Monday, June 27, 2011

Do Product Companies need CMMi certifications?

As a product manager in India, I keep getting questions from my various quarters regarding CMMi certification for software product companies.

"Do software product companies need CMMi certifications?"

The questions are often asked by people whom have worked in software services companies and they have moved to a product company and find it strange that the organisation they are working for does not have CMMi certification, and they want to be the one who will implement CMMi in their new organisation.

The answer to these questions has always been the same: Look from the customer perspective and see if it makes business sense to go for CMMi certification.

Any certification, CMMi including, costs money, time and effort. Investing in CMMi must give adequate returns - in form of increased revenue & increased profits. This means that CMMi processes must help to do one or more of the below:

1. Increase sales of the product.

2. Increase the average selling price of the product.

3. Increase the revenue opportunities for subsequent services/products.

4. Decrease the time/cost to develop the product.

5. Decrease the cost of sales.

Implementing CMMi takes money, so from a business point of view, this investment must be justified. Also one needs to look at the product from customer's point of view:

  • Do customers prefer to buy products from vendors who have CMMi process in developing the product?
  • Do customers pay a premium for the product that was developed by CMMi certified team?

If the answers to the above questions is "NO", then there is no need for CMMi certification.

If the answer is yes, then you need to look at the investments needed, and the returns it gets. The return on investments must be inline with the corporate financial requirements.

Today customers do not care about CMMi certifications while buying a product. CMMi is more applicable to services. Customers look for vendors to be CMMi certified while buying IT services.

By the time I go through these questions, answer to the first question is a resounding NO.

The next question that comes up is:

"We offer services built on top of our products, so do we need CMMi certification?"

The answer to is question is not easy, it depends on the size and scale of the services and level of customer's comfort level with the services being offered.

Are the services built only on the products being sold?

If the services are primarily for software integration or system configuration and the business is built on top of the software products, the there is not much competition, therefore there is competitive reasons to go for CMMi. In such cases there is no need to go for CMMi certifications. However if the service organisation wants to improve its competitive position and the service delivery process, then it is good to go for CMMi certification.

How long and how large is the service engagement?

If the service engagement is long and involves complex SLA and multiple deliveries, then it makes sense to opt fir CMMi certification. In such cases, CMMi certification is beneficial to improve delivery process and reduce dependency on key individuals.

Is there specific requirements in RFP/RFQ that specifically calls for CMMi certified vendor?


Does CMMi certification help in winning the business?

Well in such cases there is no option but to go for CMMi certification, as it is necessary to compete in the market place.

Closing Thoughts

The decision to choose CMMi certification should be based on market conditions and return on investments. CMMi certification carries additional overheads in terms of project delivery and implementation and one must invest in this extra processes and procedures only if it makes business sense. The need to go for CMMi certification must be driven by sales requirements and not by engineering.


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