How to Identify what to build for Your IT Services Company

• Sukanya Bharati
• November 5, 2024
• Blog
• 0 Comments

Introduction

So finally you have decided to leap from a service-only model to a service + product approach, haven’t you? In our previous blog, we discussed why this change is critical for unlocking new revenue streams, improving margins, and standing out in a competitive marketplace. Now, the big question is: What product should you build?

Let’s talk about how you can identify the right product opportunities, validate those ideas, and set your company for long-term success. Whether you’re thinking about building a product, accelerator, or platform, the process remains the same. 

The Starting Point: How to Identify Product Opportunities

1. Do you know your customer’s pain points? 

The most obvious thing about successful products is that they solve real problems. You can begin with what is closest to you – your client’s problems. Begin by assessing the common issues your clients face. What services do you provide repeatedly? Make sure that there is a larger solution space for this problem. 

These pain points can be the foundation for a new product idea.

• Example: If clients frequently ask for custom integrations with CRM systems, consider developing a plug-and-play integration tool. 

2. Explore Automation and Efficiency

Look internally at your processes. Are there any tasks that are manually repeated in every project? Can that be automated? If yes, then do that. 

• Example: If your team regularly prepares project reports manually, consider building a tool that automatically generates these reports using project data. This could save hours of manual work, improve accuracy, and allow your team to focus on more valuable tasks.

3. Leverage Your Expertise – Technical or Domain 

Think about the areas where your team excels, what are your strengths as a company? Your strengths can inform product development. Building a product around your core competencies will be much easier to develop and resonate well with your clients – because you understand the problem firsthand. 

• Example: If you’re known for your cybersecurity services, a platform for monitoring security threats could become a natural product extension.

How to validate your product ideas? 

1. Talk to Your Clients

Reach out to key clients and try to understand their most pressing concerns and challenges. They can be the very first customers of your product. Talk to them – understand what features would be important for them and if they would be interested in your product idea. These insights altogether can help shape a viable product. 

• Tip: Focus on your most engaged clients—they are more likely to offer honest feedback and help you refine your idea.

2. Run a Pilot or MVP

Instead of building a product from start to finish, build in iterations. It will help you test the waters without heavy resource investment.

• Example: If you’re building a workflow automation tool, release a basic version and gather real-world feedback to inform your next steps. 

3. Measure Market Fit

It is important to gauge if the market is broad enough for the product that you are building. Use competitor analysis, market research, market sizing, and client surveys to estimate the demand for the product that you are building. It will help you assess if your product can generate significant revenue. 

What are the common challenges when you start building your product? 

1. Balancing Service and Product Development

While you are busy building your product, make sure to keep the service clients satisfied as well. Dedicate a team with the required capacity to product development, while the core service team can continue on the client projects. 

2. Mindset 

Building the right mindset is essential when you are building a product. It becomes super important to build teams with the relevant skills required for building your product while you make important decisions. Additionally, having a growth mindset, being open to feedback, and learning from mistakes is crucial.

3. Future-Proofing Your Product

Make sure when you build your product, you consider the fundamental possibilities around scaling. You do not need to build for scale from the first day itself, but you can be aware of the fact that if there is a need for it in the future, the infrastructure is capable of scaling as the product gains traction. 

4. Adapting to Feedback

Be open to changes. Flexibility is crucial, and adapting to client feedback can help you shape your product for your early customers. This can turn out to be beneficial in the long journey. 

The Long-Term Benefits of Productization

1. Higher margins 

Productization offers a more predictable cost structure and pricing flexibility, resulting in greater financial stability for your business. This can therefore lead to increased profitability, higher margins, and business sustainability. 

2. Sustainable Growth

Unlike services, products can provide recurring revenue. With the right product, your company can scale exponentially without being limited by manpower.

3. Enhanced Client Loyalty

Products often result in longer-term client retention, as clients become dependent on your solutions. This makes it easier to build lasting relationships with them. 

4. Differentiation from Competitors

A proprietary product sets you apart from other service companies. Offering both services and products gives you a competitive edge over your competitors.  

Conclusion: It’s Time to Take Action

Identifying and developing the right product can take your IT services company to the next level. Start by assessing client pain points, validating product ideas, and preparing your company for the challenges ahead. With the right product in hand, you can unlock new revenue streams, enhance profitability, and secure a stronger position in the market.

Now, it’s your turn to take the next step. What product will propel your business into the future?