Enterprises Buy Solutions, Consumers Buy Products

Big buzzwords inevitably are misunderstood and misused. “Solution” is one such word in the software industry, used in place of “product” to emphasize the problem to be solved, rather than the means. 

One might argue that all products are, in reality, solutions to perceived problems. But most of us, as consumers, would likely agree that we tend to buy products, not solutions, where enterprises most often think about problems that are more complex, and therefore require complex "solutions."

We classically argue there is a difference between a product and a “solution.” A product is a good or service that essentially “does something,” whether the product is a screwdriver, notebook PC  or Amazon Elastic Compute Cloud. 

The distinction between product and solution arguably is most relevant for complex problems encountered by large organizations. It seems less an issue for consumer purchases, if only because most consumer outcomes--and the products that produce outcomes--are rather simple. More often than not, “solutions” are unstated and “products” are the functional definition of “the tool to solve a problem.”

A solution, some say, is the application of a product to solve a specific industry need or business problem. The difference can be subtle. Amazon Web Services offers “products” such as compute, storage, databases, security and compliance, migration, analytics, internet of things or security.

But AWS groups its “solutions” by industry vertical, including financial services; digital marketing; enterprise IT; gaming; media and entertainment. 

United Parcel Service offers many products, but groups it solutions into a few industry verticals, including automotive; industrial manufacturing; healthcare; high tech and retail.

AT&T offers a number of products, including mobility, virtual private networks, internet access, voice over IP and web conferencing and network security. But AT&T markets small business solutions including remote information technology; website and marketing; facsimile solutions; data backup and security. 

Some insist that the definition must also include “a set of related software programs and/or services that are sold as a single package.” 

The overarching point is that products represent capabilities, while solutions are products applied to solving specific business problems in particular industries. 

AppDirect provides a commerce platform that enables its customers to directly sell cloud services. Prior to using AppMarket, companies “lacked a platform to offer software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) products,”  a study by Forrester Research notes. 

So one might say the product is an online marketplace capability, while the solution is the ability to sell a variety of cloud services to small businesses from a single portal. 

AppMarket’s “solution” allows organizations to quickly launch a marketplace to sell their own services, third-party services (Microsoft, Google, Amazon Web Services) or build their own software ecosystem to sell to small businesses. 

The products include automated billing, provisioning, and subscription management, if some might say these are features of the product. That is perhaps the best illustration of the subtlety: it sometimes is hard to tell the difference between a product and a solution. 

Likewise, applications might sometimes be terms used interchangeably with products, though some would say applications are used to create products. 

Perhaps often, the key concept is that a solution creates a business outcome. Outcomes result from the application of tools or products. Or, to put it another way, customers look to buy solutions to their problems, enabled by products. Suppliers hope to sell products that are solutions to customer problems. 

If that is an unsatisfying description, it might be because it is unsatisfying. In principle, every buyer wants a “solution,” but every customer also buys specific products that hopefully will solve the problem. 

I actually buy tools (hammers and nails) which are products, not storage solutions (put up a shelf) or “display solutions” (hang a picture on the wall). Sometimes I buy tools to anticipate that they might be part of the solution to some future problem to be solved.

So, in practice, I often buy products, not solutions, even if the products eventually will be tools used to solve actual problems I encounter. Enterprise buying scenarios are much more complicated, of course. 

But is an e-commerce marketplace capability a product or a solution? Maybe it is both, at different times: a product (capability) before you buy it; a solution (business results) once you get it up and running. 

Or maybe it is simply a matter of complexity: solving many business problems requires use of many tools, capabilities and features to create a single business outcome (sales, churn reduction, incident management, regulatory compliance). 

Most consumer desired outcomes are not complex. Groceries and fast food; going to the store and having food delivered all are “solutions” to the problem of hunger. But it is fairly simple to buy products to solve such problems. 

Seeing friends and family or earning money might require transportation “solutions.” But I mostly consume products: airplane tickets, using public transportation, car purchases or rentals, using Uber or Lyft, or riding with a friend.