Ten years after a cashflow crisis stopped Planit Software Testing in its tracks, the company is now a dominent player in its sector. Co-founder Chris Carter tells PATRICK STAFFORD about the lessons learnt along the way.
Planit Software Testing, set up as a subsidiary more than a decade ago, is now a dominent player in its field, even leading the growth of its industry.
Chris Carter and Sheona Devin thought they were on a winner.
In 1997, the pair left Britain and arrived in Sydney to start Planit Software Testing. The company started out as a subsidiary of Britain-based ImagoAQ, but Planit quickly established itself as an industry leader and reached revenue of $1 million in the first year. Carter and Devin decided the time was right for a management buyout.
“We found ourselves in a situation where we had divergent paths with the parent company and needed different strategies to be a success over here,” Carter says.
“We went through a management buy-out to effectively remove ourselves from the strategic direction being imposed upon us. It wasn’t really a negative experience. It was a very amicable agreement.”
But it didn’t all go to plan. Just months after the buy-out was finalised, Planit suffered a cash flow crisis and nearly went under.
Carter says the group’s key mistake was underestimating key financial differences between Australia and the company’s former home.
“Sales didn’t close on the dates they were supposed to close, and so on,” he says.
“The trouble for us, and what we didn’t realise, is that Australia tends to shut from the middle of December to the end of January. It wasn’t until February we could resurrect the deals, close them and then get the company back on track.”
Carter says he and Devin were taught a very quick lesson about sensible financial management.
“At the end of the day, when we were still part of the UK company, we had recourse to the money they had. Following the buy-out we had to stand on our own two feet,” he says. “We were very much conscious then of every cent in and every cent out.”
They learned quickly, and business improved. Planit currently enjoys a growth rate of 38.94% and revenue of more than $19.8 million. The company’s services are popular in the banking and telco sector, with the group providing services for Centrelink, Optus, National Australian Bank, AAPT, ANZ and the Reserve Bank.
But Carter admits the growth hasn’t been without obstacles.
“I think the biggest challenge I’ve found is the Australian software testing market was not as mature as the UK… I would still say we’re behind in terms of our attitude towards software testing.”
Carter says one of the main confrontations of internationalising, and then becoming independent, was having to offer products to clients who were openly hostile towards the industry.
According to the Planit Index, a survey the company compiles, 26% of businesses think software testing is a necessary evil, while 6% believe it is a cost to be minimised, and 5% view it as a low priority. Carter doesn’t have survey numbers from when the business started, but says the view of software testing was even worse a decade ago. “I would imagine 50% or more would have considered it a necessary evil.”
The first challenge was simply educating the market on why it needed to give software testing a strong emphasis in their own businesses. “One of the first things we set about doing was improving awareness before we could have any chance of building a consultancy practice,” he says.
“Our initial strategy was very much on the training side of the business, to increase awareness and also to raise skill levels.”
But while the group started with revenue levels generated 10% from testing and 90% from consultancy, those figures are now exactly the opposite.
As a result of this, Planit has managed to turn a $1600 training course (where Planit trains client employees in software testing) into a $300,000 monthly contract (where Planit does the testing itself). Carter says this is one of the group’s most significant accomplishments.
Another key to the company’s growth was to lead the industry in introducing certification training.
“Certification is something that has only started around 1998,” he says. “But what’s happened is that a number of schemes started popping up around the turn of the century.
“There’s been a body called the ISTQB (International Software Testing Qualifications Board), and its goal is to have a single set of certifications to be available globally. Now, that came in from 2003, but Planit introduced certification schemes in 2000,” Carter says.
“Planit was the first organisation to be accredited to run certification in Australia, and until 2005 we were the only company. The number of providers has grown, but obviously we really dominate the market in terms of our share for certification training.”
But with more companies now offering accreditation, what sets Planit apart?
“I think one of the key differentiators is that we offer both training and consulting. We offer a range of options to our clients so that we can do it all for you or we can teach you how to do it to market standard or an acceptable international practice.”
Carter also says moving away from hiring contractors to permanent, full-time staff helped boost the company’s growth, emphasising the need for finding good staff who are willing to stay on.
“The fact that about 97% of my staff are permanent employees is a factor. We don’t provide contractor solutions, we provide a management service,” he says.
That said, finding quality employees is always a challenge.
“That’s still the problem we have today. But in terms of me being able to provide continuity of service, it’s far more important to have a permanent staff base than a contracted base. It could potentially hold me to ransom.
“At the end of the day, I have to be in a position to offer my staff career development opportunities and training opportunities. They need to be able to develop personally and professionally.”
While Planit has definitely made a dent in the market, Carter says, Australia still has a relatively hesitant approach to software consultancy and testing and there’s definitely room for growth.
“We’ve achieved quite a lot in a short space of time. Now we find ourselves bigger than the company we were set up as a subsidiary for,” he says.
“I definitely wouldn’t want to do the past decade again, but we’re very excited.”