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Tech companies are currently experiencing an incredible disruption to their tried-and-true business models. While traditional products will always remain an important revenue source, now is the time for technology providers to develop more subscription-based cloud offers in order to meet changing customer expectations and keep pace with industry trends. To make the transition from a product-based business model to one that includes technology-as-a-service (XaaS) offers go as smoothly as possible, leaders need to know which service capabilities to invest in before making the change. To provide some guidance on this journey, TSIA has created the 2016 Service Capability Heatmap.

About the Service Capability Heatmap

Organizational service capabilities are any resource that enables your business to perform the specific actions necessary to achieve desired results. Each year, our research executivescollaborate and share their latest findings on their respective service disciplines, resulting in the creation of the Service Capability Heatmap, which outlines the best capabilities to invest in for the year ahead. Using data collected from the top performing technology companies, TSIA’s 2016 Service Capability Heatmap provides a deep-dive look at the state of the industry and offers suggestions on how your company can use these best practices to wisely invest your time, money, and resources in 2016. 

TSIA leverages a broad portfolio of structured research activities—everything from analyzing publicly reported data to conducting in-depth service-line benchmarks, and conducting intimate focus groups to determine how service businesses are actually optimizing their business through industry disruptions.

Thomas Lah, “2016 Service Capability Heatmap"

What’s Driving the Need to Invest?

The only constant in this industry is change, and recent trends have shown us that there's no time like the present to invest in new organizational capabilities. Here are just some of the key industry transformations we’ve already seen that are driving the need for investment:

  1. Commoditization of Feature Functionality – Because customers are showing more interest in receiving outcomes from technology, they are no longer willing to pay a premium price for technical ability. As a result, pricing on hardware and software offerings has experienced downward pricing pressure.
  1. Acceleration of New Consumption Models – Customers continue to explore new ways to purchase technology, such as technology-as-a-service and managed service offerings, which are seeing double-digit revenue growth in recent years.
  1. Financial Models are Shifting – Many organizations are experiencing less revenue from selling technology assets and more revenue from services and subscriptions, causing CFOs to rethink overarching financial models. 
  2. New Offer Types – The tried-and-true service portfolios designed to implement technology and keep it running are no longer enough. Customers are now wanting help with optimizing their technology, creating demand for new classes of services, such as adoption services, managed services, and outcome services.
  1. New Organizational Capabilities – Finally, all of the trends above are forcing technology companies to establish new organizational capabilities, such as new employee skills, new business processes, and new performance metrics that align with changing customer demands and reengineered financial models.

It is one thing to identify disruptive industry trends. It is quite another to do anything meaningful about them.

Thomas Lah, “TSIA 2016 Service Capability Heatmap"

Need Help? Just Ask!

By identifying the capability gaps in your current organization, you can better prepare yourself to proactively manage your way through the transformation to technology-as-a-service. Download the TSIA 2016 Service Capability Heatmap today to get started down the right path toward making the best choices for your business.

Curious about becoming a TSIA member? Contact us today about how you can gain unlimited access to the hundreds of research reports, checklists, quick tools, webinars, and white papers to give your business a competitive edge in this ever-changing industry. We’re here to help your business achieve “up and to the right” results this year and beyond!

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Thomas Lah

About Author Thomas Lah

Thomas Lah is executive director and executive vice president of TSIA. Since 1996, he has used his incisive analysis, strategic thinking, and creative solutions to help some of the world’s largest technology companies improve the efficiency of their daily operations. He has authored several books, including, Bridging the Services Chasm (2009), Consumption Economics (2011), B4B (2013), and Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business (2016), and Digital Hesitation: Why B2B Companies Aren’t Reaching Their Full Digital Potential (2022). He is also the host of TSIA’s podcast, TECHtonic: Trends in Technology and Services.

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