Eliminating the office, virtually

Many startups and microbusinesses run virtually from the founders' homes until they grow big enough to move into an office of their own. It's much less common to find a company that's actually given up office space in order to continue on its growth trajectory. But that's exactly what webexpenses, a 20-person cloud-based British software vendor did more than five years ago.

Founded in 2002 to deliver expenses management software from the cloud, webexpenses took the decision in 2007 to "practice what it preaches" and move all its own operations to the cloud, giving up its offices in trendy Bermondsey, a short walk from London's Tower Bridge. Stripping out rental, light and heat, cleaning, and all the other costs of running a permanent base resulted in an instant saving of 15 percent of the company's costs, without taking into account additional indirect cost savings.

Yesterday I spoke to the company's CEO and co-founder Sanjay Parekh to find out how the company manages its virtual organization and what kind of difference it has made to become totally reliant on the cloud for the company's day-to-day operations.

Management by objectives

One of the most obvious questions to ask was how the company manages staff and ensures everyone works in sync when you can't glance across the room or walk down a corridor to see how things are going. One of the most important mechanisms is to establish the goals people are working towards, said Parekh.

"What matters is they meet objectives. We set annual goals, we then break that up into 90-day chunks. At that level the department heads are given specific things they need to achieve. They then take those 90-day goals and devolve down to what's required of their teams."

Rather than limiting reviews to once a year, everybody is reviewed on a 90-day cycle. "So we pretty much know if people are on track in a short timeframe." Regular feedback also means that the review process is less daunting each time it comes around.

Key performance indicators

A set of three to four KPIs are integrated into the 90 day goals for each department, which get reported on a weekly basis. "That helps us stop any issues early," said Parekh. The KPIs might be a customer satisfaction rating for support, number of leads generated through the website for marketing, or pipeline metrics in sales.

Each department makes a weekly update on what went well that week, what didn't and their objectives for the week to come. Three times a week the management team starts the day with a very short operations meeting to deal with any action items that can't wait. Often the call lasts just 2-3 minutes, and it never runs beyond ten minutes.

Skype conferencing

The company uses Skype's conference calling capability extensively. Its simplicity stands out compared to conventional conference call services, says Parekh:

"I don't understand how the people who design conference call systems make them so difficult to use. It's very simple to phone five people up on Skype. Just saving that one minute of frustation every time I need to do a conference call, several times a day, multiplied by 20 people, you're saving several days a year."

Regular contact

There are regular face-to-face meetings too, using hotels, conference rooms and on-demand office facilities. "We meet up formally every quarter as a team. That would be a day meeting. We do a lot of information exchange, workshops, etcetera," said Parekh. Individual departments may have their own meetings in between. "You'd probably be meeting someone face to face at least once a month."

Most of the company's sales are handled through web demonstrations. Around 20 percent involve face-to-face meetings, mainly for larger organizations, when salespeople typically visit the customer's site. Webexpenses mainly targets organizations with at least 50-60 staff, mostly amongst the Sage customer base.

Hiring the right people

Not everyone thrives with a virtual setup. When the company shut down its office, said Parekh, "we went through a period of re-education. Some people left."

The right people are comfortable with not being directly supervised. "They need to be happy with being set broad targets and happy working on their own initiative," he said. "They need to be people that don't need the social aspect of work. It's not that it's not sociable, [but] you can't rely on the office for your core friendships."

People with that level of self-confidence tend to be more experienced than the average candidate, he said. Because employees aren't obliged to commute to a London office, webexpenses is able to recruit a higher calibre at a lower price point. "[The opportunity of] working for a forward thinking, high-growth SaaS company, there aren't that many companies like that in some parts of the country," he said.

"People want to be agile, they want to be trusted. The high value knowledge worker, this is what they want," said Parekh. "From Edinburgh to the south coast, we have people scattered across the country in all different functions of the business."

Trust and transparency

Remote working depends on trust, which in turn requires a certain level of transparency. An interesting measure of this is the stationery and supplies bill, which tends to be lower when staff work from home. "When you give people responsibility for purchasing, people have to think about it," explained Parekh. There's a big difference between helping yourself from the stationery cupboard, compared to filing an expenses claim for office supplies. There's much more accountability in the latter scenario.

Operating virtually within the UK has also made the company more comfortable in its relations with the offshore developers it uses. "We're comfortable with the fact we don't have to touch people to know they are working," explains Parekh.

"The trust factor means we're incredibly open internally — we encourage the learn-from-your-mistakes philosophy as much as we can — and we're as open externally as we can be."

Agile principles

The company's experience with agile development methodologies has helped it evolve an agile approach to organizational development, believes Parekh. "Because we're using these [cloud] tools, it just allows us to be more flexible and more agile," he said. "We can change things more easily."

"We try to use agile thinking. We don't necessarily define anything to the last detail but we define the framework ... If you can be flexible and not rigid — and part of that is how you operate and the system you use — you're just in a better place."

The success of that philosophy is borne out by webexpenses' average annual growth rate of just under 30 percent over the past four years.

Cloud native

The list of cloud applications at webexpenses and their functions:

• webexpenses — expense management software
• Xero — accounting
• Google — email, documents, intranet and online chat
• Skype — meetings, global conferencing, screen sharing, webinars
• Hellosign — digital signatures on contracts
• Trello — project management
• Zendesk — customer support and helpdesk
• Yammer — social collaboration stream

Business impact

Webexpenses has been named one of the finalists in EuroCloud UK's Best Business Impact Award, which diginomica is supporting as media sponsor. The winner will be announced at an event in London this Thursday evening, July 11th.

Disclosure: As media sponsor of the EuroCloud UK Best Business Impact Award, diginomica is publishing case studies of the three finalists. The author serves unpaid as chair of EuroCloud UK and vice-president of EuroCloud Europe.

Photo credits: Demolition site © petrafler - Fotolia.com, Sanjay Parekh headshot courtesy of webexpenses