NASSCOM EMERGE Community An initiative to collaborate with members of NASSCOM

Since we are a Product Company I will take a shot at this. Here are my top five challenges:

a. Lack of Maturity in Product Development Methodology Skills as compared to Application Development Methodology Skills with people. India has been a destination for application development and consulting. Product Development is a different beast than application development. The way to overcome this is to recruit people already experienced in software product development (there are companies that do product development on contract for other product companies) or recruit freshers unsullied by some other company's application development approaches.

b. Challenges in attracting Capital - If you are an enterprise software development company, VC funds are hard to come by unless you can show rapid growth with SaaS kinds of models and quick ramp up in Indian domestic markets. Again SaaS based delivery approaches will help you overcome this challenge if you can prove a hockey stick trajectory in revenues whatever level they are.

c. Attrition - Uncles and aunts have more say in a young recruit's career than the quality of work done or the technical challenges. Do not underestimate this. Some of your best people would rather leave interesting work and sit on the nice bench a prominent IT company may provide! Ways to covercome this - spend more time talking to recruits and hire those that think differently or have clear career goals in challenging types of work. The more challenging and technically interesting your work is, the faster they would be able to find another job! May not be a problem if you people needs are small and manageable but ramping up to large numbers if needed may become a problem.

d. Focus and Market Conditions - As of today, if you are a product development company on contract or worse, you are your own product company, the global slowdown affects everyone sooner or later. Concentrating on a niche that's somewhat recession proof may not be guaranteed in all cases. Again low-entry price point entry products like SaaS based ones may be a boon in this kind of tight market conditions, especially in the Indian domestic market.

e. Sustainability and Patience - If you are running your own product company, keeping focus and confidence in your own convictions is the biggest challenge of all. It's easy to give up and lose focus. Everything takes longer and more painful to happen with product development companies.

Hope this helps!

My top 5 list:

#1 - lack of quality research in technologies coming out of our universities. Can you name one Indian technology/product that was incubated in a masters or PhD program?

#2 - lack of funding for untested ideas. While there are N nunber of "early stage" VCs, show me any one who has invested in real early stage? Show me some cutomers and then we will talk is the popular refrain.

#3 - easy & safe money making opportunities in the IT outsourcing/services sector? The best folks prefer the comforts of a safe job rather than the struggles of an under-funded startup

#4 - lack of global product marketing talent. I have not met any real folks who have built distribution channels, sales programs, marketing programs for a product on a global basis

#5 - lack of early-adopter customers. Indian customers, being cash constrained are followers and this discourages indian products from getting crucial local support

Arvind 

Nari & Arvind: Very interesting list. Can you please list few pointers on the "root cause" of these challenges?

Product business is a difficult business. There are a lot more than 5 challenges, but we can start with 5.

1. I think product companies need to think different.  For example if a company is building thousands of websites and strapped for resources to cope up with demand, one way to solve this is to see the patterns in building web sites and do a web-site builder. It does not have to be perfect, but even if it starting saving 10 or 20% of the effort, it is still an improvement. Let us call this the Tool Builder Attitude.

2. We are good at solving problems once they are presented to us. But we have not developed the ability to solve the "meta problem". Out of seemingly different problems, there is an abstraction that brings us to the meta problem. For example SAP solved the meta problem of ERP. So while they do not have a complete ERP solution, they have enough pieces to solve the ERP problem.

3. Risk taking attitude. This is the core of entrepreneurship. But we need to take reasonably big risks. The product may fail in development, marketing or even finding the right customers. We may have an excellent product for a free market but it may not be worth purchasing .

4. Innovation in business models. I am not sure why we are not good at this. Look at so many micro-businesses that are successful. We need to come with a variety of innovative ways of breaking into a market, leveraging customers, partners and even competition to grow our market.

5. The open source problem. For almost anything you want to build a product, there is an open source solution. Even big companies like Microsoft are threatened by it. Think about large product markets that simply vanished or seriously affected - Unix, databases, xml tools, search, web servers, development tools. So we need to find new needs.

Dorai

This is a very important subject -- and with no one right answer.

Some of the key challanges I see -

1. Getting the Right customer - figuring out who is the right customer for the product is often the most difficult process. Also the product evolves with new customers, as well as with newer needs of each customer over time. It is important that the first few customers can validate the business need and assist in defining a Roboust product specification and architecture

2. Revenue Model - Defining the revenue model for the product or service is essential -- Often the model which works for the first customer, may not be the best to achieve scale.  A revenue model must offer an attractive enough proposition for the customer to buy, and at the same time serve the needs of the product company. It could be license, or license + services, along with support -- there are alternate transaction or revenue share models which have found wide acceptance for content in Telecom VAS industry. However, the process to get the to the right model and making it successful may have to go through some iterations.

3. Building Repeatability in the model - A product model is based on the premise that new customers will have similar needs and majority of their needs can be serviced by the software provided by the vendor -- however when a young product company is selling -- the likelihood that its 2nd or 3rd customer will have similar needs as the first is not very high. This happens because while the target customers maybe in similar business, the way they use the software is different, or they maybe at different stages of their business, or they may be addressing adjacent or different pain points.  

So defining repeatability in terms of specification / need is a challange. In case repeatability cannot be achieved, the product company needs to have a wider target segment of customer and a deeper architecture so that the product can be enriched. And this really means more R&D spend.

4.  Selling costs vs. development -- While the product company focuses on re-useability and engineering excellence in actual deployments it finds it very hard to maintain this (in case of complex deployments). Often the customization costs are a fraction of the overall selling costs or opportunities. The key is to gain market acceptance and traction and the costs for this are enormous -- Even more than the cost the time taken to acquire crtical mass of customers in a particular segment is very significant. Because of this disparity companies jump to create customized versions of their software and they acquire customers. While this leads to customer acquisition and increases their breadth of offering this diverts the focus from solving a sharply defined problem.

5. Marketing, Sales, Partnerships: As Arvind stated above, Marketing, Sales and Partnerships are very critical elements in establishing a Product ecosystem. For this you need the right talent and give it the time and direction. Often the company may change course in spite of being on the right direction, just because its time span for results was not long enough -- or it did not pursue it with the right intensity. 

6. DNA of Top Team -- A lot more effort needs to be spent understanding market needs, and defining problem before one starts working on the solution. Unfortunately, in India most software companies have an Engineering/IT DNA at the top -- while development comes naturally to them, they donot focus enough energies on the Marketing & Sales -- and this needs to be top driven.

I think it will be useful if people could share their personal experiences here -- I think Avinash, Arvind and me are also planning to discuss some of the online deliberations in an upcoming face-to-face session.

Ankur

Dorai, I think items 1 and 2 in your list are a contradiction in themselves: I think it is very dangerous to limit one's thinking, in the Product Design context, to the domain of problems that one has seen. There are a number of cases where service companies in India have shown a "Tool Builder Attitude", as you so rightly call it, but failed to make it beyond the "Tool" label to the "Product". IMHO, this is one of the biggest challenges a Product company faces in India: the lack of "meta-thinking". Time and again, smart, articulate people seem to be unable to visualize fairly common conditions that would break their algorithms or their user-interfaces. That, I think, is the biggest disservice the years of "service" mentality have done to the Indian software industry. And I admit that as a former perpetrator!

Another equally (more?!) difficult challenge is the ability to see things in "market" terms, as Nari and Arvind have pointed out. And I don't think this is only about global marketing - we don't see (at least not yet) the kind of marketing talent that we see among our customers. The marketing or sales people I talk to in Bausch & Lomb, Tata Tea and the like have an amazing understanding of the dynamics of their market, but I've not seen much beyond a recitation of the latest Gartner report among the software folk. Of course, that may only be because I am meeting the wrong kind of people!

The attractiveness of open source, for example, is a classic example of an issue that can be very effectively dealt with via marketing and positioning. The problem is, the platitudes in a market report will not tell you how to do that for your own product!

Dorai's point about business models is as important, I think, particularly in a down economy. There are many ways you can make money, IMHO, if you have a Product instead of a Service. The problem is, we're usually unable (unwilling?) to tie our revenues to the pain points that customers have. Pricing, I think, is all about customer culture: what is someone used to paying for and what not in a general context? And what of that can I charge for? For example, we charge a "connect fee" for SMS messages that go through our server, over and above the SMS charge itself. I've noticed that this is a sticking point in nearly every price discussion - till the customer recognizes the value that the direct SMS connection brings in relation to the premium being paid. Unfortunately, we've been unable to design a better model yet - one that takes away the discussion completely.

I recognize Dorai's comment about business models is a much larger point covering partnerships and market leverage, but I don't know if those are issues for a company early in its growth.

At # 4, I'd list the lack of a Product Development Methodology that Nari talks of. Every dev manager I meet talks in terms of reams of certification and teams of people to review the work of workers. In a prod dev context, I think that's irrelevant. Like they say, "Think big, start small, deliver quickly". No way you can do that if you're worried about SEI Level 99 or whatever. And unfortunately, there's nothing else out there that aam janta in India can relate to. Or at least, I've not found it yet.

Last but certainly not the least comes the ability to be patient and sustain both the business and the drive during the early months (years?). Product companies are typically down a long and lonely road and senior managers here don't even have peers to crib to! By definition, product companies are charting new courses and finding new ways of making money.  So there are very few avenues to get advice, direction or even just plain inputs (save these wonderful discussions on EMERGE!). Add to that the fact that revenue does not roll in every month and you're left worrying, day in and day out, if you'll hit the hockey stick or be hit by it.

Personally, I am not that concerned about the ability to attract capital, the ability to take risks, etc. This is not because they are not challenges - they are, and big ones. But they are challenges that are definitional - things that are important, even critical, but par for the course. But then, this may only be because I don't know what I don't know!

A related issue that I've personally found troubling is along the lines of Ankur's comment about selling costs vs. development: the inability to say "No" to customization. The money is good, customers are willing to pay a premium for product-related work, so why not take it anyway? The problem is, in a start-up like ours, we have limited engineering skills and every hour we spend building core functionality builds future revenue and builds overall enterprise value. Every rupee I earn on customization actually reduces that, but it also reduces the amount I have to dip into my capital for. How do I balance that? But then, I'm happy to be debating that issue - that means I at least have customers!

Thank you Srikanth for starting this thread. We are pleased to inform you that we are doing a (un)conference session on the topic and we would request all product players to share their TOP 5 challenges on the topic. 

Post the session we would highlight the key points out here.

Thanks to Arvind for suggesting the idea.

If you are a product company and do want to join us for the session..please do confirm your participation by doing a RSVP online

Regards,

Avinash

Which is "the top most" challenge when we address can bring greatest improvement?

We solve problems all the time - either we provide scarce resources to companies that need them, provide cheaper application maintenance services across the globe, or build a solution efficiently for large and small companies alike.

What differentiates a product co. though is its ability to look at problem patterns (some in this discussion forum already mentioned this), and figure out a solution that covers a large gamut of people. Repeatability is the key. More often than not, we tend to look at each problem thru the 'services' lens - each problem is unique, and hence the solution too must be unique.

Secondly, we want EVERY sale to yield a profit. Product business requires us to seed the development and work for returns over time - when they do happen, those returns are significant. So time and patience, (again, someone already mentioned it), are probably essential.

In effect, the product business is more like farming than hunting. Now, who amongst us are farmers !!

Finally, there is a sociological issue here. If every family wants its most recent graduate to be in a 'secure' job, societal pressures don't allow the luxury to fail. Failings are seen as 'failures' and people are cast out as useless. This is a tall barrier to get over.

That there are so many people attempting to build products in spite of the negative environment is testament to the grit and determination of those few. I see it as a great positive move. Once a few leaders emerge, the rest will have those to look up to for inspiration. The road ahead may be difficult, but the momentum seems to be building up. 

Very much agree with Naresh. Good responses from all.

Which is the relatively easy challenge to address that will make all the other problems disappear over time? It is time, we must start thinking towards "solutions to these challenges".

While hoping for the best to happen, where we need to direct our energy?

Laksman wrote:

>>which is the relatively easy challenge to address that will make all the other >>problems disappear over time? It is time, we must start thinking towards "solutions >>to these challenges".

To my understanding, the solution exists for many of the problems stated above and its applicability depends on one organization skills and structure.

For example one of the challenge mentioned by Nari Kannan was "Lack of Maturity in Product Development Methodology Skills".  The solution that we have applied was, we went for "Agile based Product development Methodology and Management". One of the main goal during product development is to reach the customer as early as possible before your product idea becomes obsolete or eaten over by others. While Agile methodology is not a silver bullet atleast it will help you reach the market as early as possible and helps you see the ROI metrics.

Some common example includes "GMail", "Yahoo portals", "Gaming softwares". The best part with agile is that it will also helps you to fail early, something is missing in traditional development. Failing early will help companies to focus on right path.

If you are interested in knowing further, I would reccomend reading the book "Creating Innovative Products" by Jims Highsmith

Regards
Balaji
Director -Spritle Software

Hello,

> Can you please list out 5 Top Challenges that Product Development Companies in

> India are facing and How to over come.

In my view following are the top 5 challenges for a product development company in India.

1. Lack of mentors to validate the new idea/concept.

   -> Even though India have well educated and qualified people from IISc/IITs/IIMs, one does not approach them to validate their new idea/concept. There is no platform for a new person to approach these talented people to get their idea validated. There will also be fear if their idea will be leaked or .....

2. Lack of Business leaders for commercialising the product.

   -> India does not have very good business leaders (like Eric E. Schmidt ), even though India has lots of Management gurus. India need good business leaders who can confidently take the product to the market. Who can create/help create a workable business plan, marketing plan and financial plan, etc...

3. Time to Market - Getting the right skilled resources at the right time for the available budget with right attitude.

   -> Even though India have good institutes like IIT/BITS/NIT, getting the right talent at the right time is a challenge.

4. Focus on value creation instead of revenue generation (for a short term).

   -> The initial focus should be on value creation and creating a brand for the new idea before one wants to see the idea in terms of money.

5. Lack of IT eco-system withing India.

   -> There is no proper eco-system among the IT companies within India.

Best Regards,

Vivekanandan M

>>Lakshman wrote: Which is "the top most" challenge when we address can bring greatest improvement?

IMHO, once the initial fund got allocated, the top most things that need to be addressed is "Whether the product that I am going to release will really have any business value or not".

For example: Microsoft spent huge money on building MS WebTV. It failed to reach the market that they estimated, not even a bare minimum. When they did a retro on it, the top reason listed was "much time was spent on features that wasn't adding any business value".

Now the question would be.. "How do i know whether the feature that I am developing is going to deliver any business value or not ?" For example MS Word got 'n' number of features in it which we hardly use everyday. The google doc (writely) just developed the features that users actually use. The strategy is to follow a methodology thats helps for Feature driven development and let the customer immediately use it.  This will help us to "2. Bring new capital bcos your customers were happy and they get to see what are you busy with.", "3. Can bring down Attrition a bit, because you would be able to measure team skills.".

Regards
Balaji 
Agile Architect and Co-founder, Spritle Software. 

Hi All,

Energizing discussion. I have a slightly different veiw. the issues/challenges listed here do exist. However, they are beginning to get solved at multiple levels. Increasing awareness, technology development (Open source platforms, Cloud computing etc) and maturing ecosystem are helping to turn the corner in product development. I am sure most of you here agree, that it is relatively much easier to design and develop a product today than say 5 years ago given  the fact that support system today is far better.  Not denying that challenges don't exist but the impact of them is less severe today.

The main challenge then is what I call, ‘living in ambiguity'. If you are in PD then for long periods of time you live in ambiguity. Most perish or compromise or find short cuts during this period. I am not talking about vision here. 5% is vision 95% is execution. We all have great vision, but how many of us can live in ambiguity to execute it? So it boils down to just mindset for me.

"its all in the mind"

Thanks

-Karthik 

Avinash,

it would great if we can make the Fridays 2.0 session a multi city event.

thanks

-KArthik

Karthik:

Yes, everything is primarily a mindset issue. But it is not just the minds of the creators but also the various collaborators and consumers.

Regarding the ease of product development today. It is the relative improvement across 'most' geographics. I have seen people twenty years ago in our country, creating solutions using DBase III Plus.

Ease or difficulties of creating products is not so much different among the countries. But the investment, incubation, acceptance, customer mindset etc., vary so much between successful and not so successful countries. It makes things more difficult. 

Karthik, Good to hear from you. We do the Friday's 2.0 session in Chennai...it normally happens on the 3 or 4th Friday of the month.

My team in Bangalore has recently launched the Friday's 2.0(second friday of the month) series and i could suggest my colleague Kunal - kunal@nasscom.in to do a similar (un)conference session in Bangalore...we could take the help of Kishore to lead this session.

Thanks.

Avinash



  

Hello Avinash,

How about at Hyderabad?

Best Regards,

Vivekanandan M

Thanks Avinash. Will get in touch with Kunal.

-Karthik

Vivekanandan, My colleague Arjun - arjun@nasscom.in is trying to put this together. I would request him to get in tocuh with you to take your inputs and start this asap.

regards,

Avinash