Bo Di Muccio
There are a few hot topics facing the professional services community today, many of which are keeping professional services leaders and professionals up at night. As part of TSIA’s Professional Services research and advisory practice, we’ve been tracking these trends and topics with the information gathered through member surveys, benchmark assessments, and feedback from our extensive membership community.
In this blog I’m going to share 6 of the top business challenges impacting professional services organizations, along with thoughts about some of the dynamics and drivers in play with each.
Of all the topics that TSIA Professional Services members appear to be struggling with, partner management may be the most pressing, and there seems to be two reasons for this. First, much of the tech sector is experiencing an “as-a-service” revolution, meaning fast growth. Such growth places enormous pressure on professional services to scale with product sales. An obvious place to seek an expanded ability to fulfill demand for services is in the partner channel.
Second, as internal services organizations focus increasingly on value and outcome services, they are naturally looking more to delivery partners to supply demand against more standard types of implementation services. These two pressures, among others are helping to make partner management of very hot topic indeed.
In a purely CapEx, product-attached professional services world, there isn’t a great deal of pressure on a professional services organization’s (PSO) ability to create, manage, and optimize a portfolio of services offers. But the farther away you get from that world, the more pressure there is.
At the other end of the continuum—that is, a world of annual recurring revenue (ARR), customer success and outcome or value-based offers—there is arguably maximum pressure. For product-attached services, offers need to be more intrinsically tied to the core product as well as the overall customer journey and customer outcomes. The same can be said for post-implementation services of every kind, except that the Sales team doesn’t have the advantage of positioning services as a part of the core product deal.
All of this means that there’s more pressure than ever the PSO’s ability to curate a professional services portfolio that is customer outcome and value-driven, and that takes very seriously the problem of sales enablement. What does best practice, outcome-based services engineering look like and what are the success measures?
Closely related to offer management is offer sales. TSIA has often said, “Helping will sell. Selling won’t help.” Bringing Services and Sales closer is a way of helping Sales to sell by making them better helpers. If your company’s solutions didn’t require Services for successful use and adoption of those solutions, you wouldn’t be reading this article, you wouldn’t be engaging with TSIA, you wouldn’t be (or even be thinking about being) a TSIA Professional Services member.
Your company and your customers require an optimized collaboration between Sales and Services. Having dedicated services sales and/or services sales support (such as a proposal team, a bid desk, a solutioning function, a services sales engineering group) are proven best practices, but may not work in all cases. Regardless of the tactic, the strategic need for better cooperation and synchronicity between Sales and Delivery is clear and the interest in best practices on this very hot topic is very, very high.
The challenge to invest in and to enhance Resource Management functions is real for many professional services organizations. Most TSIA Professional Services members are looking at the resource management organization (RMO) as a tactical function and find it difficult to get additional business investments needed.
We at TSIA believe this growing profession is a critical strategic function that is vital for long-term growth for any PSO. Pressure to improve core tactical capabilities and to improve on strategic capabilities, such as resource capacity planning, is building across the membership as evidence by the number of inquiries we are receiving. Simply put, RM/RMO and resource capacity planning is a topic that is on a trajectory to continue being popular for the next 12 to 18 months.
The last two topics are products of and help produce the other four. In many ways, virtually every inquiry we get is a flavor of “optimizing professional services for XaaS.” That’s because most of our traditional member companies are transforming to XaaS business and operating models. Also, because we’re taking on new “born in the cloud” member companies virtually every day, it’s easily our fastest growing membership category.
The implication of this is simple: the vast majority of business challenges that TSIA member companies face are being experienced within the context of XaaS transformation in one way or another.
You get the idea. There’s plenty of fertile ground here, and we will tackle various versions of “optimize for XaaS” questions at our upcoming Technology & Services World conference.
If you are a technology professional services leader and you are not highly focused on what you can do to accelerate customer time to value, your focus is almost certainly misdirected at some level. To an extent, the importance for professional services in positioning itself as a customer value or customer success engine has always been high.
Professional services has always been more of an enabler than core to tech business models. Professional services margins have always been dilutive relative to more traditionally profitable revenue streams, Sales has always had trouble positioning the value of Services, and so professional services has always had to overachieve to get buy-in from management and to have the support necessary to meet its goals.
However, as the industry transforms and more tech companies become tech-as-a-service companies, accelerating customer time to value increases in importance immeasurably. Arguably, the very business model of XaaS depends on getting customers to the point of enjoying the benefits of your solutions as fast as possible and making sure that adoption expands as far and wide as possible. Getting customers to value quickly and effectively starts revenue clocks ticking and increases renewal rates. In short, professional services needs to see itself as a LAER engine.
At TSIA, we’re busy preparing the agenda for Technology & Services World coming up this October in Las Vegas. TSW is unique among industry events because it consists mostly of practitioner content; industry leaders sharing best practices and experiences with other members.
You’ll find the conference agenda, and the Professional Services track, rich with sessions that touch upon these hot topics and more, such as:
Register today to save on your ticket.
For now, be sure to consult TSIA’s free resources and our Member Resource Center to access a wide variety of research, data, presentations, calculators, visualizations and more.
Post Date: August 13, 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.
The Technology Services Industry Association (TSIA) is dedicated to helping 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.