The Code for Success

Back in 1993, Peter Vile and Mitchell Pham founded software development service provider, Augen Software Group, which was built on the basis of connecting the best in local expertise with offshore development scale via their ‘one team in two markets’ run across New Zealand and Vietnam. Over that time, Augen has worked with many New Zealand businesses across a range of sectors to help them achieve their software development aspirations.

With our current border restrictions, we have a dire shortage of software developers within NZ but the Augen model is the perfect solution. Still, after nearly 30 years of helping local businesses evolve, Augen has itself taken a leap by rebranding and renaming itself to CodeHQ to better communicate and simplify what they offer.

Chief Marketing Officer, Ben Rose, the man responsible for the name change, talks to us about the relationship between sales and marketing, the future of software development and why it is sometimes important to let go of the branding that you have built for three decades.

 

In some industries, there‘s often a little bit of tension between sales and marketing. Do you find that, even as a consolidated role, you‘re still conflicted internally sometimes? 

No, never, because my view is that sales and marketing are actually just different parts of the same customer journey. The only reason why they are separate in big businesses is more to do with the structure of those businesses and the personalities of people involved. 

From a customer point of view, they are the same thing with the same objective. For us, it doesn’t make sense to split them up because we need to make sure that we’re thinking about the customer first.

 

Do you find you have a certain bias towards one or the other? Do you like the hunt and the hustle of the sales side, or would you like the considered marketing analysis?

I’m probably more of a hunter than a hustler… I started off my career in advertising then moved into marketing before ending up in sales and marketing. I realised that being too far away from both the actual result and top-line revenue means that it’s hard to know whether you’re doing the right thing. 

I’m more one for outputs rather than input. A lot of marketing activity that I’ve done in the past is focused on metrics that are interesting but not relevant to a financial outcome. I like to link them clearly to a return on investment and, in a business of this size, where you’re working directly for the directors and the shareholders, that’s really, really important. 

 

Can you talk about what those metrics are that don’t contribute to the bottom line and what needs to happen to tighten things up?

In business terms, when thinking about the metrics that I need to measure – the ones that really matter are those metrics that have a direct correlation to money that goes into the shareholder’s back pocket, either short-term or long-term.

There are so many things that you could measure when it comes to marketing. There are a variety of different dashboards, metrics and reporting available. What I always do is ask myself, if I were to present to a board that we had done well in X metric, would the board be happy? Given that the board’s job is to grow enterprise value and shareholder value, would the board be genuinely pleased with that? Or would they dismiss it because it was interesting, but meaningless?

For example, when I’ve judged marketing effectiveness awards, they tend to fall into two categories. There are campaigns that talk about metrics they’ve created; this could include click-throughs, opens, views or downloads. I don’t think that’s effective. 

Then there are others who talk about the enterprise value they created by reducing customer churn, increasing spend per visit or decreasing the cost per acquisition. Where there’s an absolute solid line between financial outcome and that piece of activity, those are the metrics I think are worth measuring. All of the other metrics might be interesting but can often lead you down rabbit holes and can be distracting.

 

Have you found that within the IT industry there is a better connection with metrics, a better understanding of numbers?

I think it’s less a category discussion and more of a business discussion. In my experience, bigger businesses, because they have teams focused on specific functions, tend not to have as aligned a view of what generates profit or what contributes to enterprise value; though that’s not always the case. 

When I worked at ASB Bank, I was head of retail marketing and they were very clear on what the drivers of profit were and what the leavers were that we needed to pull as a marketing team. I’ve found over the years that the smaller a company is, the more focused on financial survival and growth they tend to be, because everyone feels like they’ve got a bit more skin in the game and they’re more bought into it. 

When you have people in nine to five, clock in clock out roles, they could often be focused on metrics that again, might be interesting, but do they drive shareholder value or enterprise value? I’m less sure.

 

Having skin in the game can be good, but it can also be bad at times when the game is dwindling. As you grow, how do you ensure the team stays invested with that removal of a buffer?

I think it’s quite straightforward and it’s about absolute clarity and transparency. Everyone in a business, however big, should understand how the business succeeds. What does success look like for us this year, next year, in five years? And how do we get to that point? How do we drive profits? Which parts of the business, which product set, which kind of customer is the secret sauce to our profit? And then what is your role as an individual in making that outcome happen? 

In banks, for example, they’re clear about which products are the loss leaders, which ones drive profit and which ones are the wedge products that grow share of wallet. And because of that clarity, everyone involved in those products knows exactly what they need to do and why they need to do it. At the end of the year, when the business announces its financial result, they know which part they played in it. 

It’s much easier said than done, and much easier for smaller businesses to do that. As businesses grow, there’s a risk that they can lose that clarity around what success looks like and how you contribute to it.

 

Do you get the sense that there are other metrics for the success of a company coming in, that might be not only the financial side of things, but also the social impact on the relationship with the community?

They are all important. However, I think the reality is that share markets and shareholders tend to say that stuff is important, but they still want the same financial returns as they had before that stuff was important. 

There’s a contract that we’re in with society to operate and we have the duty absolutely to leave things in a better condition than we found them in; to have a positive impact, not a negative impact. But the reason I think businesses do that is because frankly, they want to be around to continue operating because their owners and shareholders would like a profit. 

Gone are the days where the only outcomes measured were financial. If businesses want to compete nowadays, it’s a hygiene factor. It’s a ticket to ride. And looking at the shareholder’s return requirements, they never decrease.

 

When you are coming into an organisation like CodeHQ, and talking about the brand as you are, where it is holistic, is that something that you look at? Do you do a little bit of an audit and align things with the brand vision?

Absolutely. Through meeting with Peter and Mitchell, the founders of the business, it became clear that they had a fantastic pedigree, heritage and service offering but hadn’t quite cracked the positioning and the brand around that. They hadn’t quite cracked how we communicate our secret sauce. 

As a marketer, I thought that was pretty exciting. And so, part of them bringing me into the business was that we worked together from day one on absolutely nailing what it is that makes us special. Why do our customers love us? Why have we been around for nearly 30 years? What are the needs that we fulfill in the market, what are others doing and how can we cut through better? And how can we make sure that more people know about that? 

That was every aspect of the brand from the way we communicate, the way we price, where we play, who we serve, who our people are, how we work; everything, absolutely everything. The great thing about Peter and Mitchell is they have been really open to reviewing that with an aim to hold on to the magic that makes our business, our business; refreshing and evolving it to take us to the next stage of growth.

 

You are talking about some fairly fundamental shifts within the organisation. Did you have this huge weight of responsibility? We‘re talking about 30 years of heritage.

Totally, super stressful. The Augen brand was a brand that the founders had come up with and lived with for three decades. It was very much part of their lives. We’ve got staff who have been with us for all of that time, so we’ve got a team who lived and breathed this brand and it represented them and they represented it. There was a very high risk for us that by changing that brand, we would lose both external and internal goodwill. 

The process we went through was we sat down with people from all around our business, including current and former customers, to really define what we stand for. Who are we? How do we behave? What do we believe in? And then we asked the question, is ‘Augen’ right? Does ‘Augen’ communicate that? Our original plan was actually a bit of a refresh because it felt slightly dated. 

We realised that we actually had real clarity about our offering, about what we do, but we had a brand that didn’t quite fit with that. It was time to change that in a sensitive way. Big, big risk. The way we ended up thinking about it though, was that this is a market that is growing at an absolute rate of knots and New Zealand businesses really don’t have many options. 

In our opinion, there aren’t any other great options, so the risk was not changing and not cutting through.     

 

What did you feel was there when you first came in and were looking at this heritage, you were looking at what was there, but maybe something that, as you said, the founders were missing?

The magic of this business is what we do, which is a blended onshore, offshore software development outsource model. No one else does it like us. It works really well, it delivers great outcomes, it’s fantastic. 

The challenge was that the digital and tech industry talks in quite a lot of waffle, there’s a lot of acceleration of outcomes and velocity and that sort of thing. People weren’t actually clear about what it was that we did. We would have meetings with people and they would say, ‘Lovely guys, not quite sure what they do, but really good guys’. Or we would do some work for a client and they’d be really happy with it, but not quite know what our services were. 

We needed to be a lot clearer in our language about what we offer, what we love, what we are great at. And part of that was understanding the target audience, because as a business, we have been talking just to CTOs in the past; very techie, very specialised, quite esoteric. 

In reality, digital is part of business these days. Every single person in the C-suite, whether or not they’re a CTO or CIO, is thinking about ‘How can I increase my productivity? How can I give the customer a better experience? How can I decrease the cost to serve?’ Those are all digital questions. We needed a brand that spoke in plain English and more accessibility and was clear about what we did. 

 

You really do have to hand it to the founders to take this leap of faith.

It’s absolutely massive. We had some interesting discussions in the interview phase, and it became clear that they’re really passionate about this business. They really believe in it. 

They developed something special, but they know that this is a unique time in the market, so they want to do some brave things to really grow. And pleasingly, it started to work, and we’ve started to work with some exciting enterprise-level clients over the last few months that we hadn’t before. It feels like the right direction.

 

You mentioned a unique time in the market. Can you talk about what‘s happening? What is evolving?

There are two main trends. The first one is the growth of digital, which is not a new thing as it’s been happening for a long time, but digital has moved from being something that a specialist person in the IT department does, to part of the way that businesses run these days. 

Digital transformation projects are the norm now because customer expectations are growing because they’re used to dealing with offshore giants in the same ways as local companies. Businesses are facing more competition from both offshore and locally, so digital development has just been accelerating. Businesses need to develop a lot more tech, software and kit. 

You’ve also got labour shortages locally and that’s been absolutely exacerbated by closed borders. But frankly, it was a problem before our borders were closed as well. 

New Zealand, being a small country, has never quite been able to fill all the developer’s seats we would like to. During Covid, it’s been the worst it’s been for a long time. When the borders open, we’ll lose talent as well. As a small country, we have a deficit of development resources. On the supply side, there are not enough developers, and on the demand side, companies just want to do more and more. 

 

What are your options if you‘re a business owner who needs to develop and you can‘t fill the seats in your team?  

Your options are; you could use local body shopping which can be good, but it’s quite expensive and there are resource constraints because you’re fishing in the same pool. You can go offshore and outsource everything offshore which can have pros and cons. There can be quality, communication and time zone challenges, or you can just not do the development, which often is what happens. 

If you read a company’s financial results announcements, they’ll often talk about not meeting expectations because they didn’t have enough development resources. 

Our model is a blend of all of those things, and we think it’s a lot more sensible to have local expertise in New Zealand that sits in your business. It might be a project manager, a business analyst or a tech lead who effectively becomes part of your team. They run squads of developers and testers that we spin up from our office in Vietnam. It’s such a big market there, there are 95 million people and two-thirds of them are under 30, and we have the absolute pick of the crop. 

We hire developers with a minimum of five years’ experience and there’s virtually an unlimited supply of developers. If our customers need teams of developers, in a matter of weeks, they can have one to five squads of developers and testers working on their business. It’s not something that New Zealand businesses are often aware of. It’s my job to make sure that they know.

 

This developer’s shortage is a travesty in a lot of ways that affects a whole lot of sectors and industries that really require that digital innovation to grow and scale. Do we really understand at a mainstream level what kind of problem we‘re looking at here?

I think we do. Awareness is increasing and there are some great initiatives to grow the industry. There are lots of programmes underway, including apprenticeships and university programmes and some providers are working with the formerly incarcerated. Regardless of these initiatives, the reality is that we are a small country so offshoring and outsourcing will always be part of the solution.

 

COVID seemed to inspire an awful lot of acceleration in terms of digital investment that may be through necessity, but then it also seemed like a lot of companies needed to really fast track what they were doing in the digital space. Can you talk about any trends that you‘ve seen just from your perspective?

I think one of the biggest factors would be that Covid accelerated development. Customers all of a sudden were buying more online, engaging more online and less offline. What that led to internationally was big companies massively accelerating their development and their reach. What that’s led to for New Zealand is now local players are competing with international players. 

There’s more competitive pressure and customer demands are getting higher. We’re seeing boards and shareholders and customers now clamoring for more functionality and faster delivery of increased functionality. 

Businesses were used to settling for what existed locally. Now they’re starting to look offshore and you’re seeing that in industries like banking, with the growth in open banking where smaller businesses, as well as larger businesses from overseas, are raising customer expectations and putting some pressure on local players here to develop more quickly.

 

The e–commerce side is the really obvious ones, but have there been some other things as well that you don‘t even necessarily think about? 

When we think about e-commerce, we think of an app, an ordering process, and something that arrives at the front door. What that actually does is that it creates a whole lot of work and therefore creates jobs in integrating the app into the different ERP and the different ordering programs and providers. 

We did a large piece of work with a client of ours who was a national DIY retailer, and they wanted to have online ordering. They had 50 different ERPs across their network. Someone somewhere has to bring those things together and create apps for the staff to track inventory. They have to create a front end for customers to order. Of course, you’ve seen the growth in NZ Post’s delivery services.

I think the growth in e-commerce has been fantastic and really exciting. But it has created a whole lot of work, opportunity and growth for businesses like mine. Here we are talking about what an exciting time it is and the reason it’s exciting is because customers are used to demanding more now and businesses have to deliver it. 

There’s a lot of stuff that you wouldn’t see as a consumer that contributes to making that product come to life, that creates jobs and work for people, luckily for me.

 

There is some nervousness around interest rates for those who are highly leveraged into property, and that might have some flow–on effect for consumer sentiment. Overall, are you optimistic about the economy, what we‘re doing here and our place in the world?

Massively. The reason why we, in particular, are really confident is because this is a country of innovation, so people will never stop having ideas and plans. Customers will never stop demanding better service. There’ll be pressure on improving customer experiences and maintaining margins, which means efficiency will be important. 

We don’t see that there’ll be any slowdown in the demand for digital services and digital build. We also don’t think the population here is going to grow significantly in the next few years or so. When the borders open, that will place a new pressure on development availability locally. In terms of our business, we’re very optimistic and really excited.