From Services to SaaS: How Agencies Transition From Projects to Products
And Why Your Business Model Depends on It
The Latin tells the story: 'project' comes from 'jacere'—to throw. 'Product' from 'ducere'—to lead. One is reactive, the other strategic. One responds to what's thrown at you; the other guides customers toward a destination you've designed.
This linguistic distinction reveals why so many businesses struggle with transformation. Many companies that start as service-orientated businesses face a common dilemma: how to transition from selling custom projects to building scalable products. It’s a shift that requires more than just operational changes—it demands a complete mindset overhaul for the whole company. I'll use examples from two imaginary businesses looking to make this change to illustrate the difficulty.
Company A is a proptech IT company struggling to move beyond selling custom IT services due to firmly established habits and misaligned incentives.
Company B is a supplier of machine intelligence to manufacturers of heavy equipment. This company has embraced the challenge of productisation and is making meaningful progress by aligning their team around a clear product vision.
The Service Trap: When Success Becomes Your Prison
Company A has been successfully doing business in the building and construction sector for over 15 years. The company is currently running at a steady $5 million pace and turning a small profit, but it hasn't expanded in recent years. Despite the owners' demands for expansion through productisation, the business faces the following challenges:
The sales team is accustomed to selling man-days and custom solutions.
Long-term customer contracts lock deliveries to the project model.
Leadership hesitates to commit fully to a product strategy, leaving the roadmap still mostly driven by client demands rather than strategic priorities.
Incentives and processes are misaligned, emphasising short-term revenue that drives sales to sell projects, rather than recurring revenue.
As a consequence, company A remains stuck in a reactive ‘project mode’ and unable to scale—literally throwing solutions at problems as they arise. Custom work eats into margins and stretches resources, while the product becomes bloated with one-off features. Teams feel frustrated as they balance competing priorities and struggle to make meaningful progress.
The Product Pivot: From Reactive to Strategic
Company B is in a similar situation. There has been no significant growth in revenue, which has remained at around $5 million with a slight profit. Majority of the revenue comes from projects, and owners demand growth and more profits. In contrast to company A, company B is making the following corrections:
The company's leadership has established a clear product vision that will disrupt an industry with a new generation of hardware.
The company is focusing on solving a specific, scalable problem for a target market, rather than chasing every client request.
They’ve started gathering customer insights to identify shared pain points and build a product that addresses common needs.
Operationally, company B is taking the following steps:
Educating the sales team to shift from selling IT services and man-days to selling the product vision and licenses.
Building a platform that can be customised at the edges to adjust to specific use cases but is fundamentally repeatable.
Prioritising higher-volume opportunities to drive growth.
Company B has embraced the 'product mindset'—leading their market toward solutions they've deliberately crafted.
Your Productization Playbook: Six Rules for Breaking Free
This all sounds trivial and easy on paper, but it is super hard, mainly because it requires the whole company to shift in attitude and skills to succeed. Key items needed to succeed:
Commit to a common product vision: Leadership must articulate and stick to a clear vision. Without this, the transition will stall.
Align Incentives: Sales teams need to be incentivised to sell the product, not just custom projects.
Focus on Scalability: Build for repeatability, not one-off solutions.
Educate and Empower the Team: Help teams understand the value of the product model and how it benefits both the company and its customers.
Say No Strategically: Resist the urge to chase every client request. Instead, prioritise features that align with the product vision. The ability to say ‘no’ is critical to building something amazing for the clients that really matter.
Build a governance model where customer cases are objectively evaluated, for example, using the RICE framework. RICE assigns scores to cases based on effort, reach, impact, and confidence. Governance serves to assess the viability of feature requests and to support the team when deals are rejected.
The Hard Truth About Product Transformation
Here's what nobody tells you about productisation: it's not a business strategy problem—it's a psychology problem.
Company A knows exactly what they should do. They have smart people, proven experience, and sufficient resources. But knowing and doing are separated by the most powerful force in business: human nature. Their sales team's identity is built around solving unique problems. Their clients expect bespoke solutions. Their entire culture rewards firefighting over building.
Company B realised this a lot sooner. They didn't just change their strategy—they changed their story. Instead of being "the company that can build anything", they became "the company that solves this one thing better than anyone else".
The transition from service to product isn't about adding new capabilities to your business. It's about having the courage to subtract everything that doesn't serve your product vision—even when that everything has been paying your bills for years.
Most companies fail because they try to do both. They want product scalability without giving up service flexibility. They want recurring revenue without saying no to custom projects. They want to transform without actually changing.
The real question isn't whether you can productise—it's whether you're willing to become a different company altogether.
What's your answer?
About the Author
👋 I’m Arttu Huhtiniemi, fractional CPO at R2 Growth. I help Finnish and European growth companies:
- Develop winning product strategies
- Build and lead high-performing product teams
- Scale through product-led growth
- Navigate market expansion
Need fractional or interim CPO services? Visit r2growth.com or connect with me on LinkedIn.
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