Magdalena Klimza, 2020-09-30

Product owner in a software development project. Internal or external?

Product Owner is a difficult and responsible role in the Scrum Development Team. It requires huge knowledge about the product and business approach, great communication, and organization skills. Such a bundle of features will increase the value of the developed product. A quite common practice currently is outsourcing the PO from the Software House, which at first glance might be controversial. Let’s check which choice seems to be better: internal or external Product Owner?

Product Owner is a difficult and responsible role in the Scrum Development Team. It requires huge knowledge about the product and business approach, great communication, and organization skills. Such a bundle of features will increase the value of the developed product. A quite common practice currently is hiring the Product Owner from the Software House, which at first glance might be controversial. Let’s check which choice seems to be better: internal or external Product Owner?

Who is the Product Owner?

In a short recap, the is the client’s representative who works with the Agile Team to maximize the product value. His main responsibilities are product backlog management, contact with the clients, and taking part in Scrum events, such as Sprint Planning or daily IT update meetings. He is a visionary and decision-maker, so this role must be performed by only one person; otherwise, that vision will not be consistent, and the team will be plunged into chaos.

This means that the ideal candidate for this role must have:

- great communication skills;

- business approach;

- knowledge about the product; 

- ability to quickly solve problems;

- organization skills;

- and be goal-oriented.

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When should the Product Owner be outsourced?

This position is a full-time job. So, if the employee is obligated to do both his previous and PO duties, that is not going to work. In the absence of another full-time candidate, this role must be outsourced.

A software house who can ‘lend’ an appropriate person provides the customer with the most convenient pricing model. That could be Fixed Price or Time & Material (the client is charged only for the time the PO spends on his project).

Such outsourcing is also a good and profitable solution especially if the client’s project is short-term or he can’t employ a full-time PO within his company (e.g., does not have a budget to hire anyone for this position). 

External Product Owner - good and bad

A PO hired from a software house is a specialist. He knows the best practices, due to his experience gained while working on multiple projects. He has already solved similar issues. Moreover, the software house he works in provides him with all the necessary tools, so the client doesn’t have to pay for them to implement the practices he recommends. His distanced approach to the product also lets him propose more fresh ideas than someone who is attached to the company.

An external person might be cheaper than a full-time position within the client’s company. Moreover, if the project has a limited duration, an internal Owner might be redundant, but a permanent cost, once the project ends. 

On the other hand, an external Owner requires more time to be onboarded to the product and team than an employee from the client’s company. That could even take a few weeks, which is rather a lot of valuable time. Eventually, when that external PO gains the necessary knowledge, he may still be less decisive and have less authority than an in-company candidate. 

Internal Product Owner - good and bad

In this case, the PO is an official representative of the client. By being close to the rest of the development team, he knows their strong and weak points. This lets him quickly gain important information from the right people and maximize the value of their efforts while doing tasks. Moreover, as a more decisive and authoritative person (an in-company employee is more trusted than someone from outside) with strong knowledge of the product, he can develop the project faster, right from the start.

However, this position inside the company has its bad side. Being attached only to the one product, he has a microscale point of view about the product vision. He doesn’t have a comparative view of other developed projects, as an external Product Owner may. What’s more,- the client might not provide all the necessary tools or courses to enable the PO to lead the product development, due to a limited budget.

Conclusion

To be honest, there is no explicit answer to whether the Product Owner should come from the client or the provider. The choice depends on circumstances like the project timeline, budget, or vacancy in the company. If the project seems to be short term, hiring an external partner might be a better and profitable solution from the longer perspective. The Product Owner will be in a full-time role so he will be responsible only for the duties of his position. Additionally, that option is recommended when the rest of the development team is also outsourced, ideally from the same software house, so he will be able to read the whole team like a book.  

However, when the project is long-term, there are many suitable personnel available within the company or there is no time to onboard a new person**, the internal candidate would be the best choice.** The overarching view of other departments’ work, the business as a whole, and technical knowledge will be crucial while leading the development team to maximally increase the product value.

Read more:

- How to effectively manage remote developers? The guide for CTOs

- How to successfully build a MVP product? Lessons learned from our software development perspective

- The ugly truth about software development process

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