Why a services shop should consider product development
Riddle me this: what gives your software services company a steady revenue stream, more experience, better-looking portfolio and capability to serve more demanding customers?
If you guessed it, you’re right – A software product. Now there are many people who would list out the challenges involved in product development along with existing services business. Picking the right team, financing, setting expectations & goals are some areas that would come up in such a discussion.
On the other hand are the things that you will have once you build a product and also get customers. These would open up many doors for your services business:
Steady cash flow. We are assuming a subscription based Saas software product here for the sake of the discussion. If your team is capable of addressing bugs and other issues for existing customers and also building new features, your customers will keep paying to use your product and you will get new customers too. This revenue stream will allow you to scale things up for your product and even allow your company to take up some promising (but risky) projects from early stage startups
Get more customers. As word of your product spreads, more people will find out about your services business. This would definitely bring in more leads.
Make your team better. Product development will give your tech team some good exposure, which could be useful if they later work on projects for other customers. They’d know what it’s like to build good user experiences, as they’ve done it before for their own product. The sales & marketing team would also get better after their stint with marketing your product and acquiring new customers. They could then help market your services too.
Better looking portfolio. It builds credibility. Prospects respect the fact that your team has been put through the paces in building a product. They are more likely to sign up with you because of this.
It is a marketing strategy on its own, that earns you money in the long run(how ever long your team takes to build and launch). Let’s also address 2 main challenges that you may face while taking this route:
- Picking the right team. Marketing and sales will directly affect revenue and you need to make sure that the staff behind this will be able to work at par with the scale of implementation. If there is a risk involved taking a few people from your existing team, don’t do it unless you’re absolutely sure about it. Be the feet on the ground for the new product as there is no better person to fill that role. On the tech side, building the product will be very different from meeting deadlines while working with a customer. The developers and team lead have to be picked accordingly.
- Approach towards product development. The basic challenge here is that you are writing code for many customers instead of one. If you and your team are doing it for the first time, then there surely would be a learning curve. Here, you are the product owner and will need to come up with a feature list.
A solution to both challenges: bootstrap. You can’t build a million dollar product in 6 months. Do only a few things first and do them well. Your customer base will expand slowly. Then do a few more things with your product if you’re looking to scale up for more customers. Everything would start to take shape from thereon.
A lot of the dev shops we work with at ContractIQ have released their own products which, in some cases, big enterprises have started using. These teams are able to position themselves as experts in that field, and use that reputation to expand to other domains through their services offering. This is a good strategy to consider; you just need to maintain the balance between building your product and running your services shop simultaneously.
Pravir Ramasundaram is our in-house content writer here at ContractIQ. Keep coming back to read more from him on mobility & outsourcing.