Clutch spoke with Mikhail Chuprynski, Director of Development at Magora Systems, a software, mobile and web development company.
Can you describe the history and progression of Magora Systems?
We started eight years ago with a couple of developers. For three years, they tried to work as freelancers and then they started Magora. Since that time five years ago, we have expanded to 100 developers. We have two offices in Russia, and we are about to open our new office in London within the next two weeks. We are growing.
Why did you join Magora?
The main reason I joined the company is values, actually. I had a big ethical problem with my last company. We had a situation where I had developed software for a person who was naïve. The software was in the social network space, and we definitely knew that it would not be a success. During the conversations with the customer, he told us that he sold his house, car, and whatever he had just to find money to create this product. It was awful to hear that.
Although we did good work in terms of software development, we never tried to present an argument to the customer about the chances for success of this project. We didn’t encourage him to learn about marketing, user attraction, and so on. The company’s position was that we are just software developers and we do what we’re told.
What I’ve found here at Magora is the opposite. We try to care about what we really do, and we try to find what is really useful for the customer and his business. It’s a quite different approach. It costs a lot of time, effort, and money to understand, to change someone’s mind, to educate people in terms of marketing, development, and so on. However, the result makes sense in terms of money, referrals, successful projects, and so on. This approach fits me much better, and I really like to know that we bring some real value to our customers.
Of course, it means that we could say no, and we do. If we believe that a product is not useful or a waste of the customer’s money, we will refuse to proceed. We won’t sign a contract or take that type of project. This may seem strange at first, but it actually has its own result. We do what we like, and we do it much more effectively and efficiently. I am very glad to see that this approach is put into practice here, it’s not just words. We are trying to get to another level, to become more advisors and consultants to our customers, not only software developers. It’s a bit different.
We would never take money from our customers if we are not sure that it will really help them. This means that sometimes we give value to our customers, and sometimes we probably could disappoint them. We try to be as open and humble as possible. A very good thing for us is that it works. It works for our business and for our customers’ businesses.
Regarding where we’re going in the next couple of years, I would say we are going in big directions. We are going to provide more services to our customers, to be consultants, friends, and experts to them, and then software developers.
Could you describe your primary customer and their requirements?
As we are changing our target audience, our customers are changing too. When we worked as freelancers, we had the corresponding customers, such as students and non-professional people. Now we have more and more business customers, large companies, retail, and manufacturing.
Our next step is large enterprises who have their challenges in terms of market penetration, increased sales, optimizing their processes, which is about the bottom line. For example, when we help them to optimize their sales with a mobile application, or when we help them to optimize their internal process for production, we help them to either save money or to earn more money.
Our customers are those who understand that all of this software, and all of these mobile applications, are about business and about increasing revenue, decreasing costs, or both. That’s what we do. We’re trying to find and approach those customers who have profit goals, and we’ve been pretty successful in this goal.
Can you describe a successful project?
We have a large automotive company as a client, and they came to us with a problem. All of those companies use a just-in-time approach, which means all of the spare parts come to their assembly point just one hour in advance. They try to make this supply chain very straight, smooth, and predictable. The problem was that they have to make these orders and contracts three months or so in advance. For example, they have to buy some parts in China today, which would be shipped three months later directly to the assembly point.
The prices for those parts depend on a lot of factors, such as the prices of oil and steel, delivery costs, depending on the location and the local markets of their suppliers. They have suppliers in China, Europe, and the United States. The suppliers in China are cheaper for the parts themselves, but when they need to be sent to Europe, the costs increase. If the price of oil is low, it’s more effective and cheaper to buy it from the United States, but it the price of steel is low, it’s good to buy it in China. So it depends on the manufacturer, and the problem is how to predict those factors when you need to know what prices will be in a few months.
We have created software which uses a probability algorithm to predict what the prices will be in three months for the spare parts, and we have provided our customer with that data. Of course, we cannot know for sure, but we have a good probability. We have been able to achieve 70% to 80% accuracy in our predictions for the future cost. The customer can use this information during negotiations with their suppliers, and they can reduce their cost by 7% per year, which equates to hundreds of millions of euros. The application cost them €200,000 to €300,000, so it was a very good investment.
When they started to do this, nobody knew whether this problem could actually be solved. So they had risk, but they seized the risk, and now they have high returns on this small investment. This was the most successful project of ours in terms of money and efficiency.
Please describe another notable client project.
The second one is more understandable for everybody. We had a big logistics company as a client, who had a huge fleet of trucks, vans, and cars to deliver all kinds of loads. They used smartphones to know exactly where the automobiles were at any given time. When they get this information, we could optimize it to understand what causes schedule delays. We compiled information about traffic jams and other data to optimize their routes. We were able to use common vehicle information to consolidate loads to optimize the route, and so on.
We have reduced their need for trucks by 25%. They found out that they used 25% of their fleet inefficiently. They have reduced the number of drivers and trucks, and then decided to rent those extra vehicles to another company. They get a lot from this application. I don’t have exact numbers, but I would estimate that about 25% of the fleet is about two years of the overall revenue of the company.
How does your business model or project management style lead to success for your clients?
We try to focus ourselves and our employees on functionality. We don’t talk a lot about things like design and good looking visuals. We try to understand how the software can do its work in the best way. This is the first thing we consider with our customers. That doesn’t mean we don’t do design; of course we do it. However, it is a secondary task for us.
We first ask a lot of questions about why certain features would be needed, what the problem is, and why a customer is trying to do it a certain way. We try to get into the niche of our customer, and we try to estimate return on investment. We need this to get good order, because when we are talking with the customer’s project manager or head of department, they always have budget issues, and they need to convince their bosses to provide this or that amount of money. It’s much better when they operate with money and say, ‘Okay, we have our estimation that it will bring our company this amount.’
So it’s not about convenience or time, it is about money. It is efficient, and in this way we get orders. Often we have situations when the problem is not about software; it’s about communication and so on. The software is just a tool to change the process a bit. So we’re trying to find the good and proper place to put the software, so we need to understand what the real problem or challenge is for the customer.
Our project managers and account managers talk a lot before we even create an initial proposal. The initial proposal is about concept, not about interfaces and good looking design. It’s about market research and our understanding of the niche and the challenges they face in their business. Usually we say something like, ‘Okay. We see that your company has this problem or that problem. We think that we are able to solve them using software which will optimize this or that process. Our estimation is that you will save or earn this much money.’
When our customers see this input and this approach, they start to ask questions, and this is a good start for a relationship. They could say, ‘Okay. Your estimation is wrong because you make an assumption. We could provide you with the right information.’ So we correct our estimation, and we say, Okay, thank you very much. Let’s do this project, and let us help your business to get money.’ When we take this approach and have our solution, it becomes more important than the software itself. So software, good delivery process, and straight production are important but secondary. First of all, we think about business, and then we think about development. This is our approach.
What major challenges has Magora Systems faced?
In our field, there are so many challenges and problems. We’ve made many mistakes but we have learned a lot from our mistakes. The challenge was how to pass through all of those to get to where we are. First of course, we tried to provide our customers with the lowest prices. When we realized that was not a good idea, we tried to hire more competent and experienced people. Now our main challenge is where to find people who have the high standards we would like. Our main problem at the moment is where to find the proper developers and advisors. We don’t want to grow our company by lowering our standards.
Where do you see yourself and Magora Systems in five years?
As I’m responsible for company growth, I have some goals from our management and our investors. We are about to open an office in London, and next year we are going to expand to the United States, first to the East Coast, and then to the West. So we’re going from east to west, through Europe, across the Atlantic, and through the United States.
I would also say that it’s not about growth for growth; it’s about bringing more value to our customers. When we work with local people as our employees, they understand local business better than we do. They understand specific and unique local issues. So we’d like to get those people on our team, so we have to work locally. As our business grows in both the United Kingdom and the United States, we will hire resources locally and open local offices.