by: Thomas Meloche

Introduction

In 1998, Bob Nero, Richard Sheridan, James Goebel, and Thomas Meloche implemented the Menlo Software Factory process at Interface Systems, Inc. Bob, President and CEO of Interface Systems during the implementation, recently sat down to reflect on how the process positively impacted the company. As an early adopter of the Menlo Software Factory process Bob provides a unique and uncolored insight into a working software factory from a CEO's perspective.

Interviewer: Could you briefly describe the project at Interface Systems, where you implemented one of the first Menlo Software Factories?

Bob Nero: While I was President and CEO at Interface Systems, we uncovered a tremendous opportunity to provide new services in the brokerage market, specifically how to Internet enable existing brokerage statements produced on mainframe systems. We labeled this opportunity L2I, and it stood for Legacy to Internet. The Menlo approach – The Menlo Software Factory – became our methodology for pursuing this opportunity.

Interviewer: Bob, how did starting a Menlo Software Factory – making that transformation – positively impact Interface Systems as a business?

Bob Nero: As we viewed the L2I opportunity, we saw this as the key strategic initiative at our disposal to build strong value for our shareholders. We intended to succeed with this initiative. We also knew that it was going to require dramatic change for us to take full advantage of this opportunity, and that meant we needed to change not only our marketing and sales organizations, but especially how we built our software products.

What I found as CEO to be most exciting among the many benefits that we achieved was the sense of excitement that pervaded not only the development team, but very quickly ran through the entire headquarters organization, including the sales organization and the marketing organization, and that was for two reasons. Number one, the entire company could see that we were now developing software in a very different way, and they saw quite quickly that the developers had far more confidence in what they were doing and that the sales people took far more pleasure in the immediate results that they had to share with prospects and customers. The second aspect that was so valuable was the sense of connectedness that took place between customer, salesman, marketing, and developer. Suddenly we were all well aligned. Imagine the excitement of a salesman who could go back to a customer, literally within a week, demonstrating a feature or a change that the customer has just discussed with them, and showing that the requirement was already met and that here it was ready to go.

Interviewer: What did Interface Systems as a business seek to gain through the development efforts of the Software Factory?

Bob Nero: When we implemented the practices of the software factory, we were trying to overcome what we knew was one of our business' shortcomings, and that was our methodology for building software. It simply would no longer scale, and we were expecting to double or triple the size of our development organization. We also knew that we were going to have to develop a new architecture for our major product, and we had to get this architecture and a new product to market relatively quickly if we were to meet our objectives.

Interviewer: Did you achieve that goal?

Bob Nero: Oh yes. After we shifted to the software factory for our L2I product, within I would say six weeks we had some tangible achievements. We were well on our way with the launch of a couple of key new products, and they were far enough along that we could share them with customers and prospects. We also would typically bring prospects and some of our strategic partners into our headquarters organization and into the software factory, and not only were they impressed with the product that we had built, but they were complete converts to the benefits of our approach, causing them to have additional confidence about buying from us or continuing to work with us.

Interviewer: How else did changing the development team's delivery methodology impact your customers?

Bob Nero: When we shifted to the software factory, I thought we were improving our development process – and we did – but a better benefit that we achieved was actually improving delivery of value as our customers saw it. Our customers and prospects now saw that we heard what it was they had to say, that we were responsive, and that we could prove our abilities by returning to them in a relatively short period of time, maybe as little as a week, the very particular feature they had asked us about. That shows an organization that is delivering. That's valuable.

Interviewer: What's a major problem in your mind that caused software projects to suffer in the past that was addressed in the new Software Factory?

Bob Nero: Communication and alignment. I found that not only at Interface Systems, but in other large companies where I've worked that build software for a living, that even at the executive level, or maybe especially at the executive level, we were never quite sure whether we as an executive team were aligned in our understanding about what was being built and with what kind of schedule. That was because as a group of executives, we ourselves may not have been in agreement about what the priorities should have been. We simply hoped that the programmers were somehow making intelligent choices, despite what might have been our lack of alignment. The software factory addressed this problem very well through planning and status practices that facilitated meaningful dialog at all levels of the organization.

Interviewer: I want to talk just briefly about the importance of a physical space. What about the new space was significant?

Bob Nero: When I joined the company the development team existed in a long corridor, one private office per developer that went a couple of a hundred feet. I noticed that there was very little energy coming from those programmers, and very little interaction coming from them as well. It struck me that there had to be a better way.

When we implemented the software factory we moved the entire team into a large converted warehouse that was wide open, brightly lit, lots of snack food at one side, and even some toys for people to goof off with in their spare moments. We saw immediate tangible improvement. Collaboration was easy, the interaction was constant, the energy was everywhere, and suddenly there was a sense of fun that pervaded this workspace that had never been there before.

Interviewer: Bob, why did you use an outside coach to make this transition and what were you looking for in that coach?

Bob Nero: When we were going through these changes it was our specific intent to make dramatic impact, and in my view it would have been impossible to achieve lasting dramatic impact using only our existing people. They were too much a product of the existing environment. Consequently, we needed coaches, and what we looked for in coaches were people who would be easily respected by our existing team based on their level of technical understanding, on how easy they were to work with, and we needed people who weren't just teachers, but in fact were going to become part of the team. They were going to be immersed in the process every day.

Interviewer: What practices in the software factory surprised you?

Bob Nero: I personally didn't expect that the "Show and Tell" would have that much impact on the overall process, but I was very wrong. It turns out that the Show and Tell was the part that the developers and the rest of the company looked forward to the most. The developers had fun preparing and over time they became increasingly creative and entertaining in showing what they'd been doing the last two weeks. More importantly, because they knew there was this two-week deadline in effect, they had to be ready and it was reflected in the kind of work they did to get ready. Real things got done on time because the deadline was tangible and everybody understood it.

Interviewer: The project status board was clearly displayed at all times in the software factory. What benefit did you see to the organization in having that kind of public display of the project status?

Bob Nero: As a very prominent part of the software factory we had a very large status board. It was several feet high as I recall and it was six or seven feet long, full of information with multicolored cards and updated dots, and frankly I never understood it all, but I wasn't trying to either. What was important to me was to know that there was no longer any doubt on what we were working on, what had to get done and by when. Why? Because all the answers to those questions were right there. Anybody who did need to know the details, that's where they would go to know. There was no longer any ambiguity, and this was clear to me. It was clear to the executive team and all the other participants, and would be immediately clear to somebody coming in from outside, such as a prospect or one of our strategic partners, who would inevitably leave with a sense of confidence that we were going to be able to get done what we said.

Interviewer: Which of the software factory practices do you find most memorable?

Bob Nero: The thing that I find most memorable was the use of paired programming. And as an observer of behavior in an organization, which CEOs have to be, I saw things taking place among programmers that I never guessed I would have seen in that environment. We now had pairs of programmers interacting and enjoying it for at least an 8 hour day, who, before we made this change, hardly talked to anyone at all, and you could just tell that as a byproduct of this new approach, that we were getting coding done that was far more relevant and on point, and there was this tremendous learning that was constantly taking place, so that the experienced ones were teaching, and the new ones were opening the eyes of the experienced ones. It was fun.

Interviewer: So, we made a dramatic change, but we didn't make it just because we wanted to have fun. We wanted to have a positive impact on the business of Interface Systems. What was the end result of these new practices at Interface Systems?

Bob Nero: As I reflect on our success at Interface Systems, moving to the software factory was probably the most significant single decision that we made, and it positively impacted us in many ways. We were successful with L2I, a key software initiative, we improved our culture in a way that I simply wouldn't have expected, but I could certainly detect, and it happened very, very, quickly. And maybe most importantly of all, as a publicly held company, we increased the value of our shares. And from start to finish for me at Interface, we increased our shares by a factor of ten.

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