How To Improve Professional Services In Product-first Companies

Editor’s note: The following was written by a guest blogger. If you’d like to contribute an article, please contact ellen@productschool.com

The Role of Professional Services

As a Product Leader in a SaaS company, you have to provide your customers with what they need at different stages of their lifecycle. That means ensuring they are well served from the moment they learn about your product through adoption and until the end period of service.
(And yes, you want the service period to go on for as long as possible.)

The responsibility of driving long-term product adoption typically falls on the Customer Success team (or the person assuming this role). But to get there, the initial product experience should be nothing short of great. At the start of the customer lifecycle, the role of the professional
services team is critical. It is they who get the customer off to a good start and then hand-off to the success team. One is tactical project management, the other builds a strategic relationship that delivers long-term value.

In the real world, SaaS companies may or may not have a well defined professional services team. There is no broader conversation around it, which is unfortunate given how far technology has progressed to organize complex markets.

I would like to share my structure and approach to thinking about professional services. Hence I’ve got a simple framework that I use when challenged with the role and fit for professional services within any given organization.

Two people talking

Start With Functional Models And Use Cases

I am a strong advocate for having the customer choose any product because they are driven by the goal to get an alternative self-explanatory, out-of-the-box solution. Hence, to begin with, always focus on the platform’s functional modules and use cases. A good exercise is to use a chart to represent the correlation between the Sales Function and Business Complexity.

The sales function grows in complexity when going from the Configuration to Customization play. Starting with the basics, I would go with the functional modules your product has to offer. Is platform integration relatively simple or very complex? Does your platform integration range
from simple configuration and settings to highly customized, with API and SDK tools? Based on these factors, how much tactical management does the average customer require?

Also, think about your business complexity. If the average customer can figure your business and product out quite easily, you’ve got no problem. If understanding your company is the stuff that business consultants are called on to do routinely (e.g. highly regulated industry with compliance challenges that require extensive subject domain expertise), you need a different approach.

You may also be interested in: What Is Product Ops?

Take a look at the quadrants below to get an idea of an exercise I’m talking about.

Business Complexity and Sales Function graph

Starting with the lower left quadrant, you are in the configurable, well-defined business area. Most of your functions are standardized modules, features, and well-known use cases.

Going upper right, you get in a challenging territory: neither use cases scale and are worth productizing nor your knowledge of the vertical application is sufficient to even define the challenges.

Although SaaS product customizations have their advantages, you may not be ready for complex integrations at this stage. It is the approach of specialized firms like Accenture, Deloitte, and PwC. (You may not want to be here for multiple reasons.)

Your “true” professional services play is concentrated in the upper left (a complex business that can be satisfied with standard modules) and lower right (a well-defined business that requires customization on top of your product as a platform).

Strategically, however, you may want to evolve your product. As you grow, your business inevitably becomes more complex. This is when the need for a professional services team emerges.

Determine The Professional Services Strategy

Once you complete the chart above, you will end up with a good understanding of business verticals and use cases where you need to leverage professional services. Next up is how to set up the organization.
The high-level approaches you can consider are:

  1. In-house professional services where engagement is predominantly provided by internal resources.
  2. Building or investing in turn-key and customized solutions, vertically or niche. Companies offering a professional services provision address a wide range of requirements, from post-implementation to training. The key here is to hire a provider with a wide range of skills to deliver the tactical support customers need to implement your product quickly and find value faster (lower time-to-value).
  3. Leveraging an ecosystem of consulting partners and integrators for implementing, consulting, and customizing your SaaS business application. Integrations and partnerships can enhance product value for customers and may open up access to new markets and customers. Digitally advanced companies across all industries are implementing new ways to maximize customer value. An increasingly popular way is leveraging ecosystems. In an effective ecosystem, all parties deliver and receive value.

Your preference will hinge on a number of factors, including your selling channels, partner network access, enablement process, and whether you can partner with integrators who have your specific domain expertise.

Use Cases and domain expertise graph

Use cases requiring considerable subject matter expertise are obviously difficult. Look for a blend of offerings that make the most sense.

The emphasis here is on “blend”. So, for a product yet to attain maturity and limited domain expertise, focus on in-house expertise, and a minimum set of integrations that can accelerate adoption. For a mature product and expertise in specific areas, consultants and integrators can
be invaluable.

Turn-key services have a cost impact, so due assessment is needed. You can decide to keep professional services in-house for the time being and shift once costs can be justified.

The other option is deciding whether you want to keep the professional services team entirely in-house or utilize a partner ecosystem. My background is biased towards developing an ecosystem of partners and push services out through them. However, product maturity is
critical, so while developing services in-house can create differentiation at an early stage you have to stay on top of things and watch for momentum to invest in external leverage.

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Making An Objective Decision

Think critically about each option as they apply to your business. Here are some thoughts to get you started:

In-house

  1. Need to spend money and resources
  2. The valuation takes a hit if professional services revenue exceeds 20-25% of ARR
  3. Can become product management and growth distraction

Solutions

  1. Makes sense when projects become bigger and more complex
  2. Can keep the focus on growing revenue (very important if you’re a start-up)
  3. May improve the ability to target larger clients
  4. Ensure that you’re indeed offering a high-value service that cannot be replaced by another team or technology

Ecosystem

  1. An ecosystem requires momentum and a critical mass, that might be disappointing if you’re only just starting out – that’s because most channel partners are willing to dedicate resources only after you’ve achieved a sufficiently large sales volume.
  2. With growth, your attractiveness to channel partners will increase, and leveraging Independent Software Vendors (ISVs) might become a viable strategy to have our product integrate with the partner’s product, increasing the value of both products and helping you enter adjacent markets (e.g. Amazon Alexa and Spotify).

Channel partnerships

Channel partners are professional partnerships to provide design, architecture, development, migration, integration, and management services. Some examples to consider include:

  1. Value-added resellers (VARs). Focus on selling third-party tech products to end-users at a mark-up, along with customization, configuration, and consulting services.
  2. System integrators (SIs). Similar to VARs, but source software and hardware from different third-parties to deliver a custom system to end-user.
  3. Managed Service Providers (MSPs). Offer a tech product or service for a recurring fee. They may provide implementation and infrastructure. Mostly cater to smaller businesses that need to outsource their IT.

A strategic alliance is another type of partnership of companies coming together to share resources or work on a project that can benefit from one another’s expertise, distribution channels, and business relationships.

Takeaways

SaaS companies view professional services as a function of revenue maximization without losing dollar value. More often, some level of professional services is necessary for B2B Saas products where many of these applications are inherently complex and require technical expertise for configuration and integration. The most integration support is necessitated for integration. Proper data integration is also important, even when APIs are well-defined, and calls for considerable data modeling and brainstorming.

Product Manager

The preferred business model is a “pure-play”, where you cater to a niche market and have well-defined use cases. Applications that address business problems are effective only when complemented by business insights. You can create more differentiation by solving business problems associated with your product.

Professional services can also enable the partner ecosystem that can provide quality implementation and expand your reach. A hybrid of in-house and ecosystem partnerships may balance out benefits and drawbacks. After your products have reached high maturity, you will be
in a position to make bolder choices.

If you’re in the early phase of product development you might still need to provide a few services and growing an ecosystem around your application will take time.

A Necessary Evil

There is much more to the story. The intense disruption occurring today merits a look at professional services in the context of multisided marketplaces, a dominant design of our digital age. In a multisided marketplace, the product is the platform and owns the end-to-end experience in discovering, governing, and
enabling participating sides.

Here, commoditization eliminates product complexity. Still, implementation and time-to-value need to be resolved to deliver great experiences and reduce churn. Look at “Uber’s of the world”. How does the professional services organization role changes in product of a multisided market? Does it have a place in the marketplace? Please join me in exploring.

Meet the Author

Olexandr Prokhorenko

Olexandr Prokhorenko is an Engineer by trade who turned into a data-informed and user-focused Product Generalist. He enjoys working with product visionaries focusing on the value that products bring to customers, defining strategy, and building teams and processes to create and deliver great products, and sustainable business.

Through his Product Management career at Splunk to IPO, Olexandr focused on strategic partnerships and developer ecosystem, built Splunk’s enterprise App Store, and was responsible for product growth. Later, at Zuora, as a Product Director, Olexandr was building the core product and driving the “product to the platform” transition. Most recently, Olexandr has been building products at Rapidus – a marketplace connecting thousands of delivery partners with business customers.

Connect with Olexandr here.

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