Company oriented to projects or products: what difference?

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Each organization fits into a category that defines it according to what it offers to its customers and how it is provided. These are the categories: product-based company or project-based company.

One product-based company it is an organization that offers a certain product or service, being the solution of a problem, such as providing repair of a particular product, for example.

Already a project-based company, are those who create a solution based on a set of products and sell it as a package of solutions. This type of organization usually faces more challenges and difficulties because they have more complexity or need to manage manpower and obtain more resources.

The challenges of a project-based company

Unlike organizations based on products and services, this type of organization generally has a longer process and more stages. Soon they end up facing more challenges, risks and problems. Some of them:

• Develop scope and budget: Identify and develop the scope of the project and carry out a fair and competitive budget/precing of services, based on current market prices.
• Split tasks and align the team: The way the project is managed and passed to the team responsible for each step. That is, divide the tasks and ensure that everyone is aligned and follow the progress of the project.
• Follow schedule: Follow the schedule and comply with it, so that everyone is following and independent of interference. For example, problems with materials, equipment, budgets, resources, among other risks.
• Align the team, projects and resources: Combine the right resources with the right projects and organize the team so that everyone is aware of all stages of the project. So, if there is a problem, the resolution will be much faster and more effective.
• Preparation for possible risks and customer alignment: Customer changes make it difficult to execute the plans. Thus, it is necessary to be prepared for possible changes and what will be the next steps from this decision (including payments).

The main challenges include:

• Manage customer scope changes
• Control progress and accumulated value

What are the main differences between these types of companies?

Each of them has specific points, depending on what the organization offers and what the process of selling is like until delivery to your customer.

• A company works with the sale of X product (products).
• Another offers repair services for X products (products & services).
• Another company builds the infrastructure where X products (projects) will be used.

That is, although companies linked to the same product have the same focus, they meet different needs. The purchase of a product or service has a process until it reaches the customer, since when it comes to a project, the process is much longer and may take months or even years to be delivered/completed.

• Example: Computer software.

In this case, the product-based company sells a predefined software, i.e. a specific software that is focused on some area, sector or task. (Ex: Software focused on accounting, productivity, collaboration, organization, planning, among others). One already project-based company will work with the customer and identify their needs and requirements in order to create/develop a custom software focused on a specific organization.

So each of them offers one thing and has its characteristics.

Now you know the difference between these two types of companies and what yours fits into! Did you like our article? Read more and follow our blog.