- Quick Review: Types of Service Offerings
- EMC: An Example of Focus
- The Services Alignment Risk Factor (SAR Factor)
- HP: A Study in Risk
- Conclusions
- Harris Kern's Enterprise Computing Institute
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The Services Alignment Risk Factor (SAR Factor)
Many product companies are aggressively traversing the services path. But there is a critical point—one that's subtle and is frequently overlooked by the business press:
By offering professional services, product companies introduce a new source of risk that they're probably not managing effectively.
What is this risk? The risk of creating and launching professional services offerings that are not aligned with the overall business objectives of the company. This risk doesn't exist when a product company offers support services and education services, but is inherent when a company offers professional services. Why? Because unlike support services and education services, which are centered on core products of the company, professional services offerings are not as tightly aligned. Figure 2 demonstrates where the gap exists. I refer to this potential gap as the Services Alignment Risk (SAR) Factor.
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Figure 2 - The Services Alignment Risk (SAR) Factor.
As described in my previous article, if the new professional service offerings are not aligned and somehow anchored to the product company, the services may be both unprofitable and counter-productive to the objectives of the product company.
What factors can drive this wedge between professional services offerings and the rest of the company portfolio? In my forthcoming book, The Sirens' Song: Building Professional Services at a Product Company (Prentice Hall PTR, targeted for publication first quarter 2002), I document three critical elements, but in this article, I want to focus exclusively on the most important business element that can increase the SAR Factor: the mission of the professional services business unit (see Figure 3).
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Figure 3 - Mission and SAR Factor.
Let's return to EMC for an example. Suppose that the EMC professional services team is implementing a new data-storage solution for a client, and the client decides during implementation to switch to a competitor's product. EMC's response should be determined by the company mission, which is basically as follows: offering enterprise storage solutions of the highest value that provide information-based competitive advantage. The primary goal isn't clear, which can lead in this situation to mutually exclusive objectives:
Maximizing EMC's profits: Continue with implementation to get the service revenue.
Ensuring customer satisfaction: Continue with implementation.
Maximizing EMC's company portfolio: Disengage to avoid deploying a solution on someone else's platform.
A clear primary mission can be used as a compass to navigate tricky seas. Remember, professional service offerings are the first service offerings you're creating that are not directly and clearly linked to your core product offerings. But a clear mission statement serves as a tether that helps keep prevent professional services offerings from floating away from the other offerings of the company.