The Business of Professional Services: Is it helping or harming your organization?
In the recent TSIA webinar, The State of Professional Services 2019, featuring Bo Di Muccio, Distinguished VP of Professional Services Research at TSIA, he reviewed his recent research of challenges facing today’s services executives. During the presentation, he posed the ultimate question that every professional service leader has to consider: How much of a business should your services organization be?
Every year, the top business challenges of services teams is presented, and every year we see “optimize the business model” top the list. We can’t deny the challenge of finding the balance of business for a services organization. Di Muccio described this notion as a spectrum, arguing that at any given time you should find yourself somewhere in the middle, with one end of the extreme focusing entirely on customer service with a “defend and protect” mindset and the opposite end a “transform and adapt” concept entirely focused on business. This concept, while not new, is ever popular to debate as services teams are a crucial element of both customer success and business.
We work with a lot of embedded services organizations – those teams operating within a SaaS company that deliver/implement the software the company provides. While all professional services teams fall somewhere on the spectrum of business oriented vs. service focused, these ESOs have the unique challenge of having a product to deliver and a service to provide. They must balance their revenue against that of the company, both justifying their existence while also not exceeding that of the product. They also require specific skillsets where they are good at managing their time with customers and keeping their customers happy, but not spend so much time with customers that they are no longer profitable. Often times services team members are also expected to work with the internal product team to provide feedback, the sales team to consult and provide expertise, and the marketing or product marketing team to determine trends and fit. This puts the services team at the center of a lot of moving pieces and the question of adequate “business” being carried out often intensifies.
In the TSIA presentation, Di Muccio covered the key areas of consideration, including revenue, utilization, and what he calls “deal attach rate,” among others, to determine if you are too business focused. As many of us have experienced, executive leadership will undoubtedly push the pendulum closer to the business side and while more business might be good at first, it also may have lasting repercussions. In fact, TSIA reports a rising level of attrition in services organizations - 53% cited attrition on the rise. For internal services teams this is detrimental, as finding and recruiting these skilled team members is costly, but training and building relationships with customers is invaluable. If you are asking yourself how much of a business your services team should be, chances are it is too much at the moment.
Here are 3 ways to be less “business” with your internal services team:
Spend less time ‘selling’
Depending on the organization, the services or customer success person may bear the burden of renewals, but even if there is an account manager or another individual responsible, typically the services team is the main point of contact for the customer. This carries a big responsibility because when the customer isn’t happy, they call the services person. When they need something additional, they call the services person. While consulting with services is smart in a sales engagement, services should be conscious of how much of their time is spent ‘selling’ because it means they are focused on business rather than customer success.
Focus on internal projects
While it may seem that a services organization is more successful by focusing all (or most) of its time on customer engagements, that may also be an indicator the services team is too business focused. Adding internal projects to the mix could increase employee engagement, peer interaction and collaboration while also improving a feedback loop to other teams. There is benefit to having a balance of internal projects, which sometimes can replace the need to outsource a project to a third-party consulting company. The services team is a big resource for the company and relying on them to deliver projects for the business can be beneficial. Keeping the services team available to other departments without taking them off of work that could otherwise drive revenue is a difficult – but sometimes a good indicator that the balance of business is off.
Adding exploratory projects
The goal of professional services (and the whole organization for that matter) is customer success. Building a model that is repeatable and scalable is the name the of game for revenue – but getting really good at doing the same thing might not payout in the long run. Leveraging the services team to deliver innovative or exploratory projects could mean pushing the product to the limit and finding new solutions. By involving the services team in exploratory projects, you are tapping into a bank of uses and applications that could change the entire perspective.
Most executives will air on the side of all business, so it is a services leader’s responsibility to challenge that notion and consider what to do about it.