect of outsourcing, or rather of getting help and entrusting a part of the product to an external partner. Certainly there are doubts. What fears do these companies have and how can we respond?
Simone: I think the main fear may be that of losing control of your product by outsourcing it. This is a very important point for us, it is something that we make clear right away in the first days of talks with a new customer: we have no intention of doing a technological lock-in for them.
It is clear that this is a time-limited collaboration and the purpose of our intervention is to help the customer at a specific moment in his history. Once we have helped him realize his product, the customer is in possession of all the technology. Where by technology I mean: source code, wiring diagrams, documentation, in short everything that is needed to fully take possession of the product. We also train our customers on the technologies we used and do all the handover. It is absolutely clear to us, when we start a project, that the customer must take full ownership of the product he has entrusted to us.
But beyond that, there can be some doubt about the confidentiality of the supplier.
From this point of view, we guarantee absolute confidentiality. Contractually we commit ourselves with a Non Disclosure Agreement (NDA), while from a technological point of view we put in place a whole series of security procedures to protect our client’s intellectual property.
Alessia: It all sounds very easy. But in your collaborations, is there any common obstacle that you may encounter?
Simone: I think one of the main problems is that we work with a lot of engineering companies, so companies that were born with a mechanical culture, which then adopted electronics over the years. Now they are facing a new digital transformation, further increasing the technology of their products, adding software, internet connections and a whole series of tools for which they do not have adequate resources. What can happen is that they approach these software and hardware projects in the same way as mechanical projects, where you do all the design first, production later, and there is not that iterative approach that is typical of digital products.
Or people think that a product, once designed and manufactured, is finished and can go on the market without any further intervention. In reality, in our case, the product is carried on much longer, both because there is the possibility of updating the software and because there is sometimes a real need to update it with security patches.
For example, on a machine that has never been connected to the internet and is now connected to the internet, there may be a need to ensure that security updates are always available; or for a machine that is accessed via a browser, there is a need to ensure that it also works with future versions of those browsers; for a machine that is controlled with a mobile application, there is a need to ensure that it works with all the new smartphone and tablet models that come out in the future, which will have different graphic resolutions, performance and other features.
So what can often happen is that some of our customers don’t realize at an early stage that their products need to be developed on an ongoing basis after release. And this is an issue that we often face.
Alessia: So there is still a very traditional approach, without fully understanding that innovations are sometimes also in the method and not only in the technology?
Simone: Yes, it is clearly something that, until you come up against the problem, is difficult to imagine. Imagine a company that makes an industrial machine that historically had 90 per cent mechanical components and 10 per cent electronic components made with PLCs, and instead decides, in 2022, to make a new product that has a very strong customised electronic component, software, Internet connection, web and cloud interfaces. This company might see it as a pitfall to have to continue to maintain that product after it is released on the market, because the software has to be updated. This situation typical of digital products offers numerous opportunities, such as the possibility of adding functionality to an industrial machine even after it has been released for sale. It could happen that a change in regulations makes an update necessary, or that technologies change. Another advantage is that it will be possible to continue to refine the software (eliminating bugs) even after it has been released on the market.
Ultimately, a digital-based product has the advantage of being upgradeable without having to redesign everything from scratch, so I would speak of an opportunity rather than a pitfall.
Alessia: So, to a company in the process of looking for an external partner, what advice would you give?
Simone: The first piece of advice is not to compare two or more technology partners to whom you propose your project on the basis of price alone, because that would be a bit like comparing apples and pears. If I have to buy office chairs, the purchasing department simply buys the ones that cost less, but buying a software and hardware development project is not like buying chairs. There are complexities to explore that are not so trivial and you need to understand very well what you are buying.
That is certainly one aspect. Also, I would recommend checking whether the companies you want to collaborate with have made products similar to those in your project. And above all understand what their development approach is, i.e. whether they slavishly design in the way the customer asks them to or whether they provide a contribution, whether they help the customer in the design, whether it is precisely the human-machine interaction, whether it is the architecture, whether it is any aspect that concerns the product, because the same product, designed in a different way, can have very different costs (and results).
In short, what I would advise is not to look for companies that offer pure and simple body rental, but that offer a broader consulting service. As Develer does.