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If you’re unclear on the difference between a product manager and an offer manager, you’re not alone. The terms are often used interchangeably. In fact, a LinkedIn job keyword search for ‘offer manager’ returns many results that are actually product management roles.
An equivalent search for keyword ‘product manager’ simply returns various product management jobs. This is a classic case of term ‘overloading’ (applying multiple different meanings to the same term), and can cause confusion when describing what product management actually is.
So what is product management, and how does it differ from offer management?
Let me explain.
Traditionally, product management focuses on building feature and use cases into core technology to meet the needs of a user or buyer persona. Product managers, even product line managers, often focus on innovating in a single technology or domain. That domain is often framed by long-existing technology categories like z,y, x and defined by industry analysts, who make a living advising IT buyers. Further, product managers are often measured on their ability to ship innovative products on schedule and within budget.
More modern product managers are engaged in designing and building out complete end-to-end, compelling, and often very prescriptive customer experiences that are crafted to drive adoption.
Today’s world of cloud, data, IoT, and AI provides insights into customer behaviors previously only dreamt of. Bringing that actionable insight and automation to the customers is what the modern business PM must do to establish sticky relationships for the long term.
They may regularly work hand in hand with customer success and tap the IT and analytics teams to instrument and measure adoption. Those goals are critically important, but alone, they do not guarantee a product will succeed in the marketplace.
With all that said, success with customers and growing market share within a target customer segment requires a deeper understanding of the business processes of that set of users to create tangible value propositions that keenly address the improvement of key business metrics at a price that customers are willing to pay. The role of product management alone is not set up to achieve these goals. Success requires partnership with the offer manager. When product management and offer management work together, the magic happens.
An XaaS offering manager is accountable for the full iterative life cycle of an offer portfolio, including validating the need in the marketplace and establishing the outcome focused value proposition of the offer portfolio that best addresses the market segment need. In other words, the XaaS offering manager establishes the offer-market fit and monetization strategy.
The offer portfolio may include technology, a variety of services, and data and analytics assembled in appropriate ways to meet the needs of the customer. The offer manager is focused on the growth and profitability of their offer portfolio. This includes the pricing model and the strategy to drive a deep economic moat through business differentiation. This role has often been referred to as a ‘mini-CEO.’
On a tactical release to release level, the offer manager must optimize for customer value realization and vendor value capture by ensuring at a minimum:
As companies grow and portfolios become more complex and diverse, offer managers become increasingly important and distinguished from the technology product managers.
Companies like IBM and Autodesk, for example, have made clear distinctions between those responsible for the lifecycle success and those responsible for the technology success. Other companies, like supply chain vendor Blue Yonder, are investing heavily in their offer managers in recognition of the need for holistic and outcome-focused offers for their success.
There are a few things that the product manager and the offer manager have in common. Both:
According to the 2020 TSIA Annual Organizational Study, the hurricanes of change that have been evident for many years are still present. Each category of hardware, software, and managed services businesses rated evolving product & service portfolios, new business models, and customer leverage of new offers in the top 4 out of 14 business initiatives.
With the industry shift to XaaS offer portfolios, the top priorities have changed. The new priorities are:
For the past few years, I’ve been collecting data on the XaaS business model acumen among the product and offer management communities. I start by assessing the level of understanding of the formula for ARR (Annual Recurring Revenue). On a three point scale, with 3 being highest (i.e. I could ‘teach the class’) just 9% self-report a level 3.
If only 9% of PMs and OMs say they understand ARR formula well enough to 'teach the class,' then how can they build solutions for a model they don't completely understand?
The mistake traditional product and offer managers make is thinking they understand subscriptions and adoption, but they miss the significant opportunity to impact all the measurable outcome vectors of their efforts to drive scalable growth for their XaaS business, specifically:
Both product managers and offer managers have a new and increased level of impact from all they do in creating value. Their understanding of the impact of each and every decision they make is crucial to the viability of the business.
For a deeper double click into these foundational concepts, please refer to the following:
Why XaaS Businesses Struggle to Achieve High Growth AND Profit
You’ve launched your subscription product, customers are adopting nicely, and revenue growth is healthy, but operational scale is elusive. Profitably monetizing the value proposition is the reason businesses exist.
So why are so many subscription businesses struggling to achieve both high growth AND profit? This session reveals TSIA’s research on the XaaS business model that you’ll want to design for to ensure longer term viability.
XaaS Value Propositions: Designing for Renewability?
Technology companies have been shifting from products built for on-premise deployment and acquired through capital acquisition to XaaS products built for cloud consumption purchased as subscriptions or paid for as consumed. This industry shift is having a dramatic impact on how solutions are designed and packaged, how value propositions are articulated to customers, and how customers engage in realizing that value proposition.
It is this actual realization of the value proposition that is the strongest indicator of the customers’ likelihood of renewal when that time comes around. This paper provides a detailed review of the value proposition attributes contributing to strong renewal results.
Accelerate the Path to LAER Efficiency: XaaS Solution Requirements and Action Plans
This paper provides a review of the customer and engagement requirements driving scalable and profitable XaaS solution design and identifies a set of actionable steps to address them.
Post Date: October 23, 2020
Laura Fay is the vice president and managing director of offers research and advisory for TSIA. She also serves as TSIA’s vice president of XaaS product management research. Laura is a technology industry veteran with over 30 years' experience driving business growth in the enterprise technology industry via leadership roles in product management, general management, product development, and customer success.
The Technology & Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.