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Software AG-SPL was acquired in April 2007 by one of the world’s leading software infrastructures providers, German company Software AG. The company, which recently celebrated its 31st anniversary, has over 300 employees and serves 100 enterprises, including credit companies, banks, the Electric Corporation and the National Insurance Institute. We spoke with Eran Alroy, CEO of Software AG-SPL, and Recruitment Manager Avigayil Godinger about the company’s activities, the changes it underwent with its transformation into a global company and how it copes with the shortage of quality personnel.
How did SPL get started?
Eran: The company was founded by a South African Jew who made aliyah and decided along with his South Africa partners to start a software house in Israel that would distribute products made by veteran company Software AG (Germany’s second largest software company following SAP). SPL branches were set up around the world and at a certain stage a single, global corporation was formed. Shortly before going into retirement the company’s founders sold its worldwide branches to various entities, including Software AG, and by the year 2000 all of the branches had been sold except for the Israeli one. In 2000 SPL was sold to a private shareholder and on April 1, 2007 it was sold to Software AG, whose products it marketed for 31 years.
What field is the company involved in?
Eran: We compile data from Israel’s large core enterprises. The projects we’re in charge of are carried out by very large core systems, which are the beating heart of every large organization and are based on Software AG products. We’re a software house involved in projects and we manage them from start to finish. The projects are under our full management, not as a subcontractor.
What led to SPL’s acquisition by Software AG?
Eran: Software AG executed six acquisitions throughout its history, including three in Israel – ApplinX, SPL and Jacada – which totaled half a billion shekels [$140 million]. Software AG CEO Karl-Heinz [Streibich] was the one who pushed for the acquisition of SPL, in part thanks to the exceptional quality he found at SPL – quality personnel and professionalism – in addition to impressive business results over the course of many years. Israel is a country that has the largest number of Software AG installations with an Adabas database and written in Natural among the various countries in which Software AG operates. The company has always been financially stable since its founding.
Eran Alroy, CEO of Software AG-SPL
Which added values did you bring with you to the merger?
Eran: Over the years we’ve reached many achievements. SPL is Software AG’s professional service center and we provide service for all of the company’s branches around the world. For 36 years Software AG was involved solely with products, without services. Just last year, with the acquisition of SPL and a US company, did the company decide to enter the field of professional services. We’ve always built ourselves on a foundation of a combination of products and services, and it’s turned out to be a winning formula. As a result it was decided our services would become a part of Software AG’s activity. We serve as a professional services backbone and it’s turning into a very large offshore enterprise.
How did the acquisition affect Software AG?
Eran: It was a very friendly acquisition with a lot of mutual concern, cultural understanding and connectedness since we’ve been very familiar with the company, its culture and the people working there for over 30 years. It’s more like an evolutionary process – as natural as can be. We have a lot in common in terms of worldview and there’s been genuine friendship and exceptional business success. Immediately following the acquisition they started including us – due to the vast experience we’ve accumulated – in projects involving planning the future product line. Our staff participates in these processes and is a partner in their development, setting goals and the global company’s future plans.
How do you cope out in the youthful, dynamic world where core systems are not the most attractive thing for young software developers?
Eran: Software AG operates R&D labs at IT centers around the world. The Software AG development center in Israel has 25 employees working hard on developing the most advanced products available for modern core systems. Also many young development people are attracted to work at product companies and organizations like eBay and Google. The big problem is what will happen with the large IT systems in another ten years if these people don’t want to work at them. Developing core systems demands broad and integrative vision and a whole lot of experience. I predict there will be a tremendous shortage in the supply of employees in this field in the coming years, and we’re already seeing this. We have a shortage of 100 employees at any given point in time.
What do you see as the root of the problem?
Eran: I claim everything starts with the Jewish mother. The Jewish mother has not yet given up her dream of her son becoming a lawyer or a doctor. She’ll send him to study law, accounting or medicine, but won’t send him off to study IT. Jewish mothers have to realize that the future lies in IT. Unlike other professions that vanish with time, this is a profession that will have importance for hundreds of years to come. A campaign has to be waged to win over the Jewish mother so that she persuades her kids to go into the field of IT. It’s still not considered an attractive enough profession despite the high salaries. It might be a PR problem.
And until the Jewish mother is convinced, do you have an alternative solution in mind?
Eran: IT has been around for 40 years and 70% of IT activity consists of developments built on core systems based on the needs of the various organizations, especially banks, insurance companies and credit companies. After the [high-tech] bubble burst and numerous attempts were made to set up large projects using new technologies, today everybody understands that things are headed toward modernization.
How do you define modernization?
Eran: By modernization I mean application modernization, i.e. a set of well-oiled cogs that have been working for 40 years such as the ATM’s you find around the world, which operate on systems built 20-40 years ago and work great, and today the question is if it works, where will the new technology fit in? Today there are products that know how to handle existing business processes, to make modernization processes for them and to expose them on the outside in the way that fits the present day – interactive and user friendly. There’s no need to change the core systems; although they’re longstanding systems so far they’ve worked exceptionally well. Today everybody realizes that you can’t take core systems, toss them out and develop new ones.
How is the modernization process carried out?
Eran: The modernization process requires veteran personnel with experience to continue developing the existing systems in addition to young software people, .Net and Java developers, to create the outer shell. You also need architects, people who know how to take business processes and fit them to these computing systems. That’s the biggest challenge.
What’s the company like?
Eran: Software AG-SPL is a company that has a tradition as well as a professional and occupational horizon. It’s the most fun company in Israel, both objectively and subjectively. Not because of me, though. The credit goes to the company founders and employees. I hold that it takes a special kind of person to work here.
What’s the breakdown of the company staff?
Eran: The company has over 300 employees. The average seniority is 13 years and most of the workers have been marching forward with the company for many years. We have both young workers and 28-year veterans, .Net and Java people and systems analysts, most of whom are women.
Is the female majority in the field of systems analysis intentional?
Eran: It’s a historical matter that we nurture. I had a woman manager for many years and ever since I’ve believed in a combination of men and women. Most of the project management here is done by women. We have a whole lot of women in managerial positions. Software AG-SPL’s edge on the competition rests largely on the fact we evaluate employees based on professionalism alone.
How would you describe the way the company is managed?
Eran: Since I work with over 300 employees I can be very involved. Every week I personally hold the weekly meeting with employees and once a quarter I hold a roundtable meeting with worker representation to encourage initiative and creativity. I personally come once a month to visit the workers at the client sites, which is a rarity among CEOs.
Why do you do that?
Eran: I hold that retaining employees is the managers’ responsibility. The managers here had instructions to meet with people and talk with them on a regular basis. Human Resources is out there in the field, but I feel the responsibility lies with the managers, so it’s my responsibility. The retention done by Human Resources is the easy part – all the things you put a checkmark next to, like a cake on employee’s birthday, company activities, etc. All that is important, but the connection with the managers is what makes the difference. Part of the job I do is taking care of employees on the most personal level. That’s the heart and soul that’s hard to find elsewhere. Everybody talks about it, but very few actually do it.
How does this come across?
Eran: A worker hired at our company gets hired along with his family, i.e. the well-being of the employee and his family are both important to us. For example, this month we’re holding a summer camp called “Young Scientist” for the children of employees. The annual SPL event will be held at Luna Park, which will be closed to the public and placed entirely at the disposal of employees, their spouses, their children and their grandchildren.
Do you encourage worker mobility?
Eran: In my view mobility is a very important and significant matter in company management and here is where our relative advantage stands out. Mobility is the gauge of retention because if a worker was unhappy and you succeeded in transferring him, he’ll stick with you.
It’s not easy to transfer workers because there may not be a match between the project needs and the transfer needs. It’s complicated because you have to reach an understanding with the client when you take someone out of a project and there are many ramifications. It’s a challenge we take very seriously.
Do you recruit only experienced candidates?
Eran: Yes. We’re not active in the area of beginners. We work in depth, providing the client a comprehensive solution and provide training in our software languages and our products. The personnel’s level of technological proficiency is extremely high. The number of people who understand core systems at enterprises is very small. These are generally older people with a lot of experience.
Do you have any interest in building up young people?
Eran: Sure. We’re looking for .Net and Java developers who would like to enter the world of data processing and study this field in the most professional and thorough manner possible, learning methodologies in depth. We live in a world of systems and therefore we need outstanding people with system-wide vision.
What is the company’s salary policy?
Eran: Today’s market is a worker’s market. Every outstanding candidate has plenty of job offers. SPL’s appeal is not measured in pay alone.
So how do you attract candidates if not by trying to win their hearts through high pay?
Eran: I want the candidate to come, hear what we have to say, gain an impression of what we do and get excited by it.
Avigayil: We always tell job candidates – go check into us, inquire, ask people. We’re confident because we know he’ll only hear good things about us. Not every company can say that about itself. The employees and the clients are our references. They recommend us. That speaks for itself.
How do you take care of your employees’ professional future?
Eran: Since we’re a product and projects company we can offer our employees a lot of opportunities. They also receive a lot of training. Every week we have some kind of training program from abroad. We include the people out in the field because it enriches them and eventually it enriches the client through the information they receive. In the case of large projects the staff workers at the client site, together with our architects, do the thinking about the next phase. This collaboration among the workers is important.
What recruitment sources do you use?
Avigayil: First and foremost is employee referrals and job candidate referrals, advertising on all Internet sites, advertising on Jobnet, which to a certain extent has become the yellow pages for the high-tech world (“If you’re not there, you don’t exist”) and of course contact we initiate with quality candidates from our own database.
What’s the main recruitment source you use?
Avigayil: For us the strongest source is employee referrals. Two years ago it accounted for 50% of all recruitment and 30% last year. That’s a very effective source, but no less important is what it indicates: an employee who brings in a friend is sure he’s bringing him to the right place. It’s a declaration of intent.
Eran: I think this setup has to be changed because in my opinion the industry has overused it. We’re already working on the next quarter. I don’t want to turn my employees into headhunters. A worker who constantly receives e-mail messages urging him to bring in friends eventually gets tired of it. In terms of fact in 2006 personnel referrals brought in twice as many recruits as in 2008.
Avigayil: A new recruitment channel that’s picking up steam is “candidate referrals.” These are people who have no obligation to SPL but they got an impression of the company, its professionalism and its quality recruitment staff. Since the beginning of the year we’ve seen an increase in recruitment through this channel, which I believe will become our next leading source. Of course we provide compensation for this as well, but the incentive is not just monetary. The motivation stems from genuinely getting a good impression and that says it all.
How do you refresh your candidate pools?
Avigayil: We realized that we need to be creative and so we decided to reach out to the candidates. We went out into the field to hardcore high-tech areas and handed out 5,000 car air fresheners with an ad for us on them.
The idea was that even if you’re not looking for work, refer a friend and you’ll get compensated.
Eran: We wanted to refresh our pool and make new people come to us, so we decided to venture into the field. Our competitors got uptight. To me that’s a sign it was successful. The results were also telling: candidates came in and got hired.
To wrap things up, what lies in store for Software AG-SPL?
Eran: Our big goal is to make our activity global, which means all offshore activity will mature and we’ll employ hundreds of additional people for global activity, all coming out of Israel. I really do believe in that. For me it’s a Zionist goal, as well as a tactical and strategic aim. I predict that in 2009 we’ll grow by dozens of employees and in the long term we’ll have hundreds more serving clients around the world. They’ll be technological ambassadors and will allow us to grow financially as well.
For the Hebrew Article