Service companies vs product companies
17 likes10,225 views
The document contrasts the operational differences between product and service companies, emphasizing that product companies focus on continuous innovation and customer satisfaction, whereas service companies prioritize delivering billable work and fulfilling client demands. It outlines how staff motivations, accountability, and quality control vary significantly between the two types of organizations. The piece also discusses the evolving nature of the software industry as more companies transition from service-centric to product-centric models.
Service companies vs product companies
- 1. A compilation of how differently Product and Service companies work!
- 2. The most important Rule in a business
- 3. Industry Trend • Earlier most software org’s were services based. • They concentrated on basic technology and skills. • There were very few ‘product companies’ • Now! This is changing rapidly. http://in.linkedin.com/in/manuswath
- 17. How they handle “The most important Rule” in a business
- 20. Create and sell a solution that predicts ease of use for end customers http://in.linkedin.com/in/manuswath
- 24. Quality is treated as an investment! http://in.linkedin.com/in/manuswath
- 25. Every hour spent on the product is treated as an expense to calculate cost of production! http://in.linkedin.com/in/manuswath
- 26. How they handle “The most important Rule” in a business
- 28. Future revenue obtained from product is the only Cash-cow http://in.linkedin.com/in/manuswath
- 31. How Service Companies Think and Act! • Role: To consistently deliver significant new value to the business via adding extra billable people. • Purpose: Employ staff to service the perceived technology needs of "the business“ and “clients”. • Staffing: The lack of product managers, interaction designers, the prevalence of old-style project management, engineers unfamiliar with the demands of scale and performance, the existence of old-style business analysts, and heavy use of outsourcing. A project typically lasts for several months, after which the members of the project team continue to work (together or not) on totally different projects, that could belong to different domains, using totally different technologies (or the same technology, but different frameworks and versions). • Passion: Staff are like out-for-hire “merc’s”, who show little to no product passion. They are there to build whatever the client wants them to do. About 50-60% of the new employees will learn and will make the transition towards new technologies right from the beginning and almost all are likely to change the technology during the course of their employment. (Jack of many trades) • Quality: is controlled via experience and budget. Here employees are evaluated according to the quantity of work they perform. • Funding: Client-funded projects, in-demand skillsets determine job opportunitybench-strength http://in.linkedin.com/in/manuswath
- 32. How Product companies Think and act! • Role: Aim to consistently deliver significant new value to the business thru continuous product innovation. • Purpose: Staff exists to service the needs of actual end customers, within the constraints of the business. • Passion: Staff are like war-time-missionaries. They have joined the organization because they care about the mission and want to help customers solve real problems. • Requirements: The necessary product to be built is discovered over a period of time. It is accepted that most ideas will not work with customers the way they are thought of initially. Those requirements that do work will require several iterations to achieve the necessary business results. • Funding: Funded through various models, product teams are measured by business results (outcome). • Quality: is controlled via datahttp://in.linkedin.com/in/manuswath
- 33. How Service Companies Work! • Process: Atypical waterfall, even when the engineers consider themselves Agile. Only part Agile would be at the tail end of build, test and release. • Silos: Teams align by function, creating silos between the different areas of the business, management, user experience design, engineering, QA and IT site operations. • Accountability: The people actually working on a project typically do not have a real say in what they are building, on how it’s built, and even when it’s due. Nor are they even interested in ownership upfront. If, the leadership team try to hold them accountable for the results, immediately hear complaints that they didn't get what they actually wanted, and because of delays and costs, critical things had to get cut, and so it’s certainly not their fault. • Leadership: possibly looks for a silver bullet when it comes to technology. In demand skill sets are always high on priority. • Opportunity: Multiple opportunity if the service-company has many clients, Possibilities of on-site travel exists to many depending on the client. • Volatility: in a volatile client scenario, there could be other clients who can hire staff in the in-demand experience levels (2-10 years of exp). Here employees leave more often(inter and intra-company) this seldom affects the company significantly. The low impact on the company is due to the fact that most of the times the employees rarely develop expertise at product level, as mere programming knowledge is enough to carry out the tasks. • Strengths: Strong program management, customer management, crisis management functions. Multiple touch points with customer organizations by having dedicated Relationship Managers. Extremely good fire-fighting capabilities when engagements or relationships go sour. http://in.linkedin.com/in/manuswath
- 35. How Product companies Work! • Process: Fluid process enable faster movement, processes work differently in order to deliver the necessary solutions for customers and business. • Silos: typically do not exist as teams depend on true collaboration between product, user experience design, technology and the business units. Optimization is for product teams, not for the individual functions. • Organization: 2 types of engineers ones that support “true IT/Dev-ops” and those that work on the commercial products. • Accountability: in product companies, all actions are measured by results based on market acceptance of product. • Leadership: technology enables and powers the business. It is embraced and valued. The people that create the technology are respected as the key contributors they are. Leadership in a commercial product company understands that it’s their job to create the culture and environment necessary to nurture continuous innovation. • Opportunity: Limited to inter-company, few possibilities of on- site travel (exception are multi-site product company). • Clients: a large number of customers get the same product. http://in.linkedin.com/in/manuswath
- 37. References • http://www.svpg.com/ • http://www.todaysoftmag.com/article/487/pr oduct-mindset • https://stratshireconsulting.wordpress.com/2 014/06/10/the-product-mindset/ • The way I am wired http://in.linkedin.com/in/manuswath
Editor's Notes
- #13: Cheaper to start