Technology product companies need to re-think their objectives

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It was one of those “Duh!” moments. I was in the middle of explaining how to cut through the market’s hype around SOA at the Sapient Executive Summit when I made the comment

The goal for IT product companies is not to have their customers realize the expected value out of the products they sell, but simply to sell products.

Seems obvious enough right? But why should it be that way? Why shouldn’t all parties involved in building IT solutions be incented to deliver on the value to the end customer? Whether they are IT product or services firms, there are ways to establish objectives that are aligned to a goal of value creation for the customer. This is why at Sapient we had a fixed time/fixed price model for so long; because it forced us to better align our objectives to those of our clients.

But what is the equivalent for product companies? How can they re-define their objective to be about delivering value not products? How can this be economically viable for them to do so? I think the on-demand/subcription/hosted/live model being explored by a number of companies right now (e.g. IBM, Microsoft, Oracle, SAP) is a step in the right direction, but may not be enough. IT product companies that find economically viable ways to deliver value rather than products to their customers will outperform their competition.

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