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Services are the worst route for a software company to go down. There's little to no economies of scale, they have no inherent advantage over other consulting
by mattzito 10y ago
Services are the worst route for a software company to go down. There's little to no economies of scale, they have no inherent advantage over other consulting companies beyond their brand, and companies are always looking to cut consulting costs from their books (since they're often considered OpEx vs CapEx for software).
Services only makes sense from the perspective that you can make your software "stickier" by adding consulting to help with implementation and customer success.
This is reflected in the multiples that VCs and acquirers give software vs. services companies - high-growth software companies often command a 10-14x trailing 12 month revenue, while services are lucky to get 4-5x. It's just a less attractive business.