Products or services? Which one wins in the long haul...

Welcome to Scandia Consulting's Blog. Our take on the Internet and technology in business.

It's been almost 3 years now since I decided to take the plunge and become a self-employed consultant. As projects (and clients) come and go I wonder if there is really a solid future in custom developed Web applications. Sure, the hours of work are plentiful and there have even been a few opportunities to outsource when the schedule has been too tough to handle on our own. That is now. What happens in a few months, a year, two years when clients have hired internal expertise to tackle application development for their Intranet, or HTML "programmers" to tackle the day-to-day tasks of their brochure-ware? Does one hour of client acquisition translate to at least one hour of billable time? The answer to that is, "not always...in fact the majority of time it doesn't."

By having a hand in various verticals (financial, healthcare, non-profit, communications) I can't help but to think that developing a product or set of products in a SaaS (Software as a Service) model is a better approach to a successful future. The short term financial results are certainly not equivalent or as lucrative, but from a residual/continuous income perspective the outlook could be tremendous. Of course, in this scenario startup capital is required in some form or another. As you probably already know, there are a ton of options to do this, but as I see it there are two significant approaches:

1. Start building by the help of outside investors This will force you to start "in the hole", but the flip-side is that you are out of the gates full-throttle, allowing you to hire the expertise and management that the venture requires. Plus, it gives you a competitive edge by (hopefully) providing a fast to-market strategy preventing other companies to gain within the same space. For more information on investors and growing your business I recommend Startup Nation.
2. Build-as-you-grow This is basically what it says. You start small and try to execute your business plan and development efforts in parallel to what you are currently doing (be it a full-time job or your Professional Services consulting). This requires enormous focus and discipline on your part in order to stick to a pre-determined plan for how you will achieve your various business/development milestones. It is easy in this scenario to put aside your new venture to paying clients. Having a solid project plan and workload expectations will be a huge help in getting the idea off the ground. As you gain traction with your work, you can start bringing on additional talent and "turn up" the pace of your progress by shifting allocation percentages from consulting to product development.

So, why the topic you ask? It so happens that Scandia is at a cross roads right now with this very decision. Only time can tell what will happen. One thing is for sure, we have some homework to do and come up with a plan to propel us forward in this ever-changing technology landscape. Chances are that we will be conservative in how we tackle this and creep forward with approach #2 above. Stay tuned for updates on how this evolves.

I leave you with a quote that has pretty much shaped my life, failures, and successes.

"Natural ability without education has more often attained to glory and virtue than education without natural ability." - Cicero (106 BC - 43 BC)

Best, Nik Wahlberg