THE PS BUSINESS MODEL
Defining a sustainable business model is a critical step for any business. This reality applies especially to technology professional services businesses. Many PS organizations focus on increasing bill rates, increasing utilization, and reducing load costs to meet profitability targets. While it's important to track such metrics, oftentimes the senior management team has not yet defined a target business model for their professional services team. This lack of abstraction is denying PS required investment and crippling the function long term.
In building a successful PS business model, both corporate and business strategies need to be considered. To define corporate strategy, a management team must answer the following questions:
- What markets do we want PS to pursue?
- What do we want PS to achieve in those target markets?
- What services do those markets need?
- How do those markets like to purchase professional services?
To define business strategy, the management team must answer the following questions:
- What is the financial business model for the services business unit?
- What financial objectives make sense?
- How will we differentiate our services offerings?
- What skills and positions will be core to the PS organization?
- What partners will we use?
- How will we scale delivery capability?
As perhaps the chief component of a business strategy, a successful PS business model defines the costs, investments, and profits required for the business. A successful model allocates the appropriate amount of investment in sales, research, and administration to achieve the corporate strategy, achieve market success, and hit target profitability. The business model should be realistic and sustainable.
TSIA Research has the information and insights to help you optimize your PS business model and dramatically improve the ability of PS to succeed long term. To learn more, explore the following links: