At the Kickoff: Project Development vs Product Development

Having experience working with more than 200 clients, we can honestly say that quality, time, and money are the main factors considered when choosing a software development contractor. What is rarely considered is the form of cooperation you develop with the contractor. Choosing the most suitable form has an adverse effect on how much time and money will be spent before the product is launched and how of high quality it will be.

What are your options? Here, we inspect two key approaches that can be used for your development needs — Project development and product development.

Project Development

Simply Put: Develop a Detailed Statement of Work and Follow-Up with Its Implementation

Main Benefit: Financial Risks Shifted To the Contractor

2) Apart from that, the team fully commits to finishing your project within a specific statement of work and budget. Regardless of technological advancements, political situations or any other external circumstances, the contractor is obligated to complete the agreed upon deliverables.

However, mind that the project duration, which is how much time will pass before the project is finished, is not “set in stone” before the beginning. If the development goes as planned, according to the documented specification, you can expect the team to deliver the project on time. But once a change request appears or any other interrupting factors enter the picture, you will have to sacrifice duration, as time and money spending is strictly fixed. Thus, project development is no good if time to market is of utmost importance to you.

Associated Risks: Lack of Flexibility, Higher Hourly Rates, No Participation in Team Selection

A project development team has 20–100 percent higher rates as compared to the rates of the team developing the product. The contractor is the one to undertake practically all the risks associated with development. Accordingly, the higher complexity and sophistication is present in SOW, the harder it is to provide a precise price estimate for the project. This is compensated for by higher budgets, which provide cover for the initially unaccounted project costs.

Combining all that with having no influence on team selection, and you realize it’s hard to predict how effective your communication with the project development group will be. It’s likely that team involvement will be neutral in under this kind of collaboration.

How to Mitigate the Risks: Elaboration Phase and Agreed Change Management Process

Change management is another point worthy of your attention. Changes are an inevitable part of development, be it a new feature request, market adjustment, or updates based on customer feedback. Any changes will disrupt the planned flow of project development. This leads to additional expenses and time losses. The bigger a project, the bigger the associated risks. You have to handle changes professionally, by following a documented set of rules that cover process and payment issues.

Best Fit: Small Projects with Crystal Clear Requirements

Product Development

In A Few Words: Implementation from a Bare Idea to Business Diversification

Your Benefits: Great Flexibility, Fast Time To Market, Lower Expenses

2) You reduce expenses by effectively paying lower hourly rates for your product development team as you share the risks with the contractor.

3) You make an individual choice of selecting and hiring each team member. This gives you an advantage for weighing your staffing options. Every person becomes a valuable asset and adding even one more member to the team can have a notably positive impact on revenue.

4) The product development team, having worked with you closely for a long period of time accumulates domain expertise. They understand your organization’s goals and challenges as well as realize the software product’s place in your business. Seeing the big picture assists them to consult you on making the very best technical decisions.

Associated Risks: Project Management

How to Mitigate the Risks: Trial Period

Best Fit: Complex Projects with a Long-Term Vision

Bottom Line

Have a clear idea of what kind of software solution you need to develop, define the level of quality you need and keep the timeframe in mind. Choose an approach and discover what works for you.

You can find the original at AltexSoft’s blog: “At the Kickoff: Project Development vs Product Development”.

Being a Technology & Solution Consulting company, AltexSoft co-builds technology products to help companies accelerate growth.

Being a Technology & Solution Consulting company, AltexSoft co-builds technology products to help companies accelerate growth.