Cost-saving approach to software tests boosts SWAT What do you do for an encore when you've more than quadrupled your revenue to $4.1 million in just four years?
Author: Dick Youngblood, Star Tribune
What do you do for an encore when you've more than quadrupled your revenue to $4.1 million in just four years?
What Steve Timmerman did was start a new business-within-the-business and build it to $500,000 of revenue in this, its first full year.
Such is the sweet life in an arcane corner of the computer software world.
Timmerman, 44, is founder, CEO and chief techno-geek at an outfit called SWAT Solutions Inc. SWAT earns its keep -- and a comfortable keep it is -- in the increasingly sophisticated field of quality-assurance testing of the customized software being developed by its corporate and institutional clients.
I have no idea what all this means, mind you. Following the sage advice of Win Wallin, the former Pillsbury grain trader who wound up as the exceedingly successful CEO of Medtronic Inc., I never ask how something works; all I want to know is what it does.
What SWAT does is send consultants to clients' offices early in the software development process to apply a passel of methodologies that Timmerman developed to spot flaws more efficiently than in the past.
The operative word here is "early," according to Dave Birkelbaw, a private consultant who was project manager for a State Board of Medical Practices software development effort that included SWAT as the quality-assurance consultant.
"Typically, software testing has been left until late in the development process, when time and money often run short and [fixing problems] is most difficult and expensive," Birkelbaw said. But Timmerman's strategy is to get involved early in a project and do the testing work as an integral part of the development process, not as an afterthought, he said.
And the payoff for this early involvement: "More timely fixes, better quality and money saved," Birkelbaw said.
That was precisely Timmerman's strategy when he assembled a cadre of similarly geeky veterans of the software-testing business and started SWAT in 1997 (the company name was taken from his initials, SWT).
"Research shows that the earlier you identify [software] defects, the cheaper it is to fix them," said Timmerman, who reckoned that the early involvement of on-site consultants cuts testing costs by a third or more. The result is a client list that ranges from Vital Images, Life Time Fitness and Shop NBC to the state of Minnesota and Capella University.
The only flaw in this scenario is that the use of on-site consultants has pretty much confined SWAT to the Twin Cities, said Gary Sodahl, SWAT's vice president of operations. He said travel and lodging expenses would push costs for out-of-town clients to a prohibitive level.
Which is one reason why Timmerman invested $50,000 in equipment for the SWAT Lab, where wireless devices can be sent for testing from anywhere in the world -- at a cost about half that of having an on-site consultant doing the work, Sodahl said.
The lab, one of a handful between the East and West coasts, got into full swing in mid-2005. With clients such as California-based Kensington Computer Products, one of the world's largest manufacturers of keyboards, mice and other computer accessories, the lab is on track to generate $500,000 of revenue this year -- vs. $200,000 in six months of 2005.
"This is where we see a lot of our growth coming," said Sodahl, who heads the lab. But there still is a lot of potential growth in the Twin Cities consulting business, he said, and the notion of opening regional consulting offices around the country is part of SWAT's long-term growth strategy.
Learning curve
All of which does not mean that SWAT has been on a perpendicular path from the beginning. After revenue jumped to $960,000 in 1999, sales fell well short of that level in each of the next two years.
The problem: "I was trying to do it all myself, and I was getting nowhere," Timmerman said.
A side from the recovering economy, the solution turned out to be hiring a trio of seasoned executives who knew as much about finance, business management and sales and marketing as he did about software testing.
First came David Steingart, a Bloomington attorney and CPA who was Timmerman's tax consultant. He bought into the company in 2000 and now takes time from his accounting and law firms to provide the financial and management controls that Timmerman lacked.
Sodahl, former director of software development and testing at Norwest Mortgage, came aboard in 2001. And a year later Timmerman hired John Fox, a gent with 26 years' experience in software development and sales, as vice president of sales and marketing.
Add it all up and you get a business that's on the way to more than $5 million in revenue this year. That's a 22 percent increase -- well below the 43 percent annual average in the preceding four years.
Timmerman will take it without complaint.
About the Author
Dick Youngblood is Columnists for the StarTribune, in Minneapolis, Minnesota. Dick can be contacted at yblood@startribune.com
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