Innovation in Software

It’s now become a little bit more common knowledge that Vagueware is growing. Quickly. That has come as a bit of a surprise, but I’m embracing it fully as I see the opportunity to grow a great company and do some amazing things over the years to come. And I know I can’t do it alone.

The reality is that by 2Q2010 I might need a staff roster into the double digits. Given that the Vagueware Christmas party has to date consisted of me having a quiet drink on my own for the last three years, this is a big shift.

So, what gives? I’ve always been open about business development, even when I’ve later changed my mind, and I think some of you reading this will be impacted by the changes I’m seeing in the industry and thought I’d share. There’s more than enough to go around.

First, some background:

How the Manchester web development industry has worked so far

Manchester has until the last year or so basically been defined as a services-orientated new-media provider. What that means is that if you are a high street chain or building a brand you will go to the “boutiques” across the Northern Quarter, look at portfolios and appoint one of them to develop a website. Client choices are generally driven by a mixture of aesthetic, price and experience.

Then the agency will realise that there is some hard programming going on under the bonnet somewhere and will either have programmers in-house to handle it, or they might out-source it to a friendly coder who can help them out.

This means that a £50,000-£100,000 new media build might result in about £5,000-£10,000 of development work being commissioned.

The other part of the industry is the “pure code” sector. That’s where Vagueware has traditionally been – rich, highly interactive logic-focused applications that need design laying over it. Sometimes Vagueware has just overseen development to make sure the developers aren’t pulling anything over the eyes of the client. This generally results in about a 50/50 split between code and “media” work, but there has not been much of it around in the past and often some of us team up to work together.

This has worked very well until recently, and has produced some amazing output. High street brands send their work to Manchester, and the richness of the design community here is massively under-rated. The Big Chip Awards do something to offset that, but it causes a few issues:

• Developers are stuck at the bottom of the food chain causing growth and sustainability issues
• We struggle to build product-based companies in the city meaning the national media get sniffy with our efforts
• Those of us who aren’t designers are off the radar for funding streams and more positive media promotion

However, this is not going to be the case for ever more:

How the Manchester scene is changing

Quite simply, developers are getting more important. Part of this is down to people wanting to be more sophisticated about what they want to achieve. It’s no longer good enough to have a website with some ActionScript doing something funky-looking in Flash. Clients are seeking clones of YouTube or Facebook, iPhone applications, rich complicated services that need to sit on cloud infrastructures.

In short: they need propeller heads to make their dreams come true.

That means instead of being approached by an agency to take on a slice of a pie, developers are starting to get commissioned work directly and then seeking designers to take a slice of the pie.

It clicked for me a few weeks ago when I realised that the projects on the book at the moment were turning Vagueware into an agency, but not one dominated by new media but by big, complicated infrastructure requirements. Deep “Information Architecture” planning, behaviour-driven development with bags of specs, deploying onto clouds because clients want to scale to millions of users when they get traction, and so on. You get the idea.

“Oh, and can you find somebody to make it look nice?”. Sure we can!

I’m not saying this is the death of the traditional new media agency, but there *is* something going on here. People are using complex web and iPhone applications more often and are being inspired to commission their own ideas. Experience of off-shoring has meant fewer are likely to take it out to the cheapest bid – they want a great partner they trust and can discuss ideas with over a coffee.

By going to a “software development agency” as I am now referring to them, they not only get a quicker time to market but often they pay less too: Vagueware’s current rate can be doubled when handled via a middle man, and when you’re talking about a 40-day build plan, that adds up.

Designers are critical, and I can’t wait to work with more of them: some guys out there leave me astounded and wishing I had a more visually creative mind. However, I think their grip on the power base of this industry is slipping a little as more people want to build functional products.

And that means change. And wherever there is change, there is opportunity, which leads me onto:

How Vagueware is changing

Vagueware is going to ultimately have two revenue streams: products and services. Simple.

Products the things like Conveyor Belt (more on that next week), Kagtum and a few other tricks up various (rolled-up) sleeves at Vagueware HQ. We don’t expect these to monetise quickly, but they give us skin in the game in a couple of key areas that help us understand how parts of the industry work in a way just being a service provider can’t.

Services are what Vagueware does right now, but as a software development agency. Got a cool idea but have no idea how to implement it or even if it’s possible? You could go to a traditional new media agency but they might just call us. You could go to a design agency like Ideo but they might call us too. You know what you could do? Just call us. We’ll help make it happen and if it needs strong design, we’ll handle that and make it all dance beautifully in front of your very eyes.

Then there is the additional stuff I’m looking at developing over time: training, research and analysis, reports and other things I can’t talk about right now.

There is one other difference about what comes next too: we’re not limiting ourselves to the local market. In the next two months we’re going to be hitting London quite hard and by the year end I expect to be getting clients onto the books from North America (I’ve traditionally always had one or two in the US but will be growing that), and hopefully – albeit rather scarily – continental Europe.

In other words, I’m going for it. It’s scary, but the opportunity is ripe and the skills are available. The only reason I’ve not done this before is because it was hard to get commissions for rich, complex bespoke web app development. No longer.

Of course, I might have got it all wrong and it could all blow up in my face, but you never know until you try and there is always the ability to adapt if further down the line it becomes clear a bad decision has been made.