In our book, B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship, we talk about how TSIA is helping technology companies prepare for a radical shift in their business models as they move away from selling product assets and product attach services and begin delivering business outcomes for customers. As stepping-stone in this journey, we’ve created a set of frameworks to provide an overview of the kinds of outcome-based services your organization can offer.
New Frameworks for a New Era in Technology Services
During my TSW keynote presentation, “Consequences of B4B,” I talked about some of the frameworks TSIA has developed for technology companies to prepare themselves for this transition. They cover:
- Three different levels of outcome-based services.
- The process for successfully defining an outcome-based service.
- Outcome-based pricing models.
- Taxonomy for outcome-based offerings.
Developing The Right Capabilities to Provide Customer Outcomes
Historically, all offer capabilities focused on the technology asset, but as the service portfolio shifts to being more focused on the business outcomes of customers, these traditional service categories become less relevant. (Tweet this!) So, what is the specific business challenge the technology provider can solve for the customer? The answer to this question is what your company should be focusing on.
Instead of services that are centralized around keeping the technology asset up and running, the provider will need to have services that are designed to reduce operational complexity, accelerate the usage of technical capabilities, and ultimately deliver quantifiable business impact. As the services portfolio shifts from left to right, there are natural categories of service offerings that product companies can choose to offer.
These are services designed to help customers optimize their use of technology capabilities. There are two distinct types of optimize services that TSIA believes product companies should provide to customers:
- Operational Services: These are services designed to reduce operational complexity for customers, which include capacity planning, remote monitoring, risk audits, and system administration. The main objective of these services is to minimize the cost of operating a technology.
- Adoption Services: These are services designed to help customers maximize their usage of technical capabilities. Unlike traditional education services, these services involve usage analytics, user adoption reports, and intelligent feature provisioning. The main objective of these services is to maximize technology adoption.
These are not the historical bundles created by product companies where service offerings are wrapped around a product and sold to the customer as a package deal. These are offerings where a provider bundles the products and services required in order to guarantee a target business outcome for the customer. In other words, the provider is masking any complexity from the customer and simply committing to deliver a specific outcome.
Here’s what some of these emerging service categories in the new services portfolio look like:
Some of these service categories are names that are not commonly used in the marketplace, yet technology companies are already migrating their services into these categories. For example, software giant Oracle offers “Advanced Customer Services”, designed to monitor systems and reduce operational complexity. SaaS provider Salesforce.com has a set of “Premier Success” services that monitor usage and help customers accelerate adoption, and Siemens offers workflow optimization services for laboratories using Siemens equipment.
Applying Outcome-Based Service Offerings
It’s important for product companies to clearly define these four categories of service offerings in order to reduce the tensions already emerging between legacy service lines. (Tweet this!) Existing support services, professional services, field services, and managed services organizations within the same product companies are stepping on each other with competing and overlapping service offers. This redundancy is costly to the product company and confusing to the customer. This also leads to another hot topic at TSIA: Outcome-Based Organizational Structures. But that is a topic for another day.
Download Chapter 1 of B4B: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship to learn more about the future of outcome-based services!
About the Author
Thomas Lah is executive director of TSIA. Since 1996, he has used his incisive analysis, strategic thinking, and creative solutions to help some of the world’s largest technology companies improve the efficiency of their daily operations. He has authored several books, including Bridging the Services Chasm (2009), Consumption Economics (2011), and B4B (2013).