Our friends at PSVillage(opens in new tab) put on another fantastic event in Boston this past week. The breakfast series brought together 25 executive leaders of some of the most respected professional services(opens in new tab) organizations (PSOs) in the area, with strong representation from service organizations embedded in hardware/software companies(opens in new tab). It was great to see so many new faces and everyone benefiting from a lively discussion and insightful perspectives.
The topic of the day was “strategies for productizing your services offerings.” The attendees were at different stages of bringing packaged services to market, but the topic was on everyone’s minds. We covered a lot of ground, but if I were going to organize the discussion around two themes they would be: 1) Why are we doing this? and 2) What do we need to do to make it successful?
Why Are We Doing This?
PSOs are focused on productizing services offerings. For most, it is not a huge percentage of their business today, but it is core to their strategy going forward. This seems true of PSOs from five to 12,000 consultants. Why? Reasons most commonly cited were:
- Enabling the PSO to hit a price point not accessible with a custom engagement
- Reducing the administrative burden of scoping/SOW development
- Shortening the sales cycle, in some cases dramatically
- Cultivating the ecosystem by creating repeatable offerings that third parties can deliver
What Do We Need to Do to Make It Successful?
It’s one thing to want to productize a service offering, but what does it take to be successful? Some consistent criteria emerged throughout the session:
- The market matters. At its center, a productized service offering needs to have a standardized, repeatable services engagement. For some PSOs, this simply is not part of the reality or the strategy. Also, the maturity of the market matters. Educated buyers and experienced delivery groups are important in developing, evaluating and delivering a productized service.
- Setting expectations with the customer is critical. Items need to be clearly defined as in or out of scope, and a policy should be set and communicated around substitutions and change requests. Once a customer’s need is understood and pegged to a packaged service, a clear “this is what it is” as opposed to a “tell me everything you want” discussion needs to occur.
- Getting this right requires cross-departmental dialogue. Selling a packaged service may represent a shift for the sales team. They must be educated on the offering itself as well as (potentially) how to sell it. Before the offering is brought to market, potential conflicts or disincentives should be scrutinized (for example, any incompatibility with the sales team’s commission plan). On the engineering side, there might well be minor tweaks to the product that really enable productizing the service, for example disabling, excluding, or preconfiguring aspects of a product that could consume considerable time during implementation.
- A feedback loop with clearly defined measures of success is critical. PSOs need a PSA system(opens in new tab) that can deliver timely metrics to the level of detail required to optimize the offering: Is it staged appropriately? Are certain tasks/activities consistently hurting us? Can we safely pull hours and cost out of certain tasks?
There are clearly places where the packaged service may never go—complex enterprise deployments came up a lot—but the benefits of getting this right in the addressable market seem big. In addition to some of the other objectives mentioned earlier, PSOs well down this path reported that packaged offerings are some of the most profitable offerings in their portfolio.
Ultimately, the core competencies here are strengths already exhibited by successful PSOs— managing risk, setting expectations and consistent delivery.