One of the most notable IT trends today is the transformation of industry developments into a “product for the masses” format. Captive IT companies (structures of industry holdings) are increasingly moving from servicing the internal needs of parent structures to working on the mass market.
Having accumulated significant technological and intellectual resources, big business realizes that internal developments can be useful for a wide range of consumers both inside and outside the same industry. Entering the mass market allows them to gain a new source of income and develop a new line of business.
Big transition
To become a vendor of IT products, a captive company needs to change its business model, restructuring its approaches to operating activities.
We all know that any project is finite, has clear deadlines, tasks and budget (in an ideal picture of the world). But IT products live as long as the market and end consumers determine. And this is a completely different story, where there will be no desired “commissioning”. The product requires constant development, and this process does not have an end point.
To begin to move into a product story, a company needs to assess the market attractiveness of its IT developments and determine their unique advantages. Therefore, it is important to conduct an in-depth analysis of the market and understand whether there are prospects for a particular product, which segments may be most attractive for existing and promising developments. Identify the main competitors, their market share, niches vacated two years ago, the model of promotion at the initial and subsequent stages and so on.
Further, it is important to adapt internal developments correctly to the product format. This is, first of all, the unification of functionality, improvement of the user interface, simplification of the integration and operation process.
After adaptation, the product needs to be optimized: you will need to conduct tests with a focus group in order to improve functionality and user path (how convenient it is for the user to work in the system). You may also need to modify the architecture to ensure scalability and reliability.
Then the product support infrastructure is built. This includes organizing technical support, training users, creating marketing and sales support mechanisms.
From the beginning, you should build a recognizable brand for your IT product. In highly competitive environments, it is important to stand out through association with quality and innovation. The task can be solved through participation in industry events, publications, promotion through professional networks, etc. Partnering with other companies or integrating with popular platforms will also help you get to market faster.
Product marketing and sales is a separate area, which should include online promotion, content marketing, demos and pilots. This will help attract the first customers and create a positive image in the market. At the same time, the effectiveness of marketing must be measured – chaotic marketing does not lead to anything good.
Once launched, it is important to consider feedback from early customers and adapt quickly to their needs. Competition requires constant product renewal and improvement – investing in R&D will advance to leadership positions.
Risks: internal factors
When bringing a product to market, there are a number of significant risks that can significantly affect its success and competitiveness. One of the key ones is the discrepancy between the product and the market needs. This risk is eliminated through careful analysis and pilot runs to test hypotheses and identify possible flaws before a large-scale launch.
Another bottleneck is lack of scalability. To avoid problems associated with increasing load or expanding the client base, it is worth making sure that the product architecture supports the necessary scalability and performance. This requires a thoughtful design of the system, taking into account the potential growth in the number of users.
It is important to invest in the creation and training of a technical support team, as well as the implementation of automated solutions for the efficient processing of customer requests.
Technical support for an internal solution is significantly different from the product that was brought to the market. This includes the number of requests, as well as SLAs, and channels for receiving requests, and the maturity of ITSM processes, and the level of automation. Internal solutions can be supported “on hand”, in the case of external solutions, this will “devour” the entire margin.
Finally, weak marketing can be a major barrier to product success. To improve its effectiveness, it is necessary to use data analysis and A/B testing, which will allow to determine more accurately the most effective approaches and improve communication with the target audience.
The main resource for a successful transition to the product model, in addition to the general readiness of the company’s senior management to change course, is the presence of a qualified team.
Risks: external factors
The transition of the enterprise to the product model in Russia is associated with a number of specific factors, each of which can significantly affect this process. It is necessary to take into account the regulatory and legal features of work in each area. Compliance with laws and regulations can significantly increase product development and implementation costs.
In conditions of mandatory import substitution, companies may face the need to change the technologies or infrastructure used, which will also entail significant costs, it will take time to adapt.
Sanctions can restrict access to critical technologies and components, which will affect the quality and competitiveness of the product. In addition, it can make it difficult to maintain a product once it is on the market.
The competitive environment in Russia also forms certain challenges. The efforts of domestic players (large IT companies and startups) may require more aggressive marketing policies from captive structures.
The heterogeneous level of digital maturity of Russian companies can make it difficult to implement the product, and the “new vendor” will have to launch additional services, such as training and implementation support, which carries additional cost.
The shortage of qualified IT personnel will also become a problem: when switching to a product model, you will have to work actively on attracting and retaining talent, which will require serious resources.
How to evaluate the transformation
To assess the success of the transition, it is necessary to establish specific goals and key performance metrics. Such indicators can be the number of active users, their satisfaction and the rating/reputation of the product in the market. Sales growth rates, expressed in revenue growth and an increase in the number of new contracts, will be an indicator of commercial success.
Indicative evaluation criterion is the speed of implementation of new versions of the product, including the frequency of releases, compliance with the planned release dates and the required resources. It shows the level of flexibility of the product management process and the ability to adapt quickly to changing conditions.
In summary, technology is becoming more accessible and versatile. This allows captive companies to offer solutions not only in the field of their enterprise, but also to adapt them effectively to other industries.
As a result, the transformation of industry solutions into a mass product will allow large businesses to achieve greater scalability, diversify profitability, expanding their IT areas.
And if you approach this issue comprehensively, overcoming all the difficulties and risks, the IT market can expect serious changes in the foreseeable future.
By Nikolay Ulrich, Head of Infrastructure Consulting and Information Security Practice at Axenix