How far should you go with Professional Services in your product business?

Turning on a giant switch

For any products company, product support is a given, and part of the products business fabric. However, almost all Enterprise Products Companies end-up offering the professional services beyond basic product support. These services could range from simplistic implementation support, to integration, to solutions-building, to architectural consulting, to IT advisory support. The decision to perform professional services could be driven by customer-demand, or by the intrinsic need of the product being sold, or even driven by the business strategy itself to generate peripheral revenue.

It’s important to understand where the boundaries lie, and what goal does a certain type of professional services serve. The decision to commit to a particular type of professional services needs to be driven by a conscious thought process. This is important because the time & resources required to build various skills & operating models for serving the various flavors, change dramatically from one to the other.

Professional Services in Products Business

1. Product Support

This is the core to the products model and serves as just that – support to the main products revenue, and to ensure customer satisfaction. While the core strategy for any product should be to make it so good that it requires minimal support, there’s always a need for support – offline and real-time for the customers.

2. Implementation Services

An ideal product is ready-to-use off-the-shelf, however, in case of Enterprise products the need to configure & customize could wary. Most times, customers demand for an implementation service packaged in the license deal initially, in order to ensure success. Most times, products businesses have to employ this mechanism also to close sales cycle and to ensure a consistent source of post-sale revenue from such services, and also indirectly to ensure expansion of the product usage through consistent personnel presence on the customer premises.

3. Integration Services

This is where it starts going slightly further away from the core skills that the organization may possess organically. Integration with the existing IT systems and other products at the customer premises would require the skills & management practices beyond the core areas of the organization. An extra source of revenue is one of the temptations, but there are also scenarios where integration of the product is critical to the success of the product, making such services mandatory. This is especially true if the product interfaces are not built with open-standards, and require the integrators to know the details of how the product is built internally. The correct approach would be to build the product interfaces in a way that doesn’t force the business into such compromise to induct professional services for integration. There’s an indirect impact of diversion of core product resources to such integration projects unless such professional services are pursued by design, and resources built accordingly.

4. Solutions & Consulting Services

This is where the game gets strategic, and resources expensive. And the reasons to do this are not any more intrinsically important, but strategically targeted to higher value to the customers and hence, access to the larger pie of the wallet. However, this is easier said than done. Unless there’s enough scale & case in the existing business to allow the focus on such services, strategic, and by design, a business is better off focusing on building the core products business stronger by investing resources there. This makes sense for the products, which are more like Platforms that provide larger leverage than in a Point-solution product.

5. Advisory Services

This is important for the products that are targeted for larger ticket sizes and are built for Enterprise-wide deployments. The IT strategy alignment as well as the strategic positioning of the product becomes important, and it also requires much larger IT leadership level involvement. For Enterprise Platforms, or even for departmental level strategic investments, this approach to professional services can bear fruits. However, building it into a business line requires the core product business to be strong, ready for the leap.

So what?

While the Businesses can look at starting off with the lower scale of Professional Services and build up over time, the decision is very strategic and long term. Professional Services, while offering additional top-line, could actually be a resource-intensice and money-draining proposition if not built properly. The mindset that governs the professional services line of business is drastically different from the product side of business. The operational efficiency is paramount, & profitability can very quickly take a hit. Even more importantly, professional services are more intensely people-driven and the skill sets required to build and sustain this business over long term are not trivial. Look, think, and think hard, before you leap.

PS: There are other considerations on Professional Services that directly or indirectly impact the core product business. I will cover in those in the next post. Until then, hope this helps! 🙂

The Product Ecosystem in India is at the Inflection point…

We have been long hearing that the product ecosystem in India is at the inflection point and will grow significantly over the next few years (different consultants look at 2015, 2020 or 2025 to be that period :)). More than we hear this, we do hear lot of people talking about how the ecosystem is constrained, a number of challenges that exist and that India is not yet a “start-up” nation. Sure they have lot of data to support these as well. I also had more or less the same picture in my mind for a long time, but this is fast changing as I see some quality action in this space. Below are my quick observations on the “product ecosystem in India”:

1. It’s not just evolving, it’s happening: The product ecosystem has finally arrived and that too with full force. There are over 3,000 start-ups in the country today and 500 new start-ups are taking birth every year. The interesting fact is these start-ups are not a replica (or “copy”) of a globally successful company, but are truly innovative companies who are trying to address a genuine pain point (in their own way of course) in the global or domestic market. Most of the top VC firms globally have made commitments to India market, industry associations are aggressively looking at the start-up space, global incubators and accelerators are eyeing the Indian entrepreneurial landscape.

2. Modern IT is the new buzz word: Modern IT (Cloud, big data, social and mobility) is the new buzz word in the start-up space. While Indian ecosystem may have lagged behind in the traditional IT areas (don’t have enough data to prove this though) however these modern technologies are whitespaces worldwide and surely Indian start-ups do realize this. Over 70% of the new start-ups formed in India are focused on modern IT. In fact most of the 40 start-ups I met recently were based on modern IT. It is interesting to note the way these start-ups are defining use cases based on convergence of these modern technologies (cloud + Big Data OR Social + Mobile OR Social + Big Data etc.) and competing with some of the top companies worldwide

3. Indian entrepreneur is equal to a confident entrepreneur: I must say I was thoroughly impressed by the confidence that most of these start-ups had while talking about their vision, mission and the company. In my recent meetings with start-ups, it was fascinating to note how well prepared each of these entrepreneurs were, no one fumbled on the “tough questions” and everyone seems to believe thoroughly in what they were doing. While some of them went to the extent of being arrogant about this, most of them were flexible enough to take feedback and keep going

4. Indian start-ups as leader in their own niches: “No, we do not have any competition”, “We are the market leaders in this space”, “We haven’t come across a company like us worldwide” were very commonly heard statements during my recent meetings with start-ups. Of course they had a lot of data to prove this as well. Everyone was eyeing a large opportunity and a bigger market share in the times to come. I think we certainly have a few billion dollar companies in making from India

5. Who says enterprises only prefer working with big IT companies: This was a perception (at least I had one) that large Indian enterprises only prefer working with bigger IT companies. However, it was thrilling to note that many start-ups today work with some of the biggest Indian enterprises including Airtel, SBI, ICICI, Reliance, and many others. Some of the start-ups have also extended the customer list to include large global enterprises. Many of these engagements are enterprise scale and the pipeline for many of these start-ups looks very strong

I am personally thrilled by the progress seen in this landscape (and can go on writing about the same :)). While the ecosystem may have been weak for the last decade, that does not hold true for the current decade (beware consultants :)). It is time that we start recognizing this and help accelerate the ecosystem faster. Obviously, start-ups will need more support from the industry, associations, government as well as VCs/ angels/ incubators to evolve faster from the current state.