An essay on software product vs. software project development (vs. cloud development)


In my world, software development can be split in two disciplines: project development and product development. There is surprisingly little literature on this specific topic (either that, or I didn’t find it), yet they are in my opinion very distinct. And even though a lot of software engineers are actually part of a software product development team rather than a project development team, most literature in software development is actually about project development. Even more: most tools and methodologies focus on software projects rather than products. Don’t believe me? Well then, open Visual Studio and create a new solution, and the first thing you add is… a project. Coincidence? I don’t believe it is. Since I recently encountered a number of situations where I had to explain the difference, I decided to write an article on the topic, and by doing so, maybe trigger some more documentation and tooling in favour of product development.

Before going into depth on the differences, I guess I should first define them to make sure we are on the same page. A project is a solution developed for one specific customer that has a certain set of requirements. A product is a solution developed and offered to multiple (possible) customers and which aims to solve a common problem for these customers.

As for my background: I’m part of a team that develops an omni-channel contact center product on a daily basis, but I’m also involved in some smaller projects, and, I’m currently also working on a cloud solution, so I’m experiencing all of them at the same time. But product development is a big part of it, and that for more than 15 years in the meantime. I want to make clear that the goal of this article isn’t to label them good or bad, or promote the one or the other. They are just wo different things that are both needed and useful and this is only  an attempt to document them and point out the differences (and maybe give some hints to how and where life of the product developer can be made better).

To end this introduction, it must be clear that project vs. product development is not about  websites vs. desktop applications. I’m convinced that in both project and product development, the solution can be a desktop application, a web application, a distributed application or something else or a combination of all of them.

Software project development

Projects are typically sold once, made once. As mentioned in the definition, they are tailor made software for a specific customer with specific requirements. The cost or price of the solution is the time estimated to develop these requirements, which, either you pay as salaries to your in-house development team, or you pay a software development company to do it for you.

An important part in project development, if not the most important part, are the customer requirements. And in my experience, the lack thereof, or the fact they change often during the development process. And that is ok, because most customers and sales people do not have the experience or knowledge to define all the requirements needed for a development team. And I’m not the only one that feels that we should live with this and accept this. That is why we today we prefer agile methodologies in project development. They enable us to quickly iterate and check with the (internal) customer, who will inevitable get more insights during this proces and update his requirements. But the process takes this into account and allows this to happen.

One thing that remains hard to avoid, even with an agile process, is the difference between estimated and actual time. Agile allows you to iterate quickly, find defects (in requirements or software) fast and respond to it. Agile allows you to keep a better view on where you are. But agile doesn’t help you to estimate a project, nor does it provide a method to finish on time. Most projects will require more time than anyone thought at the beginning. There have been many books written on this matter, and how you should try to avoid this, but a lot of projects are stil late. And to me, it actually makes sense: after all these years I learned that you can only estimate required time correct if you have done that particular kind of thing before. Since we define a project as a one time thing, it is a given fact you will be wrong in your time estimation. Software teams are also often called R&D teams, and I think this one-time thing is actually the Research part of the story. And as with a lot of research in a lot of other businesses (pharmaceuticals, chemistry, …) there is not much accurate time estimation possible. You start with a certain goal and then you work out a solution for which you have a certain direction, but no one will tell you when you’ll discover the next ground breaking drug that solves a certain cure. The same goes for software your write the first time.

The only project teams that succeed in giving correct estimations, are the project teams that make a similar solution for each customer. For example, marketing agencies that create public websites for there customers have a pretty good idea on the time needed to develop yet another Drupal website for their new customer. That’s because usually 80 or 90% has been done before, it’s just the content that changes. The other remaining percent might be very specific, but the slip this can cause is a lot smaller and can be easily compensated by overestimating a little. So the company is safe if it takes a few days more than expected, and the customer paid a little extra, but its usually a small amount compared to the rest so it really doesn’t matter. In all other cases, timing will  be wrong if you make something the first time.

What surprises me every time, is that most managers and sales people that decide on projects, sell/buy these projects for a fixed price without identifying in which of the two before mentioned categories they fall. And if you have a first timer, one or the other party will be unhappy afterwards. Either the selling party estimates too high, which leads to a serious price quote to compensate for the unknown, or, the selling party underestimates and looses money by doing the project (in some cases, it has lead to the bankrupt of companies). This is also applicable if you develop your software in-house… though expressed not in money but in time and time estimations, which is actually the same. It would not be bad for software development industry to go for a common project standard in approaching a unknown project where both recognise the fact that total time to come to completion is not certain. And yes, it might mean the project only is partially is done because “the money is gone”, but that is not uncommon in research situations. Pharmaceutical labs end research all the time because the proposed budget is burned. And then they take what they have so far. When you’re doing something the first time, then it is by definition, maybe only for your company, but nevertheless it is, and it can fail. That is the cost of innovation, and innovation never guarantees ROI…

Projects are typically smaller in size (or requirements) than products, and thus have short a typically smaller lead time. This allows developers to jump relatively fast to new development environments, tools and components. When finished and delivered, the teams go to the next project and have the option to review their environment and get the latest tools for the job. And when a certain methodologie, tool or component didn’t turn out to be as good as expected, the team can switch and use an alternative for the next project. This is a serious advantage for project development, because whatever environment you are using, the tools keep getting better and better.

Projects do not really come with a support period. Once the requested functionality is implemented, tested and signed off (and hopefully paid) it’s done. Of course, some bug might still occur later on, but, that’s never more than a few months after delivery because after that, all requirements have been used (and thus tested) by the end user.

That fact that they are smaller in size, and, require no real support afterwards, often allows developers to take shortcuts while building the solution. The technical debt that goes with this, is often not relevant as there is no successor to the project.

Another typical thing that happens in project development is that after a month, a year, or at least after the project has been signed off some time ago, new or extra requirements are formulated. Well, this is usually considered a new project, even though it is an extension. And you might worry about the fact that in the meantime development tools have changed, components have newer versions, and technical debt will cause some serious impact. Well, al of that will have happened, but, the time needed to move the old project to the new environment, adjust to the new component interfaces and rectify the rounded corners, will be added to the project lead time. Whether this is a good or a bad practice, is not a subject for this article.

Software product development

Product development isn’t about implementing one customer’s specific set of requirements. In product development, the set of requirements is defined by the product manager, which gathers these requirements by questioning existing customers, or by conducting market studies. His job is to get a list of requirements that are applicable for a large subset of customers. Most product development companies stop here and take this input to define their next “product release”.

I believe this to be a big mistake in product development and in this context I like to bring up a quote of Henry Ford: “If I would have asked my customers what they wanted, they would have asked for faster horses”. It is the task of the product development team (product manager, development manager, engineer, trainer, test engineer, …) to make sure the product is reviewed with respect to new technologies, and if needed, propose a innovative new product (release) that would be much better for the customer. Customers will never ask for this kind of change, because they don’t have this required knowledge, so they just ask for a faster horse.

This kind of product changes isn’t easy to pull off however, and is usually blocked by the management higher up the food chain. The reason has of course to do with money. In comparison to projects, where the effort is paid by that one customer, products are sold via licenses, and, it requires a reasonable amount of licenses to cover the expenses of development. Expenses that are already made, maybe months and years upfront because the large set of common requirements has a significant long lead time than projects. New architectures and innovation in product development is thus again an investment while the implementation of new customer requirements attracts extra customers and thus increases license sales.

This approach in software product development often leads to a software solutions that are a disaster from whatever side you look at it. Architecturally they are not up-to-date, or consist of different types of architectures glued together with a by some ugly work-arounds. Component wise they use three or four different versions of the same component. To install them you need four or five product specialists (aka consultants or experts) that must come over and install the product, only because experts can understand the complex configuration of the solution. Support is a nightmare, because each quarter of the product uses a different logging mechanism. I only name a few, usually it’s much worse.

I was and I am lucky to work for a company where management realised this and a release cycle consisted of three parts:

  • 40% customer requirements, gathered by the product manager by collecting customer feedback and analysing the market
  • 40% strategic features, which was the name for those requirements that came from the development, to change architecture, introduce new components and techniques. These are features that are needed to make sure the product can grow and is prepared for future extensions, stays manageable and competitive. You could call customer requirements “short term” thinking, and then strategic features are “long term”
  • 20% paid customer features: we allowed customers to pay for getting certain requirements in a certain release. The requirements are not customer specific, they are generic, but, they would not have made it in the product without this promotion

You can argue about the percentages, and you can argue whether the third is really needed (we don’t do it anymore now I think), but the other two are definitely a must have if you want to have a future proof product.

In the above paragraphs I already mentioned a few typical differences in product development compared to project development. A very important difference is time, and this in many different aspects of product development.

  • Defining a product takes weeks or months. Gathering and filtering the requirements is an intensive job, which must then be turned into functional and technical specifications, which have to be reviewed by all stakeholder. A very time consuming process, but this is needed to identify how the new release will look like in terms of architecture, which components will be needed, whether they will be bought or made by the team, create a planning, find dependencies, … and that’s all before the first line of code has been written
  • Products take months or years to develop and this means a serious investment for the company that gets bigger as time goes by. That is why a product is never really done. We like to build the next version based on the current version and we attempt to reuse as much as possible to reduce development time
  • Products are installed at customers, for many months and years to come, and as such they require constant support, many years after the release of a specific version

And it took me a while to get here, but this is where I would like to come to the statement I made in my introduction, and which was my reason for writing this essay. Most of todays methodologies and tooling focus on project development and not on the specific situation of product development.

Let me illustrate this with a few examples and let us start with the agile development that is common today, usually in combination with SCRUM. We iterate quickly to get customer feedback soon in the development process. In product development, we cannot go back to the customer because this job has been done in the beginning. Furthermore, a product is generic and it might require significant configuration to get it to work as the customer desires. The customer only gets a new release after a year, and isn’t consulted every week to see whether he likes the solution so far. Very often it isn’t possible to implement feature by feature either because a certain set of base components might be needed first, which could take weeks to get done. In such a scenario, a daily standup meeting also makes very little sense, since the engineers assigned to create such basic components need days or weeks to complete them. Think about a new communication layer for example, or a piece of database design. So agile as we know it today isn’t directly applicable to product development, but that doesn’t mean its complete useless either. The idea of iterating fast and gathering feedback soon is beneficiary in all cases. In my team I encourage engineers to implement what I call a “proof of concept”, which isn’t meant for the customer, but for the team, and it allows us to validate certain components and architectures very soon in the release cycle (that takes up to more than a year often). So we manage to get some concepts validated already in the first week of development. In product development, this is actually a fast iteration. It requires a good insight however in what must be made first, and the requirements that are essential to make sure the test is in any way valid. I haven’t found any methodology that corresponds with how I work every day. The traditional project management techniques (Prince, CMMI, …) have also good aspects which you should apply, but, are far to heavy for the limited set of engineers I have  And it is clear that SCRUM “to the letter” is also not an option, and thus I end up with a combination of all of them. This doesn’t bother me that much since we have practiced it for many years with success. The only time when it gets a little odd is when people start asking wether you do agile development, which usually means scrum, and when you actually should say no but you end up saying yes anyway because the answers is actually this essay.

To get to this agile product development also requires some personnel management skills because product engineers often prefer working breadth than in depth. Yes there is a difference between product and project software engineers. Having recruited both of them, and having worked with both of them, I’m convinced there is a difference and it boils down to: a project engineer has a short attention span and likes new toys, a product engineer is more theoretical, cares less about the tools and whether something is hot. Project engineers are bored after a couple of months working on the same thing, while product engineers love to know every little thing that is going on. A project engineer will cut corners to create a solution, because the nature of a project will either make sure he is never hassled with the consequence of it, or enables him to rectify this later on. A product engineer will work generic and will constantly worry about creating technical debt in the product, because he realises that it will come back to haunt him in his dreams (sometimes literally). Again, I’m not labelling anything good and bad, just pointing out the differences you need to be aware of when you are in the one or the other scenario. God forbid you hire a product engineer for a project… only then you’ll experience what delivering late is (though it will be a solid project). God forbid you hire a project engineer that fills your product with short cuts and then moves on to the next company (which will happen as he is bored of product development after some months). Unfortunately it happens all the time.

Another buzzword at the time or writing (because that’s the nature of buzzwords, at the time of reading they might no longer be buzzing) is DevOps. Third time: nothing wrong with DevOps, it has some pretty good ideas, but in the context of product development it’s just not going to happen. If you are an internal project software team, you definitely should go for it because it is a great concept and all to often things fail because development and IT operations don’t cooperate sufficient. But when you develop a product , you do not know the customer yet, let alone his IT infrastructure. And if your product is sold via different channels, you might never ever know the customer. So people can talk about DevOps all day long, neither the concept nor the tooling helps product development. The only thing DevOps might achieve in product development, is make product developers aware that somebody sometime will have to install and upgrade and patch their product, and, it is worth investing time in it. In our company, we were aware of this already long before DevOps became a buzzword, and our product is still significantly easier to install than any of our competitors.

In this context, also Continuous Delivery often comes to play. Fourth time: good principle, but, in product development you will not continuously deliver.

Now you might argue with a lot of this and claim that even in product development, agility with his fast releases of product requirements shipping to the customer has huge benefits because the customer will profit from your incrementing feature set while at the same time you get feedback on the delivered goods. I thought the same actually until I experienced it myself with the product I’m responsible for, which is an anekdote I would like to share to illustrate point of view.

Early 2008 we released a new version of our product. It was a major review, and, in terms of “strategic features” I believe more than 70%. That is significant, but, at the time deemed necessary to stay competitive and to guarantee or product could grow in the future and expand to new markets. Hence, the company was willing to make the investment and survive a couple of years with the license revenue of whatever the software was at that time. The new architecture was clean, cut into different modules, and we had figured out a complete implementation and installation process from development up to QA up to the end customers. We could literally built in a feature in two days, make a setup package for the module with one click of a button in Visual Studio, provide it to the QA team, and after approval put it on a custom deployment server. From there on, the customer could get this update for this one specific module and immediately install it in his environment. It was impressive, and sales loved it. They could now sell licenses to customers and gather requirements and they would come in the product one by one on short term. Everybody would have the latest version of our product and share every latest feature. The overhead for the development team was low because it was automated, so they didn’t mind either. And then came the day when we ended up with some serious customers. Large enterprises, where hundreds and thousands of users use the product on daily basis to make the enterprise generate revenue. And they didn’t want all of this agility. From the IT operations point of view they have very strict timings on when software can be upgraded or patched. And updates and patches must go through a process of UAT, which requires the business to validate the changes, and this is a process that takes a lot of time so it’s only done once or twice a year. Furthermore, from the business point of view, they didn’t want all these new features. Not that they weren’t good features or they were buggy. No, the customers didn’t want them because it is a change in comparison to what they have, and changing the software meant that people had to be trained again, and training a thousand people for a new GUI costs a lot of time (thus money), and this for features the didn’t ask. Just to point that being agile isn’t always the holy grail of development in all cases, especially in product development. We didn’t throw everything away that day either of course, and we still use most of this infrastructure and design today, but, only to deliver the maintenance releases and patches, where being agile (aka fast or quick) is still an advantage. But when it boils down to features, we have a separate branch to work on that will become a next release, and we won’t bother the customer with that.

Enough on the process and have a few words on the tooling. Package managers are hot today and are the first thing that come to mind. Package managers are easy and there is nothing better than opening a new solution and add some of the nicest components with a simple command line statement. If another engineer opens my solution in Visual Studio, the NuGet components are downloaded right away in a blink of the eye. Or, for the NodeJS guys it’s a matter of sharing package.json and call NPM install on the command line.  I like it a lot, all of them… but guess what? Not for product development. Not because the packages are bad, by far not. Never ever was there such a wealth of components that are of good quality and are free to use. But as I said, time is an important aspect in the difference between project and product, and, these packages tend to release very often, and often with changing interfaces. For projects this isn’t an issue, since this can be calculated in the extension of the project. For a product this can be annoying, because by the time the release ends, the components have several new versions available compared to when you started, and thus a changing interface might break your code near release time. No problem I hear you say, you can “fix” the version you use, so you don’t always get the latest version but everybody gets always the same version. True again, but that doesn’t take into account that one day your specific version of a package might no longer be available via the package manager’s repository, so what happens then? You’ll be forced to upgrade at that time, and that time might be a very bad moment, for example when you are quickly fixing a small bug, and this suddenly end up integrating a new version of this package with a total different interface. Additionally, you can fix version in a project or even in a solution, but, in product development we use many different projects and solutions for all the components and modules. There is no way to assure that all of these solutions fixed the same version. So we use package manager but adjusted the process in such a way that packages are first fetched to our own servers (and stored in source control) and only from there on can be used in the different solutions. That way, we know that when a bug arrives in two years from now, we are guaranteed to have the exact same component. It’s by far not that easy as running the package manager for your solution in Visual Studio, but it is in my opinion the best way to approach this for the future.

Another aspect is software packaging. How do you get your product to the customer. From the previous discussion, I think it is clear that all the “publish to web server or database” features that come with most development tools are not really useful in the context of product development. At best, the engineers can use them to test on their own servers, but that’s the limit of it. There are solutions such as InstallShield, but this is a very expensive solution, and not only for his licenses, even more for the number of engineers and time that are needed to get to a setup package. And this is money wasted, because at the end of the day, the setup package doesn’t add any value to the business using your software, they get the same feature set. To be completely honest: making large monolithic setups were nice in the days when we shipped DVDs to customers. But, more importantly, creating a setup.exe is by far not all there is to it. Today, all software is distributed over the net, and if you have a mature and reasonably sized product, it is in all parties’ interest that you only send over those bits the customer actually deployed. So it better be modular, and offered via deployment server, and have tools to manager the software on the customer’s machines. In the paragraph on agility I explained we created a separate process for this, and, for those who are interested, this is a combination of an ASP.NET web service, some custom made command line tools and Inno setup packages. I would advise Inno setup over InstallShield to any one any time of the year.

Coming close to the end in the chapter on product development, I suddenly remember I still have to add something about time estimation. When I talked about agile in project management I also mentioned the failing time estimations when it is the first time you do something. In product development we notice that product release are also often released late, or with less features in it than originally foreseen. So do we suffer the same problem as with project development? It’s a combination with product development. There is usually a part of the work that can be estimated quite accurately because it has been done before in the team. But if all goes well and you have strategic features, you know you are going to do some new stuff and thus you will get timing wrong, and, the more of the new things you’ll do, the further off you will go. As you know by know, I accept this as a fact of life in software development (or in any research type of activity). Time is in our advantage here, because when you have a reasonable series of requirements, a number of them will require more time than expected, but, some of them will cost less time so there is a certain part of compensation in the system. The fact that the set of requirements isn’t a demand from one customer but a general set of requirements, allows the product manager to skip a number of them to keep everything on track. So there is a little bit more flexibility here to mitigate the problem of time estimation, but it remains very hard and also for product development, there isn’t really a good process to deal with this.

A conclusion

There are most likely still a couple of other differences between product and project development that you might think off, but I have to wrap up and would already like to make a conclusion. As you can see, we use in product development a lot of things from project development, but, we always need to significantly modify them to fit them into our product development scenario and requirements. Actually, we must modify them soo much one might actually wonder whether it wouldn’t be better that we create separate methodologies for them, with specific tools or specific features in the tools we use today? Is this available already? Then please let me know! Are you having the same experiences and do you see the same in your company? Why hasn’t this been done? Is it because it is simply not possible or is it because everybody has different requirements in this field and thus the best we can do is make all our own processes  based on the tools for project development? Not sure whether I will ever get an answer, but I’ll keep my eyes open for anything that happens in this area.


And what about cloud development?

Cloud development, by which I mean development of a cloud platform is indeed another topic, or maybe not. First let me clarify what I mean with a cloud platform. A cloud platform is a software solution deployed in the cloud and offers a service to different customers. I do not consider a customer’s website installed on Azure a cloud platform. Nor is the product installed for a customer on an Amazon VM a cloud platform. I guess you get the point.

Fact is: a cloud solution is made and deployed only once, just like a project. On the other hand, a cloud solution targets different customers, thus implements the requirements common to all of them, and one customer definitely doesn’t pay for the whole development. So a cloud platform seems like a combination of a  project and product.

In my experience, most cloud platforms move from a project approach to a product approach as the platform grows. They all start very agile to get some traction in the market. In that startup phase, it is actually a project with the only difference you make it multi tenant. So they release often small updates to the platform so that the customers see the progress of the platform and believe in it’s future, while at the same time paying a small amount of money for it, keeping the business alive.

But when the platform reaches a certain size (in terms of customers and requirements implemented), every change done impacts more and more people, and more and more businesses, and thus the platform ends up in a kind of product scenario. At that point, they have to be very careful what changes they offer to which customer. Unlike a product however that can be updated with a specific version at one customer and not at another, there is only one platform deployed and thus it’s the same software for all customers. Usually this problem is mitigated by making these new features configurable, and, by default disable them for all customers. Customers that wish to use them can enable them, being aware of the consequences for their business. Customers that are happy with the solution as-is and do not need the extra features do not have to do anything.

The problem here is that this solution only works for customer requirements, and doesn’t help for any strategic features (as we called them before). Fundamental changes in architecture and design are typically a lot harder in a cloud platform, and therefore very uncommon. Luckily, most cloud platforms are very young and can still focus customer requirements and don’t need to worry about architectural changes or new techniques that are developed, but at some point in there lifetime they will reach that point. This will impact there business a lot, and usually means that they will build a second version of the platform based on the same data, and when you opt in to go to the new version, you are actually migrated to the new platform, rather than reconfigured on the existing system. Of course, if you have thousands of users (or maybe even millions), this for sure is not an easy task. One platform that pops into my mind here is,which has actually reached the phase where they have to make significant architectural changes to stay competitive and up-to-date (for those who know Salesforce, I’m referring to their Lightning interface which adheres to “responsive” principles, while there old interface didn’t support this because it was build long before responsive became the standard).

Working on a startup cloud solution myself (in the little spare time that I have left), I can experience the methodologies and toolset available for project development when programming the pieces of our offer.And this works quite well. However, knowing what I know from my experiences with products and what I have seen in other platforms, I realise that one day pressing the “Publish” button won’t be possible anymore, and we will have built our own process by than, like many others are  did before, and will do after us.





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