Business model of SQS Group

Customer Segments

SQS has a segmented market business model, with customer groups that have slightly different needs. The company targets its offerings at six segments: Automotive & Manufacturing, Banking & Financial Services, Energy & Utilities, Insurance, Retail & Logistics, and Telecommunications.

Value Proposition

SQS offers five primary value propositions: accessibility, cost reduction, performance, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. It has acquired numerous firms since its founding, including Galmont Consulting, Trissential, Bit Media, Thinksoft Global Services, and VeriSoft InfoSystems. This strategy has enabled it to greatly expand its capabilities and diversify its portfolio.

The company reduces cost through its payment arrangements. Its managed testing services offer performance-based payment under defined service-level agreements, resulting in cost savings.

The company demonstrates strong performance through tangible results. Specific positive outcomes for clients include the following:

• Generali Versicherungen used SQS’s services to set up a “test and implementation“ team for a system migration, resulting in the transferring of 66 billion data records in 42 hours
• Betting World Proprietary Limited used SQS’s services to assist with agile development and provide reporting on quality,resulting in 30 sprint reviews being delivered within 18 months
• Telecommunicaitons service provider eircom used SQS’s services for a wide range of testing services, resulting in a reduction in productivity, volume, and efficiency savings of €5 million
• Deutsche Post used SQS’s services to introduce uniform and systematic testing methods, resulting in an increase in the degree of testing automation from 60% to more than 90%
• An (unnamed) online retail bank used SQS’s services to increase the scope of its automated regression testing, resulting in right-first-time statistics of over 90%

The company reduces risk by maintaining high quality standards. It designed a procedure called SQS PractiQ, which focuses on software quality management. Specifically, it aims to ensure quality at all phases of software development, including launch, planning, implementation, monitoring, completion, as well as ongoing operation/further development.

The company has established a strong brand due to its success. It bills itself as the leading specialist in software quality, and is the first German firm to have a primary listing on AIM.

It has completed more than 10,000 projects and generated revenues of €320.7 million in 2015. It has over 4,600 employees working out of offices in Germany, the UK, Australia, Egypt, Finland, France, India, Ireland, Italy, Malaysia, the Netherlands, Norway, Austria, Singapore, Sweden, Switzerland, South Africa, the UAE, and the United States.

It has over 400 clients, and its customer base includes half of the DAX 30, almost a third of the STOXX 50, and 20% of the FTSE 100. Specific clients include prominent firms such as Deutsche Post AG, T-Mobile, Zurich Group, Barclays, Daimler, Credit Suisse, and BP.

Channels

SQS’s main channel is its direct sales team. The company promotes its offerings through its website, social media pages, and participation in industry events such as seminars and conferences.

It has organized and hosted several of these events itself, including the “Iqnite” conference series.

Customer Relationships

SQS’s customer relationship is primarily of a personal assistance nature. The company assists customers by working closely with them to develop and implement software. It provides specialists with extensive knowledge in the areas of relevant procedures, tools, and technologies, as well as general project development. These consultants typically work at the client’s site.

SQS also helps customers by offering SQS Academy, a program that teaches a set of accredited quality assurance, quality management, and business analysis skills. The program offers more than 750 workshops per year to over 5,300 participants, and courses are available publicly and in-house.

Despite this orientation, there is a self-service component. The company’s website features a section called “Publications” that includes useful resources such as white papers, fact sheets, and case studies.

Key Activities

SQS’s business model entails designing, developing, and delivering its services to its customers.

Key Partners

SQS maintains strategic alliances with firms in the product and technology sectors so it can provide its clients with enhanced offerings. Specific partners include: Black Duck, Coverity, Microsoft, Manufacturing Technology Centre (MTC), Orbium, Parasoft, Siemens, and Swiss Post Solutions.

Key Resources

SQS’s main resources are its human resources, who include the consultants that design, develop, and deliver its services, the sales employees that promote them, and the training employees that provide instruction.

It maintains important physical resources in the form of nearshore, homeshore, and offshore delivery centers in Austria, Germany, Northern Ireland, the United States, Egypt, India and South Africa.

Cost Structure

SQS has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent service enhancements. Its biggest cost driver is cost of sales, a variable expense.

Other major drivers are in the areas of administration, sales/marketing, and research/development, all fixed costs.

Revenue Streams

SQS has one revenue stream: revenues it generates from the sale of its services to clients. Sales typically occur through the signing of time and material contracts.