Digital companies have the capacity to grow very rapidly, but sometimes the speed of a startup embeds issues that are later revealed by pressure and external scrutiny. When IT issues are involved, applying a dependable framework can play a huge role in restoring stability.
Since its inception in 2006, music-streaming service Spotify had operated as a 100% agile company with an emphasis on collaborative teams. Founded in Stockholm, Sweden, its business model is built on a mix of ad-supported freemium and premium subscriptions. It employs more than 3,500 people based in cities all around the world and its IT setup entails more than 100 distinct systems from backend to playlist, search and payment functions.
In 2017, the business was growing rapidly and preparing to fulfil its promise to launch on the US stock market the following year. The company was experiencing growing pains and was under workload pressure; increasing the need for company-wide policies and common ways of working.
The financial systems (FS) team responsible for managing the companies ERP (enterprise resource planning) systems was especially in need of support. It faced multiple issues regarding daily workflow, compliance for the stock market launch and the recent migration of a key resource to the cloud.
Reorganisation was needed so Spotify contracted Swedish company Olingo Consulting to help it strike the right balance between control and agility, and to ensure that agile, DevOps and ITIL practices were used in a best-of-breed manner. The work was led by the autonomous teams, assisted by agile coaches. One of these coaches was Ola Källgården.
“Spotify were focused on speed as a business because that’s how it had grown so rapidly and they were loath to jettison that approach,” explains Källgården.
“As long as they were small and agile the need for rigid processes wasn’t there, but as they’d scaled with more teams coming in, spread in different offices, the need for structure increased. They came to realise that real structure was worthwhile and that a framework such as ITIL could be beneficial in some areas as long as it was applied in the right way.”
Källgården set about addressing the two key issues that were dogging the FS team: workflow and compliance, a two-part assignment carried out in tandem over the space of six months.
The workflow issue was tackled through a combined work-management process that took its influence from the way ITIL, AXELOS’s IT services management framework, addresses incident management and request fulfillment based on value principles.
A Kanban work board system was employed to help teams visualise the priorities of various stakeholders and tickets. At the same time, the FS team’s internal customers, such as the procurement, accounts and taxation teams, were shown the stresses they added to the workload since each was oblivious to the demands the other placed on the FS team.
Steadily, workflow increased and waste decreased. Time was consequently spent on the work items that created most value, allowing for better quality and improved relationships.
“It was done in iterations. We didn’t work out a solution and drop it on them, it was more about refining the process as we progressed,” Källgården says. “There’s a business expression popular in Spotify: ‘Stop starting, start finishing’, and that’s a mantra we took up. It was about getting the right things through the door that benefited the organisation.”
The second issue relating to compliance involved Källgården providing a more technical solution to the introduction of checks and controls needed to meet regulatory requirements. There needed to be segregation of duty. If a change was made to anything that could have a financial impact, such as the accounting practice, then it had to be approved by the relevant level of authority.
If the FS team were to make changes to the financial systems from a software perspective, as soon as it did anything that impacted the accounting or taxing functionality it had to be signed off. A system had to be built in at each step of the requirement, from analysis and drafting the design, to testing and the application.
Here ITIL’s principles around change management were particularly relevant, given Spotify remained wedded to agile processes. Rather than simply explain the changes, Källgården’s role was to educate staff in the mechanism of compliance so they could tailor their working processes accordingly. Once staff appreciated why they needed to change, things moved forward positively.
“The teams were used to acting autonomously because they had to operate at speed,” he says. “Agility is in their DNA, but the legal requirements of stock exchange introduction meant it was no longer just about being fast, it was about being compliant, too. They had to recalibrate how they built the compliance into their work process, which was not something they had ever had to consider before.”
As a result of the consultation, each team was able to create a process that fitted its own requirements while complying with controls introduced during and after the floatation.
“It was a small but vital part of the organisation at that time and I think it made a big difference to the way it worked,” says Källgården, who remains in regular touch with the company.
Meanwhile, Spotify’s stock market entry in April 2018 went smoothly. Today, it is the largest streaming music service in the world with 36% of the market and a turnover of $1.2bn.
To find out more about the most widely respected framework for service management, visit Built on ITIL.
