Product development in a consulting firm: scaling potential inspired by the best practices for startups

Abstract

Successfully developing a software product from the scratch until launching to the market is not simple. This is the day-by-day of many startups, whose existence is based on building and selling scalable products. But what if a company built on a business model that is, by its nature, very different from startups, decided to venture into product development? This study analyzes a consulting firm that decided to develop and commercialize a Software as a Service (SaaS). Results show that, although the business drive is clear, several challenges must to be overcome for a consulting firm to operate closer to how a startup would.

According to theory, consulting firms have high variable costs bound to consultants’ wages, causing the operating expenses to increase at the same rate as the revenue. In comparison, technology startups have higher fixed costs typically linked to licenses and developers’ salaries, operating with low variable costs, what creates potential to scale revenue faster than the operating expenses. By analyzing the financial figures of a real consulting firm, this theory was proven to be valid, and therefore, despite of achieving outstanding growth, scaling in the consultancy model is limited.

Thus, this work explores well-consolidated theoretical frameworks for startups to successfully develop and launch products to the market, and in parallel, it dives deep into a real consulting firm’s processes, practices, and challenges for developing a SaaS. The analysis within this firm is done by first looking into project documents for elements that communicate the steps for developing the case product. To complement the analysis and discover the underlying practices and challenges in this process, members of the development team were surveyed and observed during a workshop to co-create the value proposition of the case product.

Findings show that, even though the process is found to be closer to the traditional product development, an iterative approach with continuous learning was in use. Also, the team pointed out a lack of understanding on the potential customers, and the feeling that an internal competition for resources was compromising the workforce of the development team. Finally, discussions about the value proposition revealed difficulties for the company to detach itself from a consulting mindset towards a startup-oriented thinking. Although there are challenges, there are also ways to systematically overcome them, uncovering a better track to successfully accomplish such endeavor.