Challenges in SMEs Are Similar

Hi,

Currently, I am writing a new article for Golem.de.

In this context, I have been reflecting on the similarities in software development in small and medium-sized enterprises (SMEs).

The German Federal Statistical Office defines SMEs as companies with 10 to 250 employees and a turnover of less than 50 million euros.

At first glance, this range seems very wide. Intuitively, one would expect the challenges and solutions to be very different as a result. And to some extent, this is true. However, this does not align with my experience over the last 15 years, during which I have worked exclusively in SMEs. On closer inspection, it turns out that the number of developers is not that different after all.

Let’s consider this. At the lower end of the range, for example, we find startups. They are at the beginning, but have a solid round of investment behind them and can afford a small team. In this setup, the team mainly consists of software developers. All other tasks such as marketing, sales, or office activities are shared among everyone, and much is handled by the founders. I see up to 80% software developers in such companies. This means at the lower end, we often have 10 to 20 software developers.

Besides startups, at the lower end, we also have established companies that occupy a very narrow and small niche. In these companies - if their product is software - the team structure is very similar to that of a startup. They may differ significantly in their processes and procedures. And they are not dependent on investments. But here too, we have up to 80% developers and all tasks are divided. From this perspective, there is no difference.

Now let’s look at the upper end of the range. Here we find different types of companies. For example, we find “Hidden Champions”. These are companies that are often owner-operated and dominate a narrow niche market. Many of these Hidden Champions are decades old and have grown through non-digital businesses. But in the 21st century, they can no longer avoid it. To continue to exist, they must digitalize. And for this, they are building a development department. But this development department is (still) not the main business. We will not find a company here that employs 100 or 200 developers. These departments are more likely to be 30 to 50 employees. And of these, perhaps 10 to 20 are software developers. The rest are domain experts, administrators, management, QA, and designers. So, even with these Hidden Champions, we have a similar number of developers as at the lower end of the range.

Other companies at the upper end are service companies. Here we have more software developers, but they are divided among many projects. And these projects are independent of each other and again equipped with small teams. Even here, we will rarely find more than 20 developers on a project.

And as a final example, we can look at companies whose main product is software and that employ 250 people.

My former employer InnoGames was of this size. Here we have many software developers, but they are not working on the same product. They revolve around the same theme, but they are independent teams. And even here, we rarely find more than 20 developers on a project. Of course, there are companies that build a single software product and have around 250 employees. But there are surprisingly few. In my research, I have not yet come across any well-known company that falls into this category. Many names that came to mind have significantly more than 250 employees. Thus, they are not SMEs and therefore face different challenges.

And that’s exactly the point. When you think about the team structures in SMEs, you realize that from a software development perspective, they are more similar than intuitively assumed.

I have spent my entire career in SMEs. Always rather at the upper end, but since becoming self-employed, I also work with smaller companies. And it is now clear how similar the challenges in software development are.

And, that you cannot apply the same solutions in SMEs as in large corporations. Yes - I’m looking at you, microservice architecture 😉.

Rule the Backend,

~ Marcus