Internal-facing products are often overlooked. Companies usually focus their product manager’s attention on client-facing products, forgetting that employees are users too. Others think internal products are unimportant, as they don’t directly affect revenue. Yet, poorly designed internal products decrease employees' effectiveness, lead to frustration, and, ultimately, impact the company’s overall productivity.
These internal products need effective management as much as client-facing ones do. This article covers some important questions PMs need to ask about internal products.
What are the internal products?
Internal products are the company’s products, too. Internal product management helps different business departments, such as sales, finance, client success, operations, etc., to meet their specific needs. Product managers work with internal business users to define problems, prioritize them, and create digital solutions that will assist their colleagues in driving more value.
There are two types of internal-facing products:
Enterprise core: Tools that help to manage standard business processes, such as financial management, human capital management, employee information systems, etc. Many products on the market offer various solutions, from ready-to-use to tailor-made. Yet, some companies need to customize these products to their specific internal requirements.
Industry-specific: Tools that are created for unique business or industry-specific tasks. For example, a telecom corporation might need a bespoke solution that will cover the needs of several departments, such as a big data tool to segment their client base and predict their behavior. Still, there might be many solutions for enterprises on the market, but some of them might not suit every industry, so a company can decide to create a solution in-house from scratch.
Why are internal products important?
Often, internal-facing products are top-down initiatives inside companies. A management team sees a problem, envisions a solution, and communicates it to the appropriate team. At first glance, it seems straightforward. We know everything about our company and what we need within it. Yet, it creates an illusion that we know from the beginning what solution is the most suitable for solving the problem without any research, idea validation, MVP, feedback, or UI/UX. In other words, no product management. As a result, Frankenstein products are born. They are hard to use and maintain, their efficiency is close to zero, and the expenses are high.
The second misconception is that companies treat internal products as less valuable than client-facing ones. This sounds logical, especially when you lack resources: clients have several alternatives before choosing you, while employees are limited to what is available within a company. However, the reality is that the role of any internal product is to bring increased business benefits.
What is the difference between internal-facing and client-facing products?
Client-facing products exist in highly unpredictable environments, so PMs handle market research, finding product-market fit monetization, choosing a go-to-market strategy and monetization model, launching, etc. For a product manager working on these products, it’s vital to have uncertainty management skills, as well as execution skills, to tackle strategy and day-to-day tasks, such as on-time delivery of a product that meets all the requirements.
On the other hand, internal-faced products experience less uncertainty: user and market research are done within a company, and financial projections can be precise. Moreover, there is no market competition inside a company — PMs can be sure that no one is currently working on the same project that might enter the market sooner, leaving their product behind. As a result, the error cost is lower; however, companies usually invest much fewer resources into internal-faced products. So, PMs should possess excellent execution skills, as they have fewer attempts to launch a successful product with scarce resources.
How do you identify internal product ideas inside a company?
Even though internal-faced products don’t encounter market competition, there’s still a rivalry within a company for resources: Why should we invest in this particular product, not another one? Let’s see where you can find ideas:
- Start with the company strategy. Short- and long-term strategy, plans and reports for investors, public announcements, top management interviews in media, reports, etc., will be a good start to provide an overview of where a company is going and where bottlenecks lie. The main goal is to identify the most valuable strategic client-facing products and how an internal product can help them achieve their goals.
- Know the product's investment attractiveness. Ask your finance team: What criteria will you consider while choosing what product we will invest in? A company’s current financial state, revenue projections, and risk tolerance will play a huge role in deciding what products a company will develop from short- and long-term perspectives.
- Learn about what issues client-facing products face now or in the future. It will help you identify areas where internal-facing products will be welcomed on all levels and where the results will work off the investments and potential risks.
As you get a clear picture of the company’s strategy, internal bottlenecks, and financial capabilities, it’s time to dig into where to find problems and which solutions you can develop.
- Technical debt. Outdated technology, insufficient software testing, no documentation, or technical obsolescence create tensions within and between teams and unavoidably lead to a critical mass of problems that impact the company’s financial results. Here, you can develop internal-facing products to solve problems and mitigate risks.
- Overstaffed departments. Teams with too many employees often indicates a lack of automation. In some cases, automation was considered before, but because of scarce resources or other priorities, it was put on the shelf, and the team kept growing, nonetheless. It might be time to revisit the topic of automation.
- Long-running business processes with many participants. Internal processes that are often long-lived and involve too many team resources will indicate broken or overly complicated communication processes within a company. Again, automation might be key: reducing some interaction steps, result control, and communication tools will accelerate business processes and mitigate risks.
A thorough search for clues within a company will lead to some hypotheses and solution ideas for current or potential problems.
How do you validate your ideas?
Internal-facing products have an advantage over client-faced ones. We can validate ideas in advance by using some simple instruments. Initial, quality research will show your decision-makers the attractiveness of investing in a project, increasing the chances of getting the green light from the management team.
- User stories. In-depth interviews with internal users help to test hypotheses by identifying root causes, gaining insights, and getting overall feedback on a problem.
- Data analysis. Applying data to user stories modeling aims to see the true scale of a problem. For instance, if several employees say that data input is a long and daunting process, but in reality, it might turn out to be a bad UX design that gives the impression of a long process.
- Financial modeling. Estimating the financial performance of a product at every step of its creation gives a clear picture of what a product will bring to the table and/or whether you need to start working on it sooner rather than later.
- Market research. Looking around for ready-to-use tools on the market may provide an immediate solution or some ideas of how your product might look. Even though you won’t purchase it, it gives you a vision, some insights, and inspiration on how to do it right.
- Benchmarking. Learning about competitors' experiences with the same problem and getting insights from cross-industry solutions provide you new perspectives on a solution.
- Mentoring. Talk with colleagues within or outside of your company who have faced the same problem before, supplying you with the best and worst approaches, successful use cases, and pitfalls to avoid.
How do you get approval and resources?
Finding and validating different ideas are crucial steps; however, this is far from the final step to securing approval for a project. Next, you need to sell an idea to your management team and stakeholders. Project financing differs from company to company and sometimes even from department to department. Therefore, start with a clear picture of what kind of processes are in your company. Know what quarter or year you should potentially get investments and start pitching your idea accordingly.
Then, identify stakeholders. Very often, in group decision-making, there are two types of stakeholders: the core stakeholders, whose problem you are going to solve, and the rest. The rest of the stakeholders might be involved in the decision-making process, but they mainly follow the advice of the core stakeholders. So, it makes sense to narrow your interest to the first group. Use the Power-Interest Matrix to identify your core stakeholders and involve them in a project as soon as possible. Make sure that they know what it’s about, what problems it solves, what resources are needed, and how and when it will be launched. Ask for their feedback — make them feel they are already part of the project. Plus, it will provide you with feedback from the very beginning.
Internal-facing product development: How to do it right?
At this point, we’ve got a vision of a problem(s) and a potential solution approach from interviews with the users, the user scenarios are clear, the product model is ready, and we have feedback from stakeholders and top management. Sounds like it’s time to dive into working on the project. Contrary to client-facing products, the internal-facing ones have the luxury of getting immediate user feedback throughout the development process. Don’t hesitate to use it.
Involve your future users in the project from the very beginning — Very often, there is a gap between how we see a problem at the start and how a product will solve it in the end. Again, you can use the Power-Interest Matrix to choose a group of motivated users who will support you with feedback.
Shift left your development — Move testing, quality, and performance evaluation to early in the development process, even before any code is written. A minimum viable product (MVP) is also as important for internal-faced products as for client-faced ones. It is where your user feedback can be used on an ongoing basis.
Create space for open communication — Share product roadmaps and feedback forms, and organize open meetups. It will help to create an engaged community around your product.
Invest in UX/UI design — Moving from one module release to another, UX/UI design is often overlooked. Pay attention to it every time you finish a module; otherwise, the rush to start a new task will push you away from this crucial part of the product, and going back to it will cost you more resources and many unhappy users, who would use a product with a poor UX/UI design even for a while.
Plan a team succession — Think about how a product team might change. By moving from development to production and to support, a core team often changes. It is good practice to have some team members who worked on a project from the beginning stay on after a product is released. Highly experienced and familiar with every aspect of a project, this specialist will bring the most value to your released product, from helping to educate new team members to easy navigation in backlogs and valuable feedback on new ideas. Remember, your team members are stakeholders, too.
Client-facing product development is a well-discovered and covered topic among PMs. However, considering how many useful and valuable products are created for internal use, we shouldn’t forget that they also need excellent product management. Internal-faced products are products, too. Let’s treat them like this from now on.