Moving your Business From Services to Product: Here’s What it takes!

Services vs. Product Income: One Time vs. Recurring

Many who are in a “Services” environment have asked me what it is they need to know to transition and be successful in “products.” These questions have come to me from much of Asia where hundreds of thousands of people have experience in services, but few have experience and the competencies to manage products successfully.  However, if a service could be “productized” then the builder can leverage the profits from the product and get repeat sales.  Many know that if they can get into products they can leverage their efforts and be even more successful.  It is especially true if they have some “domain” expertise they can apply developed by delivering a service to a product.

Shifting from services to a product

The value to a company to shift from services to a product is a straightforward return on investment evaluation.  First, you calculate the “services” ROI and then do the same for having a product.  Product ROI is a bit more difficult because you have to assume you are building something that will be purchased, thus necessitating a sales forecast.

Several years ago the Information Development Authority of Singapore commissioned a McKinsey study that discussed the fact that at the much higher costs of people in Singapore working in IT, they will also have greater difficulty competing with IT services costs from India or China.

That means about 30,000 IT professionals in Singapore need to gain the competencies outlined here.  The story is much the same in India where Infosys started to transition part of their business to products as did Cognizant.

But more significantly, many individuals want to strike out on their own, be entrepreneurial, and build their own business.  It has become especially much easier today give a low cost, portable computers called smartphones and powerful programming languages.  The advent of the Internet of Things and all of its still to be discovered opportunities enables whole new businesses the will to disrupt how things were done in the past digitally.

But building that business and being successful requires gaining new competencies.

The current service provides the competencies listed below are still valuable necessities.

1. Staffing
2. Team Management
3. Manage Team Productivity
4. Planning
5. Project Management
6. Resource Management
7. Development Tools Expertise
8. Project Review
9. Design and Conduct Training
10. Technical Support

Let’s take a look at these skills as applied in a real-world environment.

Services

Suppose you have worked on a new software development or maintenance project involving 5-20 team members.

Here you will start with project planning after gathering client requirements. The client will readily give you the requirements, and perhaps an industry or business analyst focuses on a requirements document.

You will then break down the total work and allocate chunks to team members and track progress. Here you are somewhat performing the tasks of a project manager.

You ensure access to IT tools and resources needed to complete assigned tasks.  

Whenever you find skill gaps, you bring the necessary training. You will also track project health including productivity using metrics to deliver on time and a budget. After project delivery, you and your team provide necessary technical support until your client can use the software comfortably.

Product

If you picture yourself in a similar role in a product company, you will have many surprises.  

There is no one to give you exact requirements of the product. You do not know what the market would like as features and user experience. You have to imagine every scene and innovate, like a movie director.                                   

You need to constantly track how your competitors solve the problem that your product is trying to solve in better and cheaper ways. You worry about communicating product benefit messages to stakeholders. You look at extensive testing of a product and get initial beta feedback.

You network with several internal & external stakeholders to keep abreast of changes and newer ideas. You will look at the roadmap of your product capabilities and add-on services to help your customers adopt your product quickly.

Therefore, the new competencies that need be developed are:

• Fundamentals: Decision making, customer journey, product lifecycle management
• Product Market Strategy: Innovation, Value Proposition, Market Segmentation and Opportunity, Personas, Market and Competitive Research, Product Positioning, Roadmapping, Portfolio Management, SWOT Analysis, Distribution Channels, Training, Pricing, Costing, Data Analysis, Forecasting, Budgeting, Finance, Metrics, Intellectual Property,
• Marketing: 11Ps, Social Media, Media, Mix, Planning, Messaging, Content, Packaging, Bundling, Promotions, Marketing Communications, Timing, Budgeting, Metrics
• Soft Skills: Leading teams, Persuasive Communications, Impactful Presentations, Networking, Negotiation, Mediation, Program Management
• User Experience and Interface:
• Product Engineering: Prioritization, Kano Analysis, Research and Development, Beta Testing, Agile Management
• Product Support: Documentation