I started IdeaCarve technologies in 2010 with a motto to offer web application development services to the clients. Since most of the projects I did were small to medium, these projects expected my personal attention and I had to invest time, money and energy into each of them.
Same attention as bigger project:
A service project needs a Project Manager to manage it, a QA engineer to test it, and an engineer to develop it. Also, we need to consistently source the requirements from the client alongside the development. After the project’s development, the QA engineer will raise bugs, if any, and resolve it.
Need to remember the legacy business logic of the project:
Usually, the lifetime value of the customer is short owing to the duration of the project being done. The project receives its remuneration upon completion and reception by the client. However, having this problem solved, another one arises. We still need to continue to pay engineers and the project manager their every month’s salaries, which in turn forces us to hunt for new projects.
A bigger trap here is in increasing the number of resources that would help us in delivering more service projects and generate more revenue. After the completion of these projects, the cycle repeats itself and adds on to our existing cost. It is, in fact, not a very sustainable business model.
Dependency on human resources :
After a few months after the project is completed, some clients might ask us to do small changes, which may as well be worth 2 hours, but for an engineer who has to look back and remember the business logic of this service project as conducted before, it needs QA and the same amount of effort.
If an engineer who had a domain expertise of this service project leaves the organization, life becomes more tough because you need to again spend money and time in training new resources. If the client requests us for a small modification, say, after a year, we need to hire an engineer, train him/her on the legacy code. Added to this, the return from such a service project is less if the customer lifetime value is small.
My final words about switch to a Product model -
When you invest time, money and energy in a scalable product idea, there is only one legacy business logic. Make this product sustainable, and the revenue shall pour in.
Thanks for Sujith V, and Shamanth M for reading drafts of this.