As professional services are a central part of successful customer journey outcomes, it’s important to discuss some key questions about how to define them, especially as services convergence and the blurring of previously clear lines continue apace. So, what are professional services?
This blog will answer this question by exploring:
- What Is Professional Services: Definition
- Professional Services in the Technology Industry
- What Does a Professional Services Operation Look Like?
- What Does a Professional Services Manager Do?
- Two Different Types of Professional Services Organizations
- The Professional Services Sales Team
- The Importance of Professional Services
What Is Professional Services: Definition
In the broadest terms possible, professional services are specialized services requiring expert knowledge in a given field, which applies to all professional services: legal, engineering, and accounting. We need concepts for professional services that are more specific to our technology industry.
If technologies were simple and easy for customers to adopt and use, and if total business value automatically happened based on that use and adoption, there wouldn’t be much of a need for any of the services built over the decades, including professional services. This isn’t the case, yet so many customers require professional services to enjoy the benefits of these solutions.
Professional Services in the Technology Industry
While many businesses exist solely to provide professional services to customers, many professional services organizations are embedded in larger enterprises. For example, technology companies often maintain a professional services team as a strategic part of their business.
This is true for classic enterprise technology (hardware and software) and adjacent areas like industrial equipment, healthcare technology, and more. The solution, system, or technology requires professional services for customer implementation and subsequent business value; the concepts discussed here apply.
For technology companies, professional services help ensure customers succeed with a new technology purchase. How do they do that? Some of the most common professional services that technology companies offer include:
- Consulting services (technology consulting, business domain, or business process consulting)
- Implementation of systems integration services
- Migration services
- Custom development
- Value realization or adoption services (post-implementation)
- Analytics services
- Engineering services
- Project and program management services
What Does a Professional Services Operation Look Like?
TSIA has worked with numerous professional services organizations in the technology industry and has had a unique opportunity to observe their organization strategies and structures.
The professional services function has evolved from a loose grouping of consultants, smart people delivering value to customers to the best of their ability, into a fully mature organization in many cases. Professional services organizations can vary from company to company, but some characteristics are consistent across most professional services operations. In professional services organizations that adopt the most common functions, you will find:
- A management team
- Overhead (including operations, finance, marketing, research and development, and specialized teams)
- Unique delivery pools
- Global governance
- Performance monitoring
- Dedicated delivery resources with fully formed talent management that specializes in consulting
What Does a Professional Services Manager Do?
The technology sector illustrates the importance of the professional services team. Software and technology can be highly sophisticated, requiring expertise to understand the product's capabilities. The in-house professional services team can deliver expertise to help customers maximize their purchases.
In the most common use cases, the professional services team will consult with a customer who has purchased new technology. The first step for the professional services team is often to adjust or modify the technology to suit the customer’s technology environment and business goals. This requires expertise in business processes and technology and experience in professional services teams.
Next, the professional services team will be key in onboarding the customer and ensuring the customer uses the purchased product correctly. The team helps the customer adopt the product and integrate it into the customer’s business processes and workflows.
This adoption is especially vital for a subscription-based business. If the customer fully adopts the technology, it becomes an essential tool for the company. When customers value the tool, they will continue renewing their subscription, and may even expand it.
In addition, most professional services teams are organized around a defined charter, strategy, and business plan. They will also adhere to a set of financial targets governed and monitored by a detailed profit-and-loss framework.
While not every technology company that TSIA has worked with has evidenced all of these organizational best practices, the most mature and successful certainly have. As a result, many of these capabilities have become clear majority practices.
Two Different Types of Professional Services Organizations
As mentioned above, the professional services organization should establish clear charters. These charters typically fall into two distinct categories:
Services Success Charters
An organization with a “services success” charter is mainly established to drive intrinsic, direct financial performance, revenue growth, and profitability. Accordingly, the professional services organization’s utilization targets, supporting structures, and compensation plan will be shaped to drive revenue and profits. For example, organizations operating under a services success charter will tend to have higher than average billable utilization and will monitor and manage non-billed customer project work more closely.
Product or Customer Success charters
On the other hand, the product or customer success charter establishes a professional services organization primarily to support and drive the company’s core product business. Organizations established under the product or sales support charter will place less emphasis on billable utilization hours and allocate more time for non-billable work, such as customer adoption and pre-sales support.
In other words, professional services organizations can look and function differently from company to company. This variability highlights the versatility of professional services and the difficulty in applying a “one size fits all” standard across the board.
The Professional Services Sales Team
There has always been considerable debate about whether companies need a sales team dedicated specifically to professional services. After all, companies that sell products will already have a sales team on staff. Can’t the product sales team also sell services?
Yes and no. It is typical for the product sales team to own professional services and sell at technology companies. Still, in some cases, it can make sense to have specialized services sellers.
The needs and interests of the professional services organization need to be adequately served by a sales team primarily focused on selling something other than professional services. Product sales often require more knowledge, training, or motivation to sell professional services correctly.
Professional services sales will only be performed correctly if the sales motions are performed correctly. Services must be positioned to customers with the proper message to help customers understand the value of the services.
TSIA recommends that professional services organizations consider whether having a dedicated sales team for professional services is right for them. A dedicated team will be more knowledgeable about how the services support customers and more motivated to offer services as an expanded sale.
The Importance of Professional Services
It is easy to see why professional services remain prominent in technology companies. The professional services team is integral in helping customers maximize their technology purchases. Professional services will use their product expertise to customize the technology to align with the customer’s goals. They will then work with the customer to ensure the product’s functionality is wholly understood and adopted company-wide.
Over the customer life cycle, professional services can continue to add value to the customer relationship by helping the customer utilize the product, providing analytics to validate product performance and other valuable services.
TL;DR
This blog explores the intricate world of professional services within the technology sector, underscoring their pivotal role in enhancing customer outcomes through specialized expertise in consulting, system integration, and analytics. It delves into how professional services teams are structured and operate within tech companies, emphasizing the need for a nuanced understanding of professional services amidst the convergence of technologies and services. The blog further discusses the evolving nature of these services, from project-based to subscription models, and the strategic importance of aligning them closely with broader customer success objectives.