Defining the Services Spectrum

In any hotel I have ever stayed in, I could pick up the phone and say “I’d like to order room service”, and the employee on the other end of the line understood my request. Even when I was in China.  This makes me appreciate two realities: that English is the predominant language of business travel, and that hotels the world over standardized on the term room service.  You laugh, but what if every hotel chain you stayed in used a different term for room service?

“Yes, I’d like to order room service?”

“Room what?”

“Room service, you know. I order some food and you bring it up to my room.”

“Oh, you mean concierge cuisine services—I’ll connect you.”

The hotel industry makes it easy on their patrons. There is a standard term for a standard service. If only the world of technology services was so kind to its customers.

The TPS industry has not aligned on a common set of definitions for common service offerings. What one company calls professional services, another company calls consulting services. What one company calls an outsourcing service, another company calls a managed service.  This lack of common nomenclature may seem trivial, but it creates consternation on two fronts:

1.       Customers have to work harder to clarify what type of service they are truly purchasing

2.       Service providers have a difficult time benchmarking performance of like service lines

This is not an easy issue to resolve. Service providers are very married to their own service taxonomies. In fact, some service providers believe part of their differentiation is encapsulated in the naming conventions for their service offerings. Perhaps. But would you perceive room service any differently if the hotel you were staying at referred to it as a concierge cuisine service?  Is there any value to you as the customer if the hotel brands a special name for this service?

I don’t believe we will solve this service taxonomy dilemma in the short term. However, to accelerate accurate benchmarking, I do believe the industry needs to align around common definitions for common service offering types.  By using a common taxonomy for service lines, companies can compare their service line results and practices in a meaningful way. Specifically, different service types have different attributes in the following areas:

·         Pricing models (time and materials, fixed price, multi-year contracts)

·         Expected pricing range

·         Average length of engagement

·         Types of deliverables (project based or Service Level Agreement based)

·         Skills required to deliver

·         Organization structure required to deliver

·         Investments required to support the service type

·         Typical profitability

The ability to categorize service types into a common industry taxonomy accelerates the understanding of the differences service providers can expect when managing these service lines.  This leads us to the image for this entry.

When TPSA incubated as an industry association, we sat down with our founding advisory board and agreed on a common taxonomy for the spectrum of services member companies offered. This was a critical prerequisite for successful benchmarking. The board identified the following service lines:

Support Services: Paid to support. Services wrapped around a product offering designed to provide the customer successful use of a product. Contracts are time based, often include target service level agreements, and are priced as a percentage of the product cost.

Technology Professional Services: Paid for what you do. Project based services designed to help design, implement, and integrate a technology. Contracts are milestone or deliverable based. Pricing can be time and materials or fixed. In this category, there are several sub-categories:

Implementation Services: Services to accelerate the implementation of a product into the customer’s environment.

Integration Services: Services to integrate the company’s product with other well known industry products that exist in the customer’s environment.

Customer Integration:  Services to integrate the company’s product with custom, unique technologies that exist in the customer’s environment.

Technology Consulting: Services that provide recommended technical architectures or designs for the customer.

Business Domain Consulting: Services that provide assistance in modifying business processes to fully leverage product capabilities.

Implementation: These are process reengineering services designed to assist the customer during initial implementation of the project

Adoption: These are process reengineering services designed to increase product usage after the product has been in place for a period of time.

Managed Services: Paid to Operate. Services designed to help a customer manage their technology environment on an ongoing basis. Provider does not take direct ownership for customer employees or capital. Contracts are time based and often include target service level agreements. Pricing can be fixed or activity level based.

These three key technology service lines are placed on a broader services spectrum in the image below. This spectrum represents the most common types of technology related services companies consume.

 

The Services Spectrum

The Services Spectrum

 

 

This spectrum has allowed TPSA to build meaningful benchmarks for the technology professional services bucket. Our dataset for TPS excludes the non-relevant results of management consulting or support services. Our sister association, SSPA, benchmarks the performance of support services. Right now, TPSA is building on that work to create a meaningful benchmark dataset for managed services.  We are recruiting companies into our 2008 Managed Services Study. Our objective is to drive the same level of meaningful insight by aggregating data that is truly related to managed service offerings.

Once again, I don’t believe we will solve this service taxonomy dilemma in the short term. But the industry needs to align around common definitions for common service offering types so they can compare relevant results and practices.

Now, why hasn’t concierge cuisine services delivered my food yet?

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2 Responses to “Defining the Services Spectrum”

  1. Neil Barton Says:

    Thomas,

    Interesting post. There is a source of standardised service taxonomies: through benchmarking companies like Gartner, Compass, Probenchmark, and Maturity. But its quite expensive to get access to them, they are proprietary to those consultancies, and they are often don’t cover all managed services (hence all the “out of scope” lines on benchmark reports.

    Here’s a thought back at you. So many people in IT say that IT services are commodities now. But a commodity market is one where everyone is selling the same thing and competing on price. And if everyone is naming and packaging their services slightly differently, how can they be commodities? There’s a longer discussion on this in my ECITE paper at http://www.neilbarton.com … but I still haven’t got to the bottom of it.

  2. Tracking the Technology Professional Services Industry « Service Visions Says:

    […] Service Visions Framing Technology Professional Services « Defining the Services Spectrum […]

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