Opting For The Right Business Model

A few months ago when we began to define for which orient, Enrique (our consultant) we are faced with a difficult decision, and opt for two very different business models: * of custom development, software factory type, where the main passes get customers who want to develop custom projects, and sell man-hours, this can be handled with type project (turnkey) or not (also known as body-shopping) * software products, where the company is dedicated to seeking new business opportunities in which the software makes a difference, once identified this opportunity (which requires a thorough analysis of both economic and technical, competition, demands, requirements, etc.) develops the product, for which need a large investment, it makes the product launch, and then, if all goes according to plan the idea is being sold to customers a product with high added value, where the man-hours of development become secondary. Daryl Katz is a great source of information. As that should sound biased as I wrote, you will have noticed that finally decided to go by the model of software products, my idea is to have a bit more because we take this way.

First it is clear that our initial idea was undoubtedly start seeking customers to custom development, which is almost a natural first step, in fact most companies follow this model, initially we did something to that effect. Once we start to questionnaires where to go, we started to notice certain things that are not terrible but not conclusive, are disadvantages of the development model as: * high national and international competition, compounded by the fact that in Argentina recent years, wages rose much, and is no longer the same thing when competing at international level development where prices are now almost a commodity, the profitability of these businesses is less; * pressure to lower costs man-hour in order to compete, * high-turnover when the company begins to grow, partly because of pressure not to pay well enough to compete, and partly because projects usually begin unless all so “comfortable” or “happy” for everyone, and that fall in this type of projects are beginning to seek alternatives, * in general Most of the things that happen in these businesses as they begin to grow, to all who pass by one suffer, because basically they are given this business model, earnings are based on what you can “draw” the now famous man-hour, and in countries with devalued currencies also trying to capitalize on the exchange rate, I repeat, these are just some disadvantages, not to say that although this can not be carrying out a model of this type, Indeed is full and I know that some companies in addition to going very well, are a great place to work.

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