Hello and welcome to the Virtual Frontier, the Podcast about virtual Teams created by virtual team. Disclaimer, all of our interviews are conducted virtually I'm Daniel your host and I'm part of the team here to Virtual Frontier. In this episode, we welcome Baddy Sonja Breidert, CEO and co-founder at 1x Internet Rouven Volk CEO at Powerpool Solutions R&D and Johanna Anthes Head of communication at Bright Solutions. On today's topic is how to kill innovation with public tenderor let's better say, how not to kill innovation in the process of a public tender .

Aside from myself, my interviewees all have deep experience with public tenders and participating in these types of projects. We will talk about the meaning of public tender which dilemma's are often associated with them and which possibilities there might be to design tenders in a way that innovation is not killed doing the tendering phase. You might think, what a boring topic, you guys want to put me asleep right away, but far from it. Let's listen to the approaches, solutions and experiences of our today's panelists on how to realize innovative projects in the public sector.

A quick mention of sponsor, Flash Hub build your virtual Team systematically and methodically. Scale with your business is at any time and make work better. Learn in our free training, how you can build, growth and scale your business. with virtual Teams and Global Freelancer's. Visit FlashHub.io/start to get free access to our virtual business builder training. For our international community. This is an English episode and you can find a transcript of our conversation on more than twenty languages on our blog, at happyscribe public or watch the video with subtitles for this episode and our YouTube channel.

If you like the show, subscribe on YouTube review it on Radio Public, follow us on Spotify, Sticher, Audible, GoolgePodcast or any other platform you're using to enjoy Podcast. You can also engage with our community on Discord. All the links you can find below in the description. So without further ado, let's dive into episode thirty eight of the Virtual Frontier. Enjoy the conversation. Hello and welcome here to new episode of the Virtual Frontier. I'm happy to have you guys here today to talk about interesting topic.

We have chosen the topic, How to Kill Innovation with public tender . For that conversation I have invited Buddy and Rouven and Johann. So we have a new constellation here. But before I dive into the topic, probably you want to introduce yourself a little bit so our listeners have an idea from were coming and what background you bring on from the Tender world.

Thank you for the invitation. So yes, I'm Baddy and I'm the owner and co-founder of 1x Internet, located in Europe. And we are so we have a lot of experience doing tender's both in Germany and in Iceland mainly. So yeah and I take care of mainly sales and marketing. So therefore I think that, you know, I probably participated in a couple of tenders throughout the years, so I'm looking forward to a great talk here.

So Rouven take it over.

Thank you. Yes, quick being here. My name is Rouven. I'm working as a Solutions Architect since more than six years now and I work with many huge clients and public tender processes. And I thought it would be a great idea to share some thoughts and learning of things which are working really nice, where public tender makes sense and also puts custom topics where public tender actually oppose a threat to the goal of the business. And I think that's a very interesting topic and I'm really excited to have this discussion with you today.

Yeah. So let's get it started.

And Johanna...

Yes, I'm Johanna from Bright Solutions, and I've been processing incoming tender requests for, let's say, two years. I already had some time or.... the last tender some time back. But I'm super excited today to hear more about how those expectations that I saw and received as the first reach out to Bright Solutions from the customer side, how those expectations actually evolved and where it developed further in projects. So as I was just the entry point and I always saw all the wishes and we would like to have this and that, and I never really saw what happened afterwards and I'm so precarious to talk in detail about this today.

Great, so just to give a little bit of an overview of all the different topics, I would like really to get the experience out of you guys what you have already learned over the last couple of years since you working in this area, how public tenders works. What is your experience there. Then we can probably dive a little bit into the part of the dilemma where just as Rouven mentioned, there are probably some parts where a tender make sense and other parts where it doesn't.

And so let's talk a little bit about the dilemma between where it makes sense and we're not and why we do it. And also what is the reason behind it for people that are interested in that, why we're doing public tenders at all and what is the concept behind that? And as you guys have worked in this area a long time, probably we can also talk a little bit about solutions and alternatives that are more adapted to the actual needs that business have today and how to approach them.

But before we dive into each topic, maybe you want to expand a little bit about your experience, what you have gained over the last years. Maybe you want to take it over the.

Sure. So I think it's fair to say that I used to work with Talent Pool agencies like wanting to Bright Solutions and a couple of other companies. And one of the biggest challenges was always that especially huge organizations have and the public tender process mandatory. It's not an optional nice to have thing. They must do it. And so there are many parties involved and it's not always the project team which have a certain need which needs to get solved but there are also so many different business departments, like an integral part in the process, like procurement, legal, I.T. security, data privacy and so on.

So at the moment, when it comes to public tender processes, most of the work is already done. So usually a couple of months preparation to get this started. And as soon as we start and have the tender process in front of us as an agency and the part where most people just call me and say, like, hey Rouven would you like to work with us here to apply or we'd like to apply to this tender process. This is usually the point wehre is say like. It's a bit too late because there are already so many things to specified in it, which sounds good on the paper but are like in conflict with the organization originally intended with the process that most of the time those organizations want to do something better in the future. But instead of creating a tender process where they say like, hey, we are looking for someone who can help us to create a better alternative to what we already have, they take the existing system ask everyone like what does it need or what do we need from a system perspective and they specify everything out how the old system is working.

And they ask for a new system, which is which is basically exactly what they already have. And it's maybe not always working as it should be. Like a 10 year old solution probably not the best way you could do today if you just rebuilt it. And one of the most common places I see in the tender process.

If I can add to it. Yeah, so I think, like, you know, where you talk about, of course, organizations and what we deal a lot with and especially like in Iceland is, of course, this government.

And I always like what they say at the city of Reykjavik. They say we are dealing with taxpayers' money. So we need to also behave well and do things like correctly, if we are also having taxpayers money that we are going to be handing out. So it would also be, you know, so so that is a little bit maybe talking about the dilemma Daniel that you talked about before, because everything that Rouveb said, I agree with, you know, but at the same time, like I also I'm also like happy that we have these type of rules, though, especially when it goes into government.

I think like for organizations, maybe. You know, we could we could maybe split the talk a little bit up in organizations versus government, you know. Maybe that would be wise because for the government, I think, like, you know, still the dilemma is the same. You know what Rouven explained? You know, they come to you and say, like, can you build exactly what we have? And they put all this effort in it.

But at the same time, you know, it needs to be some kind of a fairness, you know, towards the people who are actually then in the end paying for it, which is in the case of the government, taxpayers money. You know, that needs to be some kind of a fairness of how that money is being used. So sorry for dropping that as a ball here in. But I think that that needs to we need to talk about that aspect as well.

So, you know, so. But that's what we are seeing a lot. There is one thing, the organization public tenders and then there is the government public tender.

Do we have an idea of how to like where you make the balance, like I get it completely and agree with the issue that if you handle public money, taxpayers money, you should do it probably wise even even in the private sector, right. But it's more flexible, but the responsibility is might a different one. But where do you put the balance between OK, what is necessary and what is like like extensive and overwhelming, we where talking about the tender process, just like mentioned by Rouven, when you have months and months of planning and preparation and everything, and probably in the end of this process, the product that you try to create or optimize it's already outdated.

Maybe we can do a comparison there to like, now we want to build a house and we all have a house in front of our head. You know, we all probably have a different opinion on how a house looks like. So some people throw up a house, three stores and others do it with like 20 windows and others do it with very long and thin and however, it is like we all we all, you know. The end goal is pretty clear. We want to do a house. But how to get there is very unclear. So the question is, how can we enable these public tenders to be flexible enough that in the end that we actually end up with a house that we all want?

You know, but without going into the dilemma of what Ruben was explaining earlier, where that has been, it has been like told exactly that there's going to be 20 windows on the house because everybody needs to calculate from the same base. You know, still we have like material, different material that we are using are, you know. I think it is hard, I I wish I had a solution for it and maybe that's why we are also here, because it is a hard problem.

You made a really good point, and I like the example with the house, and I think we should highlight for our listeners, I think it's obvious, like we're talking about IT projects here, primarily software development. And it's a big difference if I build a machine, which I shipped to the customer needs to run in the factory for the next 10 years or if i build a software project. But still, a software project or construction projects that basically have the same process. The requirements are slightly different, but they are approaching the exact same way.

So when there is a tender process no matter if its government or a privately held organization or whatever, basically it's always about making sure that all requirements are communicated upfront so we have a clear expectation. What is the outcome of the project? And most tender processes I've seen are always about projects. They are not asking for a service. They are always ask for full project. So like we're shooting for the big all inclusive solution and it must be suitable for every business case we have. It has to be perfect. It needs to be in time budget and scope. Which is ridiculous because most of the companies they want to also to benefit from modern methodologies , like agile work, they want to do like lean or a scrum or whatever, and they want to control the project along the way they want to optimize it. And they want to make decisions on the fly. But the tender process is the opposite of it. This usually requires the vendor who's participating in the process to commit to a fixed price and time line, and we are liable for that as a vendor approach in such a tender processes we make an offer. And we are legally responsible for that, for something that the customer is not always sure that they know what they want and most of the time, as soon as the tender process is one, they start with a kick off workshop and then we figure out what they really need. And most of the processes I participated in has been exact like that. We started with a discovery workshop once we won the tender process and then we committed on the scope and the timeline, even though procurement was already done. And this is not really taking into account what we can do from a modern perspective. And it's all about risk assessment investigation.

I would love to add here that we all agree that rules, especially when it comes to like official tenders, have to be set of course. On the other hand. I want to highlight here that features always requirements are always like the number one goal in creating a tender or responding with an offer, but not goals. That fits perfectly to what you said Rouven with the fact like you agree on, let's say, a range, and after that you have a workshop to actually talk about what's happening in the project.

So I think that it's less about changing rules, but more about how requirements are set up. So instead of saying, like, all we want to have this kind of design is like our goal is that we involve our target group of X, Y, Z, more with the new design related to this kind of example, for example. So I think that that shift in the communication is could be key. So we have the focus on the goal instead, like, OK, what do we want with the new website?

Do we want to have a better branding experience or do we want to have more customers, more leads, or is it a totally internal project? So something else that we want to target. Well.

I were talking about you, about the customer side. I often have the feeling like the customer has an intention, what he wants or what he likes to achieve, but the knowledge, the deep knowledge about how to get there is this a rare case that it is there? Right. So there's always that this discrepancy between what I want and how to explain to probably the supplier or that the architect is going to build this project. How we can close this gap while we have this long periods of the tender process, sometimes months where you're waiting for everyone get getting together. And then you have like in the first place this issue that the customer has difficulties to make a right concept, write it down what is really the requirement and everything. And then you end up after months and months of participating in the tender and then you find out that essential parts are missing.

I think it's important to understand where the whole thing started and like most in the process, don't start with like, OK, we need to remember, we need to have a problem first. And when an organization has a problem specifically IT-Problem, they want to rebuild something or do something new, they usually start with an idea and then they want to try it they try to figure out if they can solve the idea internally with the people they have in the house.

And most of the times the organizations are really busy with their daily work. This is why they say like, oh, look, we don't have capacity for it, so we need to reach out and find someone and they need to select the vendor into processes. It's probably not that specified. So what do we do as the next step? We don't reach out to the vendors because we're not allowed to. So think about like, OK, what type of product it is.

And then we invite consultants which are really good in helping us to structure our ideas and the way how we can run them as a public tender . But they are probably not the people who are implementing the stuff. And those people are usually also guide the customer through the tender process. They have the evaluation and they are really good with the methodology because of the methodology is something which has been proven over years. And it's there again and again and a pattern which we keep on repeating.

And when I as a client say, like, I want to do a web project, let's say, oh, you want to do it with a web, are some compatibility. We need accessibility, data privacy, IT Security. Of course, they keep on filling in those requirements without understanding what the actual need of the project is. And the need usually something really simple and then it gets enriched with all those requirements, but it's the right thing to do, so don't get me wrong.

Also, the tender process is the right thing to do because we want to have fair and equal selection process here. But the scope of the project is most of the time lost on the way, and it gets enriched with multiple meetings. We spend one or two months by assessing all the requirements and then we ask for vendors who can provide us the solution we described. And this is most of the time the biggest challenge, because the solution we described by then is based on knowledge what has been assessed from the past.

And has been repeated over years is probably not what I need if we come from a different perspective. With a different perspective I would like to introduce here is if it would start from scratch and if we could use any technology, what would be the best way? Because the things we know from the past are usually optimized to pick up licenses we buy products and not to build our own custom solutions which are customized for the company itself. So instead of defining technology, which we can adapt and integrate into the company to solve the business problem, we think about what other products we can buy and then we need to restructure our company to be able to use the product.

I think this is a fundamentally wrong approach for such a project because they have so much flexibility and such a huge degree of optimization we can apply instead of just like buying the next bigger software solution, which is replacing the outdated product here.

Buddy I'm watching, you. You want to comment something on that?

I think one crucial point that in the in the public tender is how are you going to evaluate the offers? Because actually that is about that in the end. You know, if you. So, for example, I'm going to make an example, we have a public tender, and it's 100 percent going to be judged on the price. So that is when, for example, something that is probably, you know, from what I have seen, you know, not very effective because then like you describe every single day, let's go back to describing a softer product as a house, you know, like, you know, you can you will just then use the cheapest way of how to build the house and you will just put that in. And in the end, yes, you will build the house, but it is maybe not very, very good solution. So maybe that is one of the first things that you have to think about. Or, you know, it's like how are you going to be evaluating this whole public tender? So the more, of course, you evaluate actually the technical approach that is going to be done or the the way of how it is going to be done. So often we see 70, 80 percent being like a valuationon the technology or what we are proposing or designed that we need to like. Do you know, we often need to do a lot of work. You know, we are asked to do a lot of work that everybody is supposed to hand in.

That's another topic that we can talk about, too. But but generally, if the price is only maybe 20 percent and 80 percent is actually that we bring out an innovative solution, that then maybe you will get out what you need from the public tender potentially. Because then you have the flexibility of being actually bringing in a very technically advanced solution to the organization, you know, for like, OK, yes, higher price. But it's not going to end up, you know, that's the the that, you know, I'm curious to hear about, like Rouven and Johanna. What's your experience is with their weighting of their price versus solution, actually.

And you also mentioned this this, I know this from my little experience what I have shared at Bright Solutions. This tremendous amount of work that the companies put in in the first place, hours and days and weeks preparing for this tender, which is also like a cost a point. And and then this huge time of waiting, hanging around in the nowhere and probably not getting anywhere. How is that working and how we could probably make that more light processes?

So, that it's actually like if we're going to dive into that immediately, like so one thing is to go to work a lot. And we have had tenders that we have calculated that it costs us like 500 hours to produce work for. Like 500 hours and if we just do like a simple calculation of like let's say 100 euros per hour, you know, this is just a ridiculously high amount of money that you're just spending and why? It's because you need to fill in one hundred and seventy rows of questions. You need to give out like all these documents. You need to design something.

You need to give a sitemap you need to do all this work beforehand and just, you know, just to be maybe in the top three and then you're going to be invited to another meeting where you also need to perform and show. And that's, of course, a decision that you need to make as a company, is it really worth it? And maybe that's actually like in the end, the you know, the organizations are probably going to get somebody who really fights for the tender.

But in the end, you need to be you need to be really smart stuff. Like for me, 70 percent technical solution, 30 percent price would be, you know, I would not take the price and make the price higher for the percentage. But I'm curious, you Johanna want to what you maybe saw.

All right. Yes, I actually saw a decrease in the focus on the price, and I was very happy about this. Still, I felt like this is a secret ruler at the end, like even companies or organizations who highlighted we're not taking the lowest price. Or the second question is always like, OK, why is the price so high, for example? But I also want to add actually a third thing here, a third focus, which is the emotional bond with existing partners.

I saw this like a tender request, which was going for weeks and weeks and weeks. And the final decision was with all we're going back again with the old partner. Even if we had some difficulties, for example. Not always, of course. But I I heard it. And it was very interesting because sometimes companies chose, like the known area, the known issues instead of moving on and the fear of, you know, like getting along with a new partner was always very high. So I want to make it more complicated.

But that's a good point, because you're saying, you know, the higher the salute like the technical part is, the more chances you actually have as an organization just to go and work with your because it's more of a, you know, just a feeling, you know, because the price is easy. You know, if you if you if you put in one hundred thousand euros and somebody puts a ninety thousand, it's easy to select. But if you describe like, I want to do it with React and the other one says Vujs.

And the other one says Drupal Headless. Another one says Drupal, you know, not Headless, whatever it is like. That is that it is difficult to like. You know you know, there are emotions that go in it like, right?

Yes, so the what I want, that's a perfect word, emotion's the request is always very rational. And then the emotions kick in within the process, and I think also to put in emotions first, then to be aware of how should my project partner be, maybe we have it already or whatever. I think to put this in my head, it's so important.

It is also important to this now to to have like the tech.... I always say the technical part is the easy one.

Right, you know, but they most like that to do they connect, like we like us here as a group. Do we connect as a group? Can we work together or or do we maybe, like, don't like each other, then we will not be able to be successful. So how are you going to measure it?

It will be then a school project where one person performs everything and the others bring the pen or something. Let it go.

I would like to take it even one step further, because like we opened this conversation by the tenants, that's like the public tender processes is basically killing innovation at its start. And one common mistake is that organizations like they always started with a project tender processes in mind. They're looking for someone who can build their idea. And that's a dangerous process going this way because you brainstorm with the team and with the organization, you interview many people and you try to figure out like, what do we really need?

What do we want? And you put this together and you want to make sure that you're really certain about what you're asking for, because now it's public tender someone is going to build this project, so better do it right. Because as soon as you contract with someone, there's no way back. So there's a lot of pressure on the individual people in the organization. But it would be so easy, instead of thinking about a project in a broader contract context, about like we have an idea and we need a service provider which would help us to build this idea, to bring it to life.

And instead of asking for a project contract with a fixed timeline, budget and scope that you could ask for a service contract, which would be much easier. So instead of like getting a budget about like a huge sum and time, scope and the approval for it, you could instead, like, say like we want to build a project of like estimated size. We want maybe want to invest one year to figure out if this idea feasible. And instead of like asking for a fixed price project just ask for a service provider, because as an organization is if you create a benefit by just make it as a service provider you can focus on skill and value they're going to provide and contribute to your organization. And it would also give you an easy exit option, because when you run the project on time and material base, of course, you have a higher risk that the outcome might not be what you asked for in the first place. But to be honest, especially IT projects, they never turn out as they have been asked for. That's always continuous innovation and feedback and the projects are much better in the end. As soon as you started working with the IT provider than you started in the first place. And most people and organizations I've seen, they have been really happy with the outcome, which was different from what they initially asked for.

Of course, like the way... the end goal was always the same, but the way how we get there and how many additional benefits we introduce along the way is something we can only do if we have a really good service agreement and what working time material base. And when we figure out like we want to invest in a certain field because like we see some potential there. Actually having a public tender , process would kill this, it wouldn't allow me to do that.

Instead, I have to do an expensive Change request. Once i build a solution I don't need in the first place. I like I'm into it like start of the project. I figure out I need a different thing here, a different feature. I have to build the whole project now because this is what we are committed to by a contract on a project basis. And then I have to pay tons of change requests and it isn't something we should change immediately like anyone who is asking.

I have also seen this like I feel like sometimes that the the larger the agencies are or the software companies, the more experts they are actually in like, you know, dealing with Change requests. So so they go in like with that we've lost like tender's to like very, very large agencies where I think, like, in no way that they could be cheaper than us. But what they are obviously doing, because at least like in some tenders, you can actually ask afterwards, how much did the project in the end cost?

And I have seen these numbers double or triple afterwards, because these these large companies, they often have like, you know, experts in asking for Change requires making sure, like I didn't say in the requirement that all the stuff. So so to your point, Rouven, like, you know, the smaller I think the company is, the more more probably honest we are about like the efforts and the larger you are, you know, you have more processes of being able to deal with it.

But but I really like what you say to me when you talk about the MVP processes like rather do. So I have a thought about that. So you talk about like, you know, raditude like an MVP in the sense of like minimum viable product and or try to like ask for a service to do certain things. You know, the only thing that I always hear from the these government or large organization is the procurement is so expensive to do.

So therefore, we rather want to like do one big procurement and then we are like a little bit just good to go. And an example of this, for example, in the in the city of Reykjavik, you know, they did this big procurement, which I thought it was really cool. They did like a big framework, just procurement. They said like, OK, we are just going to have we are going to have these things that we want to solve in the next five years.

And we are asking to get companies that are willing to do all of these things. So you have to hand in all your skill sets and all the stuff. And then we have a pool of companies that we can deal with and we have enough projects for everyone. You know, so like instead of like, you know, instead of having every single time to go into this big processes because it is so time consuming to do this procurement processes. So so that speaks a little bit against Rouven you to your point like of making smaller .... thing, because in the end, like it needs to have a budget because there is a budget that you need to match.

So but, you know, so for me, like it was a little bit of like try to do it as small as possible, but try maybe to, you know, have it as open as possible, maybe to to your point Rouven there.

Now, the budget question is a really good one, because if I think about from a clients perspective, I want to know how expensive it will be to implement a project. Of course, I want to know, like, how long will it take and what is your race card? Right. I'm asking for that. It's an important metric. But what I would rather do is thinking about like. If I make this change, what could be the positive outcome for me as an organization?

So what is the potential savings I have all the revenue impact. So I need to change my thinking instead of just thinking about the cost of implementing something I need to think about like what is the added value for me? So when I think about like I have something. Let's make an assumption.. I'm an organization and I have a communication with Merchants and this mercant communication is really time consuming, it's a lot of manual work my people are busy on the phone or on the fax.

Yes, it still happens today. They're still faxes and they're always maxed out. And it's so it's so difficult to onboard new people because the process is so complex, thats time consuming. So every time when someone leaves the company like it, puts an additional stress to the team. So to automate this, I want it to be digitalized. So instead of thinking like how the communication works today, I need to figure out how the communication could work in the future.

If we're going into different perspective. And I should start with the setting, like how time consuming is this process? Most of the time we only think about like how long will it take to implement something. But I should, like, investigate how expensive is it to keep on doing like we do today, how we're used to and what is the hidden cost of that? And maybe I figure out, like, if I would automate the stuff, maybe I can save a six digit number. So I would have budget, which would be worth investing to solve the problem in the first place.

And this is value driven, right? It's not about how long it will take. That's a different question. But now I can take this budget as a potential savings. Now I can reach out to three different vendors and I can ask them without the need of a public tender processes for small budget, like, how would you approach this? How would you approach it and how would you approach? I would ask maybe for free prototype for a really low budget. And then I get so much feedback and knowledge back, which I could use for a public tender processes, where I ask for vendors who specialize in this field of technology.

And I would select the technology which was most convincing, from the three different prototypes. But how many organizations do you know are actually doing that? Baddy, do you have some experience? Have you seen it on the field.

I like I feel like Iceland this, if I like, can bring an example from Iceland. Iceland is definitely a little bit different from from Germany. Of course, Iceland's 320000 people and Germany is 80 million plus, so obviously it works a little bit differently.

But I but I feel like that in Iceland, things have been done much more in a direction of like, hey, let's see if we can just do it or make it happen, you know, and then continue from there on a while, on the contrary. You know, I see a lot of public tenders in Germany where I get like a specification of 100 pages and they're like, I'm supposed to bring in the big thing. And then I then I start looking at, is this a German procurement or is it a European procurement?

Because if it is a German one, I know it is like the limit is like 200000. And if it is like a European one, it is more or something like that and. Like I have not seen in Germany, but then again, I have to be fair to like we we do not participate at the moment a lot because it's also like our experience and also it's unfortunately that we we often see that companies have been selected before and there is just a procurement to go and select that company a little bit.

So that experience we have had and I think many others have had that, too. So so therefore, like, we are always very picky on the German procurements that we participate in because we want to make sure that we have a fair shot when we go and do it.

Well. Yeah. I can 100 percent agree on that, Baddy, so we had the same experience and a lot of times and I was burning to actually ask within this group about the difference between Germany and Iceland. You mentioned now a few. Are there more? I think those were the most important ones. Are there more different ways? So like I saw this in Iceland, this is great. Let's try to do this in Germany maybe.

Especially for the government projects we've been doing in Iceland, talking about government or university or something like that. Then, like I said earlier, I feel like it's always a little bit smaller. It's a little bit more of either, hey, I'm going to get a pool of vendors that I can actually work with and this pool, I'm going to be it. I'm just you know, there's enough to do. While in Germany is more like I select one. So I once not not long ago, there was a university procurement happening here in Germany and they were actually asking for two vendors, which I thought was pretty nice because it meant like that they you know, but the.

The mistake that I did, in my opinion, they just asked for the cheapest price. And what I heard is like that the prices that were put in there were like not even on the scale that I could pay my people salaries. So in the end, I don't know, like if if this was like companies that were outsourcing everything, you know, or whoever it is, maybe it doesn't matter. But then people start to like playing with the hourly rates, like, you know, I say my hourly rate is this 50, but like, I will just only work for 30 minutes and then, you know, you hear all this madness.

But that's like that's nonsense. And I would never participate in anything like that. So there is all this gamification happening.

Yeah.

You know, so how do you like your hourly rate, is that for a 45 minute or is it for 60, you know, nobody's asking for it. So like, I don't know. I just I tried to be as honest as I can, but I'm definitely having the experience here in Germany that I feel like a lot of companies are are trying to treat this a by either like going in with like much lower rates. Or trying to, like, go in with very low thing and then in the end, like Change request after change request them and get more, you know. But again, it's also more larger here.

How could we get there, to be more honest, processes, because I see two points or I have a question and the point to make. You mentioned that already before that, that they're like sometimes when you fill in those public tenders, you have to fill out like hundreds of pages or answer questions. Who's reading that? Like, in the end, it's like, who's checking that? And on the other side, if it's not even a like a real a fair process, how we get to a more honest process where you really go for four for checking the values. What what I need, how how i get there and with whom I'm going to work in the end to get the best result out instead of like like punching those hundreds of questions and probably I just I don't know the numbers, but if you make a public tender , you probably get offers from several different companies, 10, 20, whatever, and then you have like that to protect like hundreds of questions, you would have to check thousands of question.

And this is all like just a big game in the end that you're going to select the partner that you have already worked with. So why why why wasting those those resources for everyone?

I went through a procurement not long ago, I think the IT was around December last year where the third final phase was so phase No. One was like a little bit of a we are going to check if you qualify. So there was like 10 questions. You know, you had to put in your legal stuff, your revenue, your staff, your skills, you know, just like basic stuff. And then of those, I think they invited like six companies.

And these six companies really had to do the work. They had to, like, you know, work through everything. And then from those three were invited to have a presentation in front of a jury. And that jury actually like and in the end, we got amazing answers back from the jury, so we were second place in that particular tender. And but we also got like for every single thing we did, we got like, what grade did we get and what grade that the others get that got it.

And what was the difference? So, for example, you know, the other company that won was obviously somehow much larger. So they had like all the checkboxes in like ISO certification or whatever it is that we didn't have. So therefore they got higher for that. So I thought I was actually a pretty nice processes and I felt like even though we spent a lot of effort on it because we really wanted to get it, I really in the end, I felt like I was treated fair.

And this was this was a U.K. it was in the United Kingdom public tender . So this was not a tender in Germany and I have never seen this, for example, in Germany. I've never had like this feeling like afterwards where I'm like, I really I really understand why maybe they thought that the other company was better or, you know, OK, if we win, it's it's easy because then you ask for feedback and then you will get why you won.

So that's good. But if you're second or third or fifth or tense, you never really get the feedback. So you start to get actually the feeling like maybe there is no feedback maybe, Daniel maybe there is nobody reading this stuff. So having that processes very transparent is like a very good thing.

I would like to ask you something, because I have seen this many times, I'm curious how your experience is. How many times did you see requirements like I with German client and they are asking for venders in Germany. Project language is German because, yeah, of course, it's like the native language for the client, but they are actually excluding the top 10 from all around the world, especially when we talk about web technology like Germany is usually a bit behind, like there are other countries way ahead and like really innovate Mindset good technology but like.

Nope, nope. Has to be local. How much would you consider like local constraints of a challenge in the public tender

For me, I actually. So I actually think that especially when you're dealing with taxpayers money and I'm very, I have a very strong opinion on this. Like, I feel like as a as a governmental entity, for example, university, or let's say I'm living in Frankfurt, let's say this, the city of Frankfurt, I feel like that if they are doing a tender, that they should actually bring the money from the taxpayers that are in this area, at least back to companies that are in this area.

So local constraints, I think they are really good and healthy for when you're dealing with taxpayers money. So I think it is important, you know, because I feel like, you know, and now I you know, now I have like we have two or three companies, one in Iceland, one in Germany and one in Spain and and like we are building up the Icelandic company. So, for example, you know, I would think it is irresponsible of the Icelandic government that they are just like, you know, getting money from the taxpayers.

And then that is they're just like putting that out somewhere else. But now comes towards your question Rouven and maybe that's just still more cheaper to do it somewhere else. So that's better for the taxpayers, right?

Well, I would always consider it from the value perspective. If there is someone who has great technology, which is complying with my requirements and compliance is really, really big topic, always like need to comply with data privacy and IT Security standards, that's for sure. And of course, if you will, in the European Union, especially for government, they have to work with companies in their own country or at least in the European Union before they're even allowed to contract people from outside.

So those constraints make sense. And I really think, like those things give us a great degree of freedom. Like, this is not very limiting because you speak and we have a lot of top talent here. But the challenge is and I really want to emphasize this. Technology is innovating faster than anyone could keep up. Just look like the last 10 years, how fast technology innovated, but we are still applying the same procurement methodologies like 50 years ago?

And the way, how we assess technology and vendors is still the same, and we are applying old standards to modern problems. And I would like to see that. I would like to see some change in that, and I would also like love to see more often like are some companies who are already adapting those things, like building pro.... than building an MVP. And also let's make a right like an MVP, minimum viable product. This is not a prototype.

This is the first application I can own and operate as an organization. But in case it's a website and the MVP has to be fully compliant with IT Security and data privacy. There's no way around it. I need the legal approval for the term perfuse it. From MVP is not a simple task. It's just the first iteration which allows me to go live. And everything before that might be a closed beta or something like that, where I invite the target group to use the acceptance test but the MVP is a go life product and everything else.

That is like ongoing innovation, but. Most of the tender processes just have a six figure budget and the product has to be fixed and like it's done, for example, after one year and then the organization expect that they can keep on using the product for the next five or 10 years before they have to do the next public tender. Instead of considering the product, something which will grow. Like you start with a small tree and you keep on harvesting it and giving water and so on until it grows to be a big tree which carries like many fruits.

But it is not how this is how it could work, but not how its working today.

No Rouven and I think, like you, you make an excellent point. If we'd now go back into the like, you know, does it kill innovation, you know, so so I totally think like that the often the mentality, you know, is like, oh, I need to get the price for it and then it gets done and then it lives there for the next five years, just like you said, Rouven.

And that is actually not very healthy for our software product. Because a software product needs to be like worked on and improved. And we need to listen to what the users say. We need to like we need to get feedback on like, is there anything that is missing, you know, like. Just like on your phone, you know, you're constantly getting updates and there are some changes being done so that public procurements, they need to start becoming more like that so you can actually start innovating and becoming better because you know how quickly Change has technology, like with JavaScript frameworks, you know, that has been right, that have been rising in the last years.

You know, like who would have known that five years ago and who knows now in five years from now what the next thing is like? Maybe, you know, I have a ten year old son and when he was born or he's 11 today, but when he was born, we didn't even have smartphones. Think about that ten years ago. And today, like, we all have them and we do everything with it. We do our you know, we buy our things with it.

And, you know, and when I think back, like 10 years ago, I was playing Snake. Right on my own, my Nokia five six six zero. And and today, like, you know, I'm I'm buying stuff with my Apple Watch. And this is only 10 years. And now if we think five years back. And so after that MySpace came, you know, whatever it was called. And and now we are just expecting to be able to buy everything online. So therefore as a organization or as a governmental entity, you need to be flexible of adapting to.

So you need to make your procurement process flexible. So you can actually adapt to what is going to happen next, so that speaks 100 percent for your MVP or MVP approach. Together with like, let's say, MVP and maybe just do it like this. I think actually my husband wrote a blog post about this and put it on our website. He actually said, like, it's better to spend 50 percent of the budget or 25 percent of the budget in the beginning and then actually like take the rest of the budget throughout the next two years.

So how can you maybe to public tender like this where you say, hey, how can we do MVP for one hundred, but then you're going to get. 200 after that, that there's going to be for the next two years and we are going to use the flexible, I don't know.

I would even go that way that we say, like, let's flip around the process, usually we have the public tender for the project and we have 80 percent for the development, for the initial investment and then 20 percent of the budget for the maintenance operation for the next five years. And I think this process is flawed in principle because we know technology is changing. And change is an integral part of owning and operating navigation, especially if it's exposed to the Internet, because like the Internet, this is like I go in the street and things happen on the street.

People come around and like people with different interests. I never know what's coming next. I need to be prepared. So change it's important. And so the public tender should focus on spending 20 percent of the budget for proving that technology is working, the 80 percent of ongoing things for the next years. And instead of thinking about the project, we think about the product. And what I would love seeing in the industry and this is like slowly taking place also here in Europe, is that organizations think about building products teams again. So start of the project, maybe with the help of an IT vendor and a building knowledge in-house and having the small team with its own but specific product and service to their clients. And so this team is growing the build that they know how in-house they get the services as they need and maybe they have some help in the beginning. But the vendors are then slowly fading out or focusing on innovation along the way.

But they understand how a product team can grow over time. And they have like a certain budget for it. And so they don't think about like, how expensive is it to build an application. They think about like how expensive is Change, Management and running a web application is Change Management ongoing. So I would think about like how much money would I like to invest on a monthly basis. So this would tell me how the team could be and also how much innovation I can drive, like the rate of innovation is limited by those constraints.

And if the team has the flexibility to ask for professional opinion from outside of the organization and we have a lightweight procurement process for that, or we found a partner, which allows us to consult on a continuous basis, this is even better.

If I'm talking about the Covid now like I am actually, I'm I'm actually, you know, just I think like I think we've solved it. I think we have, like, a good idea here. Now we just have to hope that everybody is listening to us and doing procurement.

That's you. Just like for our next. Next thing that you're going to put out there, you do it like that. But I'm really curious about the covid situation that we have now and and maybe because, like, we will have been tested about chatting about this. But I am amazed in Germany, for example, how quickly some things have been going on. And let's just talk about things like, you know, Im going to, you know, get a vaccine.

And there's like this obviously this software that everything is being registered in there. However, that is all being done I don't know. But, you know, I'm curious, do you have any of you like know like how you know, where do they public tenders for all these things now with this? Because I feel like there's so much stuff that has just been risin, right. Do you know? At least like have you read anything about it?

Yeah, yeah, I heard about one particular application that was doing like the follow ups on contacts, and I remember that this this app called Luca, they build just the project and started selling those applications and services for a license to different government entities, right. Which was causing some kind of trouble because others felt excluded and everything. But I think it's all in specifically in this case where you have an urge to deliver a product or a solution for something. You have to think about OK, who comes first and can provide really a solution for that, probably got a shot because..

...quickly

we need to fix the situation, right. Lifes are depending on that and probably and probably I don't want to wait for a tender for six months to see who else is probably able to provide a solution for that. So there you should again always have this balance between what is really required and who is going to get there and as for, for what price. And then and then decide fast. And I think this is what I what I heard also from from you guys in different contexts right now, that we should be more focused on the solutions and how to get there instead of having this huge processors in the backyard. And what I really loved in this conversation was what you was mentioning Baddy this participation between the person or the organization that makes the tender and this feedback loops, having this constant feedbacks on the process to make it more transparent and make it make it more lightweight.

And even if you didn't won the tender in this case, you've got a lot of feedback and probably you can use this feedback for the next tender, with a different partner or maybe the same organization and get better.

And the reason why I asked was just because. Most of the tenders I've participated in, they have lasted at least for four to six months. So therefore, like, you know, seeing old is like Corona Warn App and the Luca App and all these like software, I'm like wondering like how did they manage to do all this stuff so quickly and still be innovative? So maybe because they didn't do that, you know, maybe because they they actually probably did this.

How you were describing it before Rouven that we have a problem and we need to solve it. So let's just get the company to do it and we are going to get the results.

And that's a key takeaway here. Instead of writing 100 pages of requirements and telling vendor how they should do their job, just describe the problem and what you need to solve and the important thing, are the constraints. So they need to know, like what are your standards. And they are like standards which are defined by law, right. Like legal requirements, of course. But they are also standards in the organization. And so for the vendor, the hardest part is to understand like. How's your organization working? So if you're not able to describe your key problem on, let's say, three pages and those three pages could contain like everything the vendor needs to know to make you an offer and to make a proposal how they would solve your problem, and you're probably doing it wrong. And yes, they are like most of the times, we have old products which are already there. There's an extra application running for 10 years. And we need to do it like it's like an end of life and we need to replace it now.

OK, so we have like a compelling event here coming up. End of life we shot it off and then our business is also offline, can't be. So we need to move. It's a compelling event. But please do not make the mistake to describe the old solution is working. Say why you need it and what should be the positive business outcome, but ask the vendors, how they would solve this on a creative way and you would be surprised by asking different people how they would actually solve the problem.

And you can take the feedback and you can share it in the next iteration. Yeah. And you can take it to the next level if you like. But it will not happen if you specify everything out and have like a budget of about one million here you have one of your time go for it. And along the way you recognize like, oh, we could do so much better.

I agree.

Any last thoughts from you guys, Johanna, Baddy, about how you would like to see this tender process evolve in the near future as we come to an end of our wonderful and insightful conversation?

I have high hopes, just as Baddy already said, like what happened with the Germans yeah, systematic in terms of speed and all the requirements within the Corona time. We saw something Change. We don't need to talk about problems and issues here. But even like simple things as Remote working, like there are so many Ahha effects right now. So I'm super happy about this talk we just had because that proves me like those high hopes are not secret hopes that I take away and burry some time, but are realistic. And I can't wait to share those thoughts also with clients because I think that educating and sharing this from the vendor side, from the agency side is something we have to keep pushing. So we can't expect this change. But we have to push people to it.

I think it was great, I had a lot of fun and just to... You know, to hear what you know, I'm also really happy to hear that this actually, you know, we we shared the same opinion on it and same experience sounds like. So I also have a feeling that we are probably not the only vendors out there have this experience. And yeah, I think these crazy pandemic that has been going on and like stopping us from traveling around the world because we were doing before and traveling to our office, this is allowing us to, like, be a little bit more effective, I think, like, you know, in many ways.

And just like you said, Johanna. I think we can learn a lot from the speed. And I hope that is also will be successful. I'm still waiting for that we will get some kind of a digital Impfpass like you say, the vaccine pass. You know, I don't know if that's going to be a European thing or if it's going to be like, I'm really curious. I haven't seen a tender for that. There is probably a tender out there for that. But I'm going to be I'mcurious because that needs to happen pretty quick. If everybody's getting a vaccine now, then, you know, and yes, this was recorded sometime in in the pandemic. But it's going to have an end soon. Right. Just for the record, I think it was great.

No.

Yeah, yes. Yeah, yes.

I think that's. Yeah, thank you very much for the participation and all your insights and comments and perspectives. I also really do hope that this conversation gets out on the other side and people are listening to the different ideas and topics and probably in a couple of months or year whatever, we're going to see some changes there. And pushing that topic forward, I guess, would be helpful and just opening up perspectives. So thank you for participating today and see you next time.

Thank you so much.

Bye bye.

A big thank you to Baddy, Johanna, and Rouven for participating in this special episode. If you think about participating in a public tender or you are about to launch a public tender for your organization, reach out to Baddy, Rouven or Johanna. They can provide you with the right tools and frameworks to make your next public tender a real success story. You can subscribe to the Virtual Frontier on Apple Podcast, Google Play, Stitcher, Spotify, YouTube of wherever podcasts can be found. And while you're there, you can leave us a review. Please support us and Patreon so we can keep improving the show and your experience. On behalf of the team here to Virtual Frontier, I want to thank you for listening. So, until the next episode keep exploring new frontiers.