Bo Di Muccio
Over the last several years, TSIA has been analyzing and forecasting the incredible disruption “as-a-service” technology (XaaS) offers will have on traditional technology business models. Our research has found that one of the more pervasive effects of industry transformation has been services organizational convergence—the merging of previously independent service lines into organizational structures that improve the customer experience and reduce the cost to deliver.
As industry transformation brings about the impetus for increasing services organizational convergence, it primarily falls to the service lines to figure out how best to navigate their own missions and charters while everyone (and we mean everyone) in the company works to improve the customer experience and reduce the cost to deliver. As a result, navigating organizational convergence is a huge business challenge that is impacting Professional Services in a wide variety of contexts.
The 2017 State of Professional Services paper really began to flesh out our thinking regarding the impact of organizational convergence on Professional Services. I’d like to focus on one specific convergence-related business challenge that I’ve been seeing with increasing frequency lately. Below is a composite of some recent member inquires that I’ve received on this topic:
Is there a trend toward merging or blending standard Support Services and Professional Services into a single team, organization, or delivery pool? Is this sort of thing recommended?
That we’re seeing inquiries like this more and more is clear evidence that companies are, indeed, looking for ways to streamline the customer experience and increase efficiencies. The Support and Professional Services functions are clearly in the organizational convergence crosshairs.
Fortunately, we are looking at services organizational structure in a variety of ways. One source of insights is our annual Services Organizational Structure member survey, and the 2018 results have provided even more guidance in this area. For instance, nearly 90% of tech companies report having both Support and Professional Services organizations. This is true of the overall sample and of the XaaS peer group, which is more likely to report having a “converged” organizational structure of one or another kind.
Nearly 90% of tech companies report having both Support and Professional Services organizations.
TSIA Services Organizational Structure Survey
But this actually doesn’t answer the question about whether there is a trend toward the blending of Support and Professional Services, and the truth is that we don’t yet have clear benchmarks on this topic. So, to start getting closer to some definitive industry data, I collaborated with my counterpart on the Support Services side, Judith Platz. Our approach was to ask our senior Support and Professional Services executive contacts to weigh in on the following questions, as they represent a cross-section of the TSIA membership community (larger/smaller, traditional/XaaS, hardware/software):
We received responses from nearly two dozen companies across the two research practices, with the vast majority of companies having both Professional Services and Support Services research practice memberships. Here are some of the key results of this informal survey:
In short, the findings from this brief, targeted survey strongly suggest that Professional Services and Support are, and likely will remain for the time being, very distinct activities and organizations, even in a world of organizational convergence. That doesn’t mean there aren’t opportunities to create efficiency and economies across these service lines, but such opportunities tend to be in the areas of Ops/Support (offers, operations, and program management, for example).
To be clear, TSIA believes (and I agree) that services activities should be converged or blended where possible to create efficiencies and reduce redundancies. This is also the case because the extreme alternative (no organizational efficiencies at all between Support and Professional Services) invariably results in a disjointed customer experience, overlapping and redundant operational support activities, portfolio proliferation, features-led (versus outcome-based) sales models, and all kinds of other ills.
TSIA believes that services activities should be converged or blended where possible to create efficiencies and reduce redundancies.
That said, we still have to confront the fact that complex project services and standard break-fix support services share very little from the perspectives of delivery modalities, risk management, pricing and revenue recognition, skills, competencies, methodologies, project management, IP and much more. So, whether we like it or not, executing both or either of them at scale continues to require unique financial and operating models in most cases.
However, it would be a mistake to underestimate or downplay the organizational pressures to reorganize. The impetus to move toward an organizational converged model for services is strong and likely to become stronger. In some circumstances, this might mean that the focus of the Professional Services function will be paired down to the bare minimum project delivery practices. In this scenario, Professional Services would have to access, rather than own, all other functions (like operations, offer management, project management, methodology, resource management, etc.) through shared services. In other environments, little if any change to current practice would be detected. Looking at these scenarios as two ends of a continuum, I believe that most tech firms will eventually land on something nearer the middle.
For the time being, evidence from our targeted poll indicates pretty strongly that tech companies are keeping Professional Services functioning more or less independently. How independently Professional Services ought to operate is really the $64,000 question. This question will be the focus of much of the thinking and research activity we intend to do in the Professional Services research practice this year. How much “stove pipe” is the right amount of stove pipe, will be the theme of my upcoming State of Professional Services paper, for instance. So tune in, weigh in, and let me know where you’re landing on the continuum.
At TSIA, we consider it our calling and privilege to do the hard thinking about the tech industry and make the results of that thinking useful and actionable for our members. If you’d like to learn more about how TSIA is helping Professional Services organizations optimize their operation in the face of digital transformation, contact us today. You should also consider attending our upcoming Technology & Services World conference, taking place May 6-8 in San Diego, where I will be sharing the latest Professional Services research and upcoming industry trends. There’s still time to register, and I hope to see you there!
Read more Technology & Services World blog posts in which I and the rest of the TSIA research team share a preview of what you can expect to learn at the conference:
Post Date: January 31, 2019
Bo Di Muccio, Ph.D., is the distinguished vice president of research, Professional Services, for TSIA. He is also the chairperson of the TSIA Professional Services Advisory Board. Using his nearly 15 years of experience in technology industry research, analysis, and consulting, Di Muccio develops and delivers research and advisory programs that help some of the world’s leading technology companies build and optimize their professional services business.
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