Commodity products for commodity business?
As a consultant I often find myself asked about build versus buy decisions, so should a client buy some off the shelf product or build some custom code?
There are lots of questions around technology and testing which we need to ask, but I think we need to start with something a lot more basic.
Is the project about differentiating the business?
If you just want a standard HR system, say, which does the same as everyone elses HR system then just go and buy a product. It's the same HR system as all your competitors use, but neither you or they are differentiating their business using this system. Spending a lot of money building a custom system is not going to bring in new customers or generate new revenue opportunities
On the other if the project is to enhance or build a key offering for the business then choosing a custom build might be the right way. In these circumstances if you choose a product you are going to struggle to differentiate yourself in the marketplace, especially if the competitors base their offering on the same product. In fact if they are not using it yet they can go out and buy the same product and match your offering. If you want differentiation then custom build can let you create a unique offering that would require significant investment from competitors to match.
What about customization of products?
But hold on, can't I buy a product, customize it and then create a compelling offering for my customers that way? Of course the answer is yes, but how much customization do you need if your competitors are using the same product? Product companies typically drive their feature set based on their client's customisations and enhancement requests. You then end up paying for these upgrades, you and your competitors are in effect funding a product company to keep a level playing field. In fact my experience has been you end up embedding custom written code (c#, java, etc) inside of the product to deliver those features which are truly valuable - those features which no one else has and which can make a compelling offering.
Specialist skills?
Of course product companies are on hand with training courses and consultants who can come in and assist, all for a reasonable fee of course. In fact for many product companies the consulting side of their business is hugely important, both from a sales and revenue generation point of view. Internal technical people are often happy to get on the training and acquire marketable skills as well, they know this is the kind of specialist knowledge people will pay a lot for (Resume Driven Development). So why do people pay top dollar for people who know particular products? Supply and Demand - There is limited supply as only so many people know the product. There is plenty of demand, companies have based their key market offerings around the products and desperately need people who can support and enhance them.
If you really want a compelling and unique offering for your customers then consider custom build. If there are things everyone in the market does that give no competitive advantage then just buy a product.
There are lots of questions around technology and testing which we need to ask, but I think we need to start with something a lot more basic.
Is the project about differentiating the business?
If you just want a standard HR system, say, which does the same as everyone elses HR system then just go and buy a product. It's the same HR system as all your competitors use, but neither you or they are differentiating their business using this system. Spending a lot of money building a custom system is not going to bring in new customers or generate new revenue opportunities
On the other if the project is to enhance or build a key offering for the business then choosing a custom build might be the right way. In these circumstances if you choose a product you are going to struggle to differentiate yourself in the marketplace, especially if the competitors base their offering on the same product. In fact if they are not using it yet they can go out and buy the same product and match your offering. If you want differentiation then custom build can let you create a unique offering that would require significant investment from competitors to match.
What about customization of products?
But hold on, can't I buy a product, customize it and then create a compelling offering for my customers that way? Of course the answer is yes, but how much customization do you need if your competitors are using the same product? Product companies typically drive their feature set based on their client's customisations and enhancement requests. You then end up paying for these upgrades, you and your competitors are in effect funding a product company to keep a level playing field. In fact my experience has been you end up embedding custom written code (c#, java, etc) inside of the product to deliver those features which are truly valuable - those features which no one else has and which can make a compelling offering.
Specialist skills?
Of course product companies are on hand with training courses and consultants who can come in and assist, all for a reasonable fee of course. In fact for many product companies the consulting side of their business is hugely important, both from a sales and revenue generation point of view. Internal technical people are often happy to get on the training and acquire marketable skills as well, they know this is the kind of specialist knowledge people will pay a lot for (Resume Driven Development). So why do people pay top dollar for people who know particular products? Supply and Demand - There is limited supply as only so many people know the product. There is plenty of demand, companies have based their key market offerings around the products and desperately need people who can support and enhance them.
If you really want a compelling and unique offering for your customers then consider custom build. If there are things everyone in the market does that give no competitive advantage then just buy a product.
1 Comments:
One thing to consider as well when it comes to customizing products is the tools available for customizing them. Many products have their own little development environment where you can write code in their own scripting language, or something like that.
This can become quite a pain when the tools just are too simple to make something that is well designed, maintainable, testable etc.
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