Synap Software Blog

Business Decision: Why Software as a Service

by Scott on April 19, 2007

In The Business of Software, author and MIT professor Michael A. Cusumano identifies four main questions that a software company should answer when developing a target market product strategy. Asked from the perspective of the software company:

  1. Do you want to be mainly a products company or a services company?
  2. Do you want to sell to individuals or enterprises?
  3. How horizontal (broad) or vertical (specialized) is your product or service?
  4. Can you generate a recurring revenue stream to endure in good times and bad?

Cusumano’s was one of several frameworks we used in planning Synap Software. In the next few Business Decisions blog entries I’ll share my thought process behind these decisions. Some worked out fine, some not so fine, and some are an ongoing story. Today’s entry is my answer to the first main question: Do you want to be mainly a products company or a services company?

Products or Services?

Services Provide More Chances for Recurring Revenue

Cusumano states that he used to believe it was better to be a products company but as of the writing of the book (2004 – which I know is an eon ago in tech years) he says he “no longer think(s) this is true”. Why?

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