Archive for the ‘Outcome Based Services’ Category

Outcome Based Services Portfolio

September 24, 2013

With the release of the book B4B this October, TSIA is focused on helping technology companies. Helping these companies brace for a radical shift in their business models. A shift away from selling product assets and produce attach services to delivering business outcomes for customers.
As stepping stone in this journey, TSIA is working with member companies to create a set of frameworks related to outcome based services. These frameworks will 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

During my keynote at TSW in Vegas this October, I will be walking through some of these frameworks. As a step in journey, I wanted to publish a taxonomy for outcome based technology service offerings. This taxonomy is based on the offers we see emerging in the marketplace and the offers we believe technology companies will eventually need to establish. A white paper on this taxonomy will be released at TSW. Enjoy!

The historical service lines outlined in the opening section of this paper (professional services, education services, support services, etc.) all offer capabilities focused on the technology asset. As the service portfolio shifts to being more focused on business outcomes, these traditional service categories become less relevant. What is the specific business challenge the technology provider can solve for the customer? This is what becomes relevant. Instead of services that are centered on keeping the technology asset up and running, the technology provider will 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:

Optimize Services

These are services designed to help customers optimize their use of technology capabilities. There are two distinct types of optimize services TSIA believes product companies will provide to customers:

  •  Operational Services. These are services designed to reduce operational complexity for customers. They 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.

Outcome as a Service

These are not the historical “bundles” created by product companies where service offerings are wrapped around a product and sold to the customer at some bundled price. These are offerings where a provider bundles the products and services required 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 for the customer. A simple real world example of this service category would be how red light camera technology is sold to cities throughout the country. Cities do not pay for the cameras or the installation of the cameras. The vendor is given a percentage of each ticket (the outcome) issued from the cameras. The figure below highlights these emerging service categories.

 

Outcome Based Services

Figure 3: The New Services Portfolio

Some of these new service categories are names that are not commonly used in the marketplace. Yet, technology companies are already migrating their services into these categories. 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 are designed to monitor usage and help customers accelerate adoption. And Siemens offers workflow optimization services for laboratories using Siemens equipment. It will be important for product companies to clearly define these four categories of service offerings. Why? To reduce the tensions already emerging between legacy service lines. 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. Which leads to another emerging topic at TSIA: Outcome Based Organizational Structures. But that is a topic for another day.