Most people will say a company because isn’t it hard to manage people? True. So the question should be revised to is it easier to build a services company or a product company? “yes this makes better sense”?
Answer: Very easy, A product company is million times harder. I m not talking about the struggles you have to go through to be successful or any sad stories related to history of CEO’s of services companies. I am just simply saying inventions are harder than serving people what has been invented.
So why is it hard to build products compared to services?
Note: We are obviously talking about Web products (specifically, Web Apps or Mobile Apps or SAAS products, such as Google, Skype etc) and Services companies are IT companies that provide services to other companies (such as Infosys, CTS, Perot Systems etc)
There are many reasons:
Building a product is inherently hard because you are figuring out what your users might want. Sometimes you can replicate an existing product which has demand, but it still involves a phase of customer development and finding out what is the best product that will be used by the customers. Services industry is more about getting contracts from existing customers. Services exist because customers have problem using a product.
Building a product often involves thinking out of the box and coming up with inventions. Most services out there aren’t really doing this for their clients. Innovation is a tough job
Product success is usually defined by the number of people using the product (unless it’s used by many, it’s not really successful, although many startup gurus will tell you it’s good if you found 1-10 people who find your product useful…Not always). So if you fail to acquire enough number of people to use your product, you will fail. It’s not really same in services company because services charge clients differently. They very rarely care about the success or the failure of clients (even if they say they do). So it’s a easier job because your “death” or Success isn’t depending on a client (or their failure).
Building a product that is used by people takes too many skills. Many a times, these skills are needed by a small group of people. A product company is carefully orchestrated like a dance. Each move leading to the next that makes everything better and better. One wrong move can simply kill it. Same is not really true when it comes to a Services Company. They can sell the client anything. Today if the client says I have a php/PostGre application, the client suddenly is scrambling for a backend guy who knows PostGre, he just wants to get the client. He doesn’t know that a group of people working together is what makes a product unique, not because they can hire developers for a project who can get the project over the line.
Appmakery wants to lead IT innovation in services Industry. Instead of being “filling seats” for other companies, we want to be the part of real value chain and deliver real IT EDGE that our Customers deserve.
Probably many other reasons, waiting for you think of a few reasons. Also waiting for the services company guys to tear this post apart please.