Why and when do you need Software Product Managers?

 In Industry News

software product management2The software industry is young. Many software companies are young and many software companies are still in search of a business model that can scale predictably.

Why would you need a product management function? When is the right time to appoint someone to take the lead on software product management?

The product manager leads and manages one or several products from the inception to the phase-out in order to maximize life-time business value. The PM works with marketing, sales, engineering, finance, quality, support, and professional services to make the products a business success. The PM has the business responsibility beyond a single customer project. The PM determines what to make and is accountable for the business success within an entire portfolio. The PM defines the “statement of direction,” the roadmap, the release plan and determines what to innovate. The PM is responsible for the entire value chain of a product following the life cycle and asks: “What do we keep, what do we make, what do we stop?”

In the beginning…

Steve Blank on spending tax money generating entrepreneurship

Steve Blank

In a software start-up the founder will typically assume responsibility for R&D, product management, sales and marketing. A start-up is in search of a business model. A start-up is in constant learning mode and the founder must be intimately involved in all product and market related functions.

This post isn’t focused on the issues associated with starting software based businesses. Go to Steve Blanks blog. Steve and the people around him are the gurus of the software-based start-up domain.

In a software start-up the founder is typically the product manager, but as there is no product yet, the principles described in this post do not apply. As soon as a viable product and business model has been identified, the company moves out of the start-up phase and into adolescence.

Now is the time to separate R&D, product management, marketing, sales and all the other business disciplines.

The time for scaling the business has begun.

The software industry idiosyncrasies

Why do we say “software product management?”

All other industries just have “product managers” – where the difference?

01_hot_air_ballonThe software industry is different from all other industries in so many fundamental ways that it makes perfectly good sense to deliberately highlight this fact.

  • Software is invisible.
  • Software has no value per se (the value is derived from using the software and the service).
  • The value of the software will often depend on how well we (and our partners) deliver the services required to apply the software to current or new business practices.
  • The customer’s implementation, training and adoption levels of the software has a major impact on the value derived from the product.
  • The scrap value of obsolete software is nil.
  • Scaling a software product based business requires no factories
  • “Cost of Goods Sold” for software products is typically negligible
  • R&D expenses are high
  • Cost of Sales are high
  • Getting software products to customers require no physical infrastructure and warehouses.
  • Most software based business models are highly affected by network effects

Operating as a software product manager in the software product universe requires intimate understanding of these unique environmental and framework conditions.

Why do we need software product managers?

Products managers are the mini CEO’s responsible for the lifetime value of a specific software product line. The PM is the cogwheel between organizational units with completely different dynamics. Where the sales function is customer and short-term revenue driven the PM is market value driven. Where R&D is technology driven, the PM is market opportunity driven. Where marketing is driven by volume of leads, the PM is market volume driven.

If a company wants to maximize the lifetime value of its software IP assets, then they need software product management.

Software Product Management Training

The TBK Academy® has engaged software product management expert Hans Bernd Kittlaus to run a 3 day training course for software product managers. The course follows the syllabus developed by the International Association of Software Product Managers. On the third day of the course we offer the attendees the opportunity to take the ISPMA certification test and become “ISPMA certified Software Product Manager.”

Watch the short video introducing the ISPMA based training:

ISPMA Software Product Management training from Hans Peter Bech on Vimeo.

Agenda, syllabus and sign-up: TBK Academy® 


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