A new Business Model For Software Development Agencies

Are you the CEO of a software development agency? Then this article is for you.
In your current business model, you’re most likely selling knowledge and time for money. Your developers build what the client wants during the duration of the contract.

But what does your client do once you’re out? Do they have internal developers that can take on the workload? If they haven’t had any developers on staff before, can they hire developers themselves?
Will the new developers be able to take over your work fast enough?

Let’s explore how you can adapt your business model to cover these what-if’s. Additionally, let’s look at how you can set yourself apart from other Software Development Agencies.

Let’s assume a CEO of a brand-new startup plans to leverage web technologies as part of the business model, they need a partner who will help them to build IT competencies in the organization. They decide to hire someone to help with this process.
Let’s explore what IT competencies entail in this context.

What are IT competencies? 

  • Building and managing software in-house to support the business.
  • Initial maintenance of web application infrastructure.
  • Understanding the tech stack and how it relates to business goals.
  • Making technical decisions based on business requirements.
  • Hiring new IT professionals for the team.

Usually, you would come in to help with writing new code and potentially operating it as well. Yet, you’re not involved in team-building or long-term maintenance. Your client would need to acquire this knowledge elsewhere and integrate it with your work.

But what if you would deliver on all these bullet points? The advantage for your client is clear: They get a holistic experience without any rough edges.

How does it look like if you would offer a full-service contract?

In the classic model of offering programming services, you focus solely on the code and when to deliver it.
We widen our scope from code to processes, hiring and delivery. You need to understand your client’s business model in-depth, before any developer starts to write a single line of code.

You deliver an initial proof of concept (PoC) implementation that helps everybody to get a first impression of the final version. The PoC is important for potential investor meetings but also for gathering feedback from early users.
The first major release deadline is coming closer and closer, and besides writing code you also work on processes that define how they specify features and deliver software.

Right after the initial release of the first publicly accessible version, the next phase starts. All developers on the team are external and it’s time to hire the first internal software developers. They will eventually take over development and operations. Therefore, you help with the entire hiring process, including job ads and interviews.

Your goal is to establish software development as a core competency within your client’s company. They need to build this competency to maintain the tech stack, but also to keep growing their business.

Restructure your Business Model

Let’s start thinking beyond the standard terms of just writing code and expand your offerings to implement digital business models from start to finish.
Focus on a niche, a particular type of business. How can you support businesses in the niche best? 
What services around classic programming jobs can you offer your clients?

Now we’re talking about an entirely different business model. Before, you wrote code in specific programming languages. Now, you build digital companies.

This pivot requires work on your company. As a result, you need to build the knowledge and skill to support this new process. That might mean hiring new team members, or training your existing team in new disciplines.

Other agencies might compete on the number of supported programming languages, whereas your business model focuses on your client’s overall success.

Did this blog post provide new insights for you? If your business model looks similar and you’re looking to boost visibility among prospective customers, visit https://work-with-jan.com to get in touch with me.

Leave a Reply