Focus on Building A Core Product – Not Infrastructure

middleware team

MW Team

October 4, 2021

Focus on Building A Core Product – Not Infrastructure

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IT companies often suffer the dilemma of choosing their top priority when it comes to deciding the budget for a financial year. Since they have to focus on multiple aspects like products, maintenance, infrastructure, and sales, they may get diverted from their chief goal and end up making decisions that are not profitable in the long run.

Several surveys have found that most companies like to spend a significant amount of money out of their annual budget on IT infrastructure. Infrastructure may include anything like servers, cables, equipment, buildings, maintenance staff, data center upkeep, and so on. This budget is taken away from product development and any innovative strategies that might have been planned.

The downside here is that every cent that goes towards an infrastructural expense could have been used to develop a product that could grow your business or give you an edge over your competitors. This is not to say that infrastructure does not deserve attention. However, the priority should be to focus on building a core product for the company.

Spiceworks shares that “keeping IT infrastructure up to date will continue to be the top pain point” for IT companies even in and after 2020. Now, why is this such a pressing issue to begin with? And why do IT companies need to focus more on building a core product as opposed to infrastructure? Let’s find out.

Why Focus on a Core Product

The importance of focusing on a core product has been emphasized for many years. With the advent of cloud services to provide backup, this is a more real concern. It has been said that IT companies need to focus on their core for profitable growth.

In an Alltech symposium recently, professor Damien McLoughlin from Ireland suggested four steps to ensure the growth of the business.

  1. Have a well-defined, strongly differentiated core that is well-accepted in the market.
  2. Create a sense of value and loyalty in the eyes of your core customers.
  3. Grow your company thoughtfully through adjacencies that go well with your core customers and channels.
  4. Build successful formulas from your core that are repeatable and replicable.

With these few steps, you can ensure that your core technology thrives and gives you the leverage needed to survive and succeed in the long run.

However, people often need to be reminded of these facts as they have made a series of faulty choices over the years by putting infrastructure far above core when it comes to setting priorities. 

To explain in layman’s terms, if you are running a cafe, you must concentrate on providing high-quality coffee and food to your customers. Sure, the ambiance is an added bonus and must be maintained at decent levels of hygiene and aesthetics so that customers are not discouraged from sitting there. But, your chief attraction must be the coffee you make and the food you serve. If you spend a lot on cafe decor and neglect the quality and variety of food, your customers will slowly stop coming in. This is exactly how an IT business runs as well.

Expected IT Budget Allocations

Source

Evolution of Infrastructure

With cloud computing becoming a major player in the IT world and numerous companies shifting to cloud servers instead of physical servers, infrastructure has become more of a commodity than an investment. Cloud services offer an infinite capacity of storage and support. For any company, it makes more sense to rent cloud services rather than spending money on building and operating a data center.

This is why the question of core versus infrastructure has become even more relevant in recent years. Instead of spending money on something that is readily available to you externally, companies can focus on building projects that will create value and revenue for them.

As Microsoft CEO Satya Nadella says, “You don’t want to be caught up in spending your scarce resources on what is essentially something that can be available as a commodity.”

Focus on a Core Product and Make It Great

Any product or initiative that is based on technology and supports the company’s growth and value addition can be termed as a core project. These projects work towards generating profits, attracting customers, growing the business, and elevating you over your competitors. They are critical to your business and must be carried out efficiently for long-term benefits.

The aim of a company must be to create a product that will drive up sales and improve customer experience. Even when they are investing in the latest technology for infrastructure support, they must ensure that it checks all the boxes of a customer-centric approach.

Decisions made by IT companies regarding which projects to invest in are fairly reflective of their priority, whether it is technology or customers. Even if you are acquiring the latest technology for your business, you may go wrong if the technology does not support your product enough to make customers happy. 

Rather than thinking about what technology is the latest and how it can be marketed, you must think about what your end-users want and which technology would address their needs most efficiently. 

In the book “Good to Great” by Jim Collins, the author says that businesses with an insight into what drives their economic engine have a massive advantage over companies that do not understand their customers. Once you understand which products can lead to significant economic growth, you will recognize mission-critical projects easily. 

Viewing business decisions through the customer’s lens allows business owners and leaders to make more intelligent decisions that can lead to a digital transformation, which will justify the costs involved and generate a high ROI rate.

Drivers of IT Budget Increases

Source

Align IT Roadmap with Business Strategy

The technology market has become so competitive that any IT company, nowadays, has to chalk out a clear business strategy, in addition to their innovative and regular work. Software, especially, is now a strategic tool to ensure better customer experience and business growth.

Not just technical business, any business in the world is now somehow dependent on software, no matter which industry it is from. With evolving times, each business has to adapt itself to avoid being wiped out by the competition.

One such example is Blockbuster, which was a massively successful DVD store chain. With the advent of online delivery services that sent DVDs to people’s homes, it lost its business gradually. When streaming became a mainstream option in 2007, companies like Netflix leveraged their technology to create a new market that wiped out older DVD businesses. 

The same goes for the mobile giant Nokia, which is a classic example of an industry leader failing to recognize upcoming technological revolutions and being left in the dust. Nokia, which was the largest cell phone manufacturer in the 1990s and 2000s, failed due to a number of reasons.

Its inability to recognize the power of Android, ill-timed acquisition by Microsoft, overconfidence in its products, and refusal to adapt to emerging technology led Nokia to make a series of decisions that were not economically or technologically viable. This is another instance of how ignoring core development can impact even the best of companies.

Reasons and Benefits of Building a Core Product

There are great benefits to investing in a core product once you achieve the balance of development and maintenance in your company. With careful planning and ambitious projects, your IT organization can turn cost into innovation. Gradually, you will invest less in infrastructure and more in product development.

Every IT initiative that your company takes should have a simple goal, to reach your customers and tap into the sales channel through the technology you offer, instead of simply gathering the latest technologies under your belt. The perfect business strategy is a combination of innovation, design, marketing, and customer support.

There are several reasons and benefits to focusing on a core product. You can achieve the following by investing in core technology.

  • Improve productivity and efficiency.
  • Reduce costs in the long run.
  • Gain an edge over your competition.
  • Build brand value and recognition.
  • Engage with loyal customers.
  • Start new business relationships and partnerships.
  • Increase revenue, profitability, and turnover.

Leverage Cloud Services

Leveraging cloud computing services lets your business focus on more important aspects such as innovation and the development of a core product that will lead to faster growth. Statistics show that 61% of IT companies expect their revenue to increase in 2022, with only 8% expecting it to fall.

Additionally, 53% of businesses plan to increase their tech spending in 2022. Most of their budget dedicated towards infrastructure will go to the cloud and managed services, shifting focus away from on-premises data centers and hardware. Thus, the cloud plays a major role in bringing importance back to the core.

Cloud platforms such as SaaS, PaaS, and IaaS provide data analytics, business intelligence, data processing tools, and so on. Organizations can easily deploy tools and applications on the cloud platform, optimize business functions, and maintain internal processes and productivity. 

Organizations can “rent” cloud services depending on their needs and put customized controls in place to ensure security and access. Cloud services also decrease overall expenditure on the company and provide a cost-effective solution to both small and larger companies that have high computing demands.

This way, you can also save on maintenance staff, expensive equipment, and extra investment. Cloud-based technologies also deploy business solutions faster, reach end-users quicker, and win over competitors. Leaving these DevOps activities to the cloud makes the organization free to innovate and create new products.

Conclusion

Building a core product by taking smart infrastructure routes can only lead to the growth of a company. This can be done through Middleware, a fully remote development community that provides a cloud-based infrastructure through automation. Through Middleware, companies can save on cloud-related expenses and scale business applications horizontally and vertically. This will leave businesses to focus on core products and leave other activities to experts.

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