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A Theme For This Week

We have a theme for this week, namely, for software product managers, where do services fit in? Are they part of the overall product management effort? How do you productize services? I've seen a very wide variation in how this is handled from company to company and product to product.

So let's see what our readers have on their minds.

Dear Product Manager,

The management team where I work wants to put a big emphasis on productizing our services. This is in response to several recent instances where we had cost overruns in service delivery that cut into profitability. But when I talk with our services group, they are very resistant, saying that projects can't be predicted and every project is unique in some way. How can I approach this?

— Fighting the Resistance

Dear Fighting the Resistance,

One quick thing to verify is whether the cause of the cost overruns truly is a failure to productize your company's services. If, after some investigation, that seems to be the likely reason for the profitability problems, then it's time to try to get buy-in from the manager of the services group, with reinforcement from their boss (or whoever they report up to on the management team who wants to see the services productized).

I recommend taking an approach that's common in project management: start with a pilot. Get a reasonable consensus on which service would be the easiest to productize. Then conduct either one-on-one discussions or group discussions with consultants designated by the head of the department. Ask to talk with those who are either the most expert or more forward thinking. In your discussion, review the service and ask: What is the same with each engagement? What differs from one customer to another? What questions do you, Mr./Ms. Consultant, need the client to answer in order to decide what to include in the service? From what you have learned, create a questionnaire with those questions as a job aid. Have the questionnaire provide guidance on which components of the service to use or exclude based on the answers. Next, draw up a standard description of the service that clearly identifies those parts which are standard and those which are optional.

Begin using both the questionnaire and the description of the service on upcoming engagements. The further upstream you can push the questionnaire, the better. What I mean by that is if you can get these questions answered as part of the sales contract or right after, the services group can accurately estimate the requirement for time, and therefore cost, right from the get-go. After the materials have been used, get feedback on how to improve the job aid and description, and then broadcast the improvements from this new pilot approach. Hopefully it will go well enough that you have less resistance for the next service you tackle, and so on.

— Signed, Product Manager

Dear Product Manager,

I am a product manager for an eCommerce product. Up till now I have spent my time on building the necessary features into the software. A small group of people at our company provides consulting and training services, and I have not had much input into their activities. Now that the product is successful and the customer base is growing, the company has decided to standardize our services, and I will be responsible for doing the requirements for this, just like with the software. I feel like the consultants have a whole lot better understanding of the services than I do. What should my role be here? It seems like it's going to require something very different from what I'm doing with the software.

— Ready to Serve

Dear Ready to Serve,

What you're talking about doing is called productizing your services. I applaud your company for realizing that it's necessary to do so. This is not always the case (see previous letter).

You mention consulting and training services. I'm going to concentrate on the consulting, since making training standard and streamlined is generally an easier task, hopefully well within the wherewithal of the trainers. Compare that with consulting, where some people take issue with the fact that it even can or should be productized. So let's talk about how to productize consulting services. Since you're letter doesn't say, I'm guessing that chances are your consulting services cover how to best implement the software, and also eCommerce best practices.

Approach this project as one where your role is to provide help by taking the input from the consultants and making it defined and consistent. The consultants are the subject matter experts, and you will be relying extensively on their knowledge to figure out where and how the services they deliver can be standardized.

The first thing to do is to break out your services into individual, discrete products. You want to aim for an individual definition of a service for anything that your consultants consider an independent unit of service you provide to customers. Any optional units, ones which get included or not depending upon what a customer has purchased or how they intend to use the software, should be broken out and defined as separate services. You'll probably wind up with a more extensive standard base service, with smaller options that can be added in a mix-and-match fashion. Create a list of these various services with descriptions and standard prices. I try to have the pricing parallel the pricing for the product. For example, if your software charges are based on the number of products sold by the software, or number of transactions, or number of users, consider charging for services the same way. One successful approach I have seen is to put all of this, along with the software and its options, into a product and services catalog to be perused every time you sell the software.

Finally, bundle software and standardized services into packages reflecting the combinations most frequently used by customers. You can provide incentives like discounts for packages versus buying services separately, or the more basic incentive of making it easier for customers to choose the right services for them so they feel confident that they have done so. Good luck!

— Signed, Product Manager

Dear Product Manager

I'm a product manager for a couple hosted applications. When a customer buys one of our products, we include a set of services to get them started using the product and help make sure they see good results. As more people sign up for this, it is becoming increasingly difficult to staff enough people to deliver the services. Also, even though the services are free, we often find ourselves chasing customers to sign them up, and this is also getting harder to manage as the customer base grows. Under these conditions, it's hard to make the services profitable enough, while they still take up a whole lot of our time and resources. What can I do to make it easier for us to staff the services and schedule them?

— Overextended

Dear Overextended,

My first piece of advice is for your company to decide how important a role you want services to play. It sounds like so far you're providing services as a necessary expense that goes along with purchasing the software. Since it doesn't make money directly, the company has found it expensive to staff and probably hires reluctantly, leaving an overworked services function that relies on non-automated processes to schedule and deliver their work. Choosing not to develop the services component isn't necessarily wrong, but it's worth revisiting your assumptions. How necessary are the services to customer success, and how influential are they in getting new customers to sign up?

Since you have hosted products, you have a code base that can be centrally delivered and maintained. If you're going to continue providing services for free, why not try to build them into the software as much as you possibly can? Work with the people who deliver the services to automate questionnaires or processes, turning them into surveys and wizards that can be built right into the software screens. Ideally, you can automate the answers and advice — some of it at least — based on how someone answers the survey questions. Your SaaS platform can provide you information about whether and when new customers fill out the various surveys or peruse the training and guidance you provide them, and this can be automated into reports that help your consultants identify which customers need a more direct touch to get going and be successful. By doing this, you are not only productizing the content of your services, you're also automating the process you go through to track whether someone has received the necessary assistance. And it's all built into the product.

— Signed, Product Manager

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