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Professional Services

What is Professional Services: A Quick Guide

4 min read
By Bo Di Muccio

With professional services being a central part of a successful customer journey to outcomes, it’s important to discuss some legitimate questions about how to define professional services. Especially as services convergence and the blurring of previously clear lines continue apace.  So… what is professional services?      

What Is Professional Services: Definition

In the broadest terms possible, professional services isn’t a hard concept. It’s just “specialized services requiring expert knowledge in a given field,” which applies to all kinds of professional services: legal, engineering, and accounting. Obviously we need concepts for professional services that are rather more specific to our technology industry, for starters.
 
One thing needs to be said at the outset. If technologies were simple and easy to adopt and use by customers, and if full business value more or less automatically happened based on that use and adoption, there wouldn’t be much of a need for any of the services that have been built over the decades, including professional services. This isn’t the case, yet, so many customers require professional services in order to be successful in enjoying the benefits of these solutions.  

Professional Services in the Technology Sector

While there are many businesses that exist solely to provide professional services to customers, there are also many professional services organizations that are embedded in larger businesses.
 
For example, technology companies will often maintain a Professional Services team as a strategic part of their business. For technology companies, professional services can play an integral role in ensuring customers succeed with a new technology purchase. How do they do that? By providing “professional services.”  

More specifically, 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 how they are organized. We have seen the professional services function evolve from a loose grouping of consultants into a fully mature organization.
 
Professional services organizations can vary from company to company, but there are certain characteristics that are consistent across the majority of professional services operations. In most professional services organizations, you will find:
  • A management team
  • Overhead (including operations, finance, marketing, research & 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 full capabilities of the product. The in-house Professional Services team can deliver the expertise to help customers take full advantage of their purchase.
 
The Professional Services team will consult with a customer that has just purchased new technology. The first step for the Professional Services team is often to adjust the technology to suit the customer and the customer’s business goals. This fine-tuning requires the expert knowledge and experience of professional services.
 
Next, the Professional Services team will play a key role in onboarding the customer, making sure the customer is using the purchased product correctly. The Professional Services team is helping the customer to adopt the product and integrate it throughout the customer’s business.
 
This adoption is especially vital for a subscription-based business. If the customer fully adopts the technology, then the technology becomes an important tool for the business. If the customer values the tool, they will continue to renew their subscription and may even expand their subscription.

In addition, most professional services operations are organized around a defined charter, strategy, and business plan. They will also adhere to a set of financial targets that are 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 practices, the majority certainly have; to the point where these capabilities have become clear majority practices.

Two Different Types of Professional Services Organizations

As mentioned above, the professional services organization should establish a clear charter. These charters fall into two distinct categories: 
  1. Professional services revenue/profit charters: In an organization with a professional services revenue/profit charter, the professional services organization was established largely to drive intrinsic, direct financial performance, 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 the revenue/profit charter will have a greater proportion of billable vs. non-billable time in their target utilization mix. 
  2. Product/sales support charters: On the other hand, the product/sales support charter establishes a professional services organization that exists primarily to support and drive the company’s core product business. Organizations established under the product/sales support charter will place less emphasis on billable utilization hours. Instead, they will 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.

The Professional Services Sales Team

There has been some debate about whether or not 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 just sell services as well?
 
Yes and no. It is not unusual for the product sales team to own the professional services sales function at technology companies, but there are reasons to believe that such an arrangement is not optimal.
 
The needs and interests of the professional services organization are not adequately served by a sales team that is largely focused on selling something other than professional services. In many cases, product sales may lack the knowledge, training, or motivation to sell professional services correctly.
 
If the sales motions are not performed correctly, professional services sales will suffer. The correct services must be positioned to customers with the correct message to help customers understand the value of the services.
 
TSIA recommends a dedicated sales team for professional services. A dedicated team will be more knowledgeable about how the services support customers and will be more motivated to offer services as an expanded sale.

The Importance of Professional Services

It is not difficult to see why professional services are becoming more prominent parts of technology companies. The Professional Services team plays an integral role in helping customers maximize their technology purchase.
 
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 completely understood and adopted company-wide.
 
Over the customer lifecycle, 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.

Like everything in our industry, professional services is changing, undergoing various forms and levels of transformation. Where our industry used to be overwhelmingly project-based, subscription forms of professional services are increasing in frequency. Where the professional services organization has been overwhelmingly an independent business unit, services convergence brings professional services more organizationally aligned to other “Big C” customer success services. For now, the traditional concepts for professional services are still the norm.    
 

 June 29, 2021

Bo Di Muccio

About Author Bo Di Muccio

Bo Di Muccio, Ph.D., distinguished vice president of Professional Services research and vice president of TSIA advisory delivery. 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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