Why Your Project is Not a Product: What it really means to take the leap into packaged software
Professional service organizations often struggle to differentiate themselves from the competition, which leads to a race to the bottom on price. But we all know that price is just one piece of the value pie. Another attribute highly valued by clients is risk mitigation. The vendor with the best price to risk ratio usually gets the job.
Perceived risk increases with uncertainty. Clients will have high confidence that a certified consultant can install the out-of-the-box CRM on a clean server. Certainty is high, risk is low. But if the proposal is to build a custom CRM solution from .NET libraries, certainty evaporates and risk skyrockets. Either strategy can be successful, but the first option benefits from the certainty of encapsulated Intellectual Property (IP) in the form of tested code.
Professional service organizations that invest in encapsulating their proven IP gain various opportunities to reduce their risk profiles. Some common strategies to reduce risk include:
- Procedural frameworks
- Custom code libraries
- Accelerator modules
- Packaged software products
One of these options is not like the others.
Packaged software products sound cool
Frameworks, code libraries, and accelerators are very useful for managing delivery cost and mitigating risk. And as organizations develop experience in specific industries, the underlying similarities can be encapsulated for reuse in the next project. There's no need to start from scratch on every project.
At some point the management team will have this insight: "We could leverage our IP even more if it was in the form of a packaged product." They see a future in which they could:
- Even out their revenue stream with high margin service contracts (SaaS) <... class="become-member ms-auto me-auto">
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