As 2014 draws to a close, the TSIA research team wanted to provide a brief recap of the top trends, lessons learned, and key takeaways the past year had to offer. Let's take a look at what we've learned this year, as well as what's on the horizon for the technology services industry in 2015.
Customer Success and Support
Judith Platz
VP Research, Customer Success and Support
This year, many of our members have begun working on starting up their Customer Success Organizations (CSOs) using TSIA insights, and we're excited to help them get started on this journey. At the same time, we've noticed that existing support organizations are moving away from tiered support and toward a collaborative support model, thereby experiencing a tremendous strengthening of metrics in business, customer, and employee performance.
These organizations are also measuring customer satisfaction in four ways:
The many layers of this measurement show that the focus on retention and expansion of customer accounts is top of mind for support execs.
Service Revenue Generation
Julia Stegman
VP Research, Service Revenue Generation
Technology companies everywhere are turning over new rocks in search of service revenue growth. All of these organizations are evolving the value proposition of their services to move from product-focused to customer outcome-focused. Here are a few trends we've noticed in service revenue generation:
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Cloud companies are monetizing support services with up to 50% of their existing customers.
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Software companies are piloting fee-based adoption services that close the consumption gap.
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Hardware companies are transforming into hardware + software + services business models.
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Renewal rates are increasing in both cloud and on-premise models as technology companies continue their quest for optimization of recurring service revenues.
Expand Selling
Mark Middlekamp
VP Research, Expand Selling
The topic of customer engagement models is becoming a hot topic across all of TSIA's disciplines. We are working to identify emerging trends and high-water marks that we will share across our membership to help you better architect your engagement models across the model's four phases: Land, Adopt, Expand, and Renew.
This is why TSIA has accelerated our research in the emerging area of expand selling and will be releasing our Expand Selling Practices and Metrics Survey to baseline the industry and provide the basis for our research and guidance on this topic in 2015. Interested in participating? Drop us a line!
Managed Services
George Humphrey
Senior Director Research, Managed Services
What a truly fascinating year we've seen in the managed services discipline here at TSIA! It's no secret that this segment of the market is growing aggressively, as the TSIA MS benchmark data shows a staggering 44% top-line revenue growth rate for managed services members. In this year alone, we've seen a dramatic increase in tech services participation in the managed services discipline with over 40 new member companies who are now part of this fast-growing line of research, including software companies, hardware manufacturers, SaaS players, service providers, system integrators, value-added resellers, and IT outsourcers. Companies with aging managed services offers and capabilities are also now looking to reinvent and reinvigorate themselves.
Given the latest buzz in this line of research, one thing has become abundantly clear: If you're not offering managed services, you're not part of the “in” crowd, and your customers are likely ready to move on.
Professional Services
Bo Di Muccio
VP Research, Professional Services
What's trending up in professional services? In short: everything and nothing. Here are the main industry trends I've noticed in 2014 as they relate to professional services:
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PS revenues are generally flat. Overall, organizations are having trouble capturing revenue at better rates than in previous years.
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PS utilization rates are flat to declining. As an industry, we appear to be having increasing difficulty keeping our billable people busy on customer engagement.
On the other hand, we're also getting some very different indications:
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In some sectors of the tech industry, revenues and margins are actually increasing rather sharply, particularly among some XaaS vendors.
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The very latest results from the recently completed TSIA 2014 PS Market Rates Study show that, on the whole, PS rates are once again trending up.
So how can all of these things be true at the same time? The blunt truth is that the market forces that we've identified in B4B and elsewhere are not affecting everyone equally across the industry. While some tech companies are poster children for B4B, others are still pretty resistant. If there's anything that is indisputably trending up in PS, it's the innovation with which executives are improving processes and uncovering new revenue streams.
Field Services
Vele Galovski
VP Research, Field Services
As the broader economy recovers and unemployment declines, recruiting, retraining, and retaining the field service workforce is becoming increasingly important. This is especially true as we prepare for the impending retirement of 50% to 70% of the field service workforce in the next 5 to 10 years, as well as the knowledge drain that comes with it. Field services organizations are responding to this problem with a renewed focus on the implementation of knowledge management platforms and processes that not only capture existing knowledge, but are also integral in bringing new hires up the learning curve faster.
Another trend we're seeing is that as more businesses move from a product-based to an outcome-based model, spare parts management will become a key revenue growth enabler as suppliers begin to take more responsibility for performance and customer outcomes. As offers that tie supplier payment to actual business outcome delivered become the norm, getting parts to the right place, at the right time, at the right cost can make all the difference.
Education Services
Maria Manning-Chapman
Senior Director Research, Education Services
While technology has long been an important element in the delivery of education, it is an imperative in 2015 and beyond. As customers begin to demand “everything as a service,” education services is being impacted in three critical ways:
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Learning as a Service. ES organizations need to move from merely providing a learning portal/website to providing a learning-as-a-service (LaaS) offer. This requires technology and platforms that are cloud-enabled, have social/collaborative capabilities, provide virtual-lab functionality, and can assess learners' progress.
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Subscription Offers. Instituting a LaaS offer requires that ES organizations perfect a subscription-based model, which in addition to determining the best price, includes driving adoption, deterring churn or attrition, utilizing dashboards to track and monitor consumption, and employing customer success methodologies to ensure subscription renewal. Another critical element in this model, is expand selling, which maximizes cross-sell and upsell opportunities, both of which are essential to growing a subscription-based business.
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Content Development. Rapid content development is essential in a subscription economy. Subscription renewal depends on new, fresh content being regularly made available to consumers. Education organizations need to migrate from older development tools and technologies if they're to keep up with the increased demand for fresh content.
To survive and thrive both now and into the future, education organizations will need to embrace technology like never before.
Services Technology
John Ragsdale
VP Research, Technology and Social
Service organizations have always been heavy users of enabling technology, and topics such as customer relationship management (CRM) and knowledge management are always top of mind in member inquiries. Here are some emerging technology areaswe've received the most member inquiries about in 2014 that we think will be worth investigating in the New Year:
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Recurring Revenue Management. These tools are used to automate renewals for maintenance agreements and cloud subscriptions, with renewal dashboards to pinpoint problem accounts and prompt the service sales team to take action at key relationship milestones.
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Consumption Monitoring. A core concept of B4B is the ability to measure and monitor customer adoption of technology, and new solutions are coming to market to automate this consumption tracking. Armed with this information, you can instantly see which customers are receiving value from your products, and which customers have yet to engage or are seeing waning use of the tools.
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Upsell/Cross-Sell. These platforms, common in consumer call centers, recommend offers to extend to customers based on the current interaction, so sales can be generated as a natural part of servicing the customer. Renewal teams can rely on the embedded analytics to know which add-ons have the highest likelihood of success with particular customers, boosting offer accept rates and making a major contribution to services revenue.
If you aren't currently using or researching these technologies, you may find yourself behind the pack in 2015.
Expect More in 2015
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