It has been an interesting coincidence that on the last few occasions in different discussions and industry forums I participated in have attracted a good amount of the classic “Products and Services” in IT industry deliberation. As such, this is not a new debate. It is common to see patrons from the products world root for it by generating IP and for the services gurus illustrate how they are able to tailor deliveries as per customer need to make good revenues.
In the various roles that I have been involved in be it front line sales, to working with target customers, to addressing markets through the channel, or driving product management for products of different types right from enterprise to small and medium businesses that are deployed on-premise or delivered as a service, I have realized it is more than “this versus that”. While at the face of it, running “product or services” businesses largely seem to be two different ball-games, which infact is true to an extent. However in addition to the different focuses that are essential on some aspects; these also involve some similarities and common influences that need to be capitalized upon. And no, it doesn’t end there. An important element of success viz the customer expectation is undergoing an interesting shift. A customer increasingly expects…a solution! They are neither looking for a product or a service in isolation, but instead for a solution that delivers timely value. In this post, we will explore the different characteristics between IT products and services and some common factors that have a bearing on the business opportunities and performance.
First, let us take a holistic look at some key characteristics of what constitutes a product and a service. The marketplace typically includes an offerings continuum. At one of the two ends are pure-play products and at the other pure-play services with combinations in between. It can be illustrated as below:
A closer look
If we take a deeper look and closely evaluate this in context of IT products and services, around which this article is primarily focused, it involves some common influences with distinct approaches to run both businesses. The evaluation of key indicators includes consideration for common factors, but with different focusses—a little more or less depending on the case. For instance, both product and service type of offerings involve evaluation and use of technology, assets and resource planning, cultural bearings and so on. A comparison of approaches for some key indicators is included below:
As we can see, some aspects are quite clearly distinguishing. For instance, meeting a market need versus single customer need; transactional approach versus relationship driven, internally focused culture and processes versus tailored to customer. At the same time, aspects like technology, people, and processes are the common influences that can either enable or inhibit effectiveness in either model. The previous section has covered how the approaches vary across indicators. Let us briefly assess the common aspects that can greatly influence outcomes.
- Technology: Technological advancements are constant. With every technological paradigm shift, right from main-frames to distributed systems to the cloud, with the change in technology capabilities available, businesses have looked at methods to leverage these for maximum benefits. So for a provider, irrespective of the nature of business, they have to constantly find ways to stay abreast of technological advancements to be in a position to advise the market or customer with right solutions. For instance, if we take a look at one of the hottest shifts around SMAC (social, mobile, analytics and cloud), it is not prudent for either product or services companies to ignore those.
- People: One of the most significant contributors to the success of any business is the people assets they have. Knowledgeable, motivated, productive and enlightened workforce is needed for running both products or services successfully. Ensuring the workforce it kept current with the market and technology demands and on the soft side ensuring they’re productive is of paramount importance.
- Process: Processes are a great tool any company can have through which preferred frameworks can be pressed into action for a more consistent and repeatable outcome. These could be applied to internal focused activities like training and development, knowledge sharing, documented development methodologies (e.g. Agile, etc.), sales methodologies and so forth. Processes can help with managing OpEx for both frameworks. Similarly, they’re applicable even to external focused aspects like processes for
compliance and so forth.
- Success factors: While the measuring metrics might differ across lines of business, it is a fact that there is no better way to walk towards success than to be driven by results that ensure customer success. This is an essential metric to keep track of that cannot be overridden or ignored in either business.
Looking at all of above, one can think of products and services as two separate circles having distinct indicators with some overlap of common influences. All of these put together, put organisations in a position to meet the need of tomorrow. Let’s take a look at an
illustration that highlights these put together:
Gearing for the shift
At the same time, given the economic challenges, the markets becoming buyer markets, general shifts in buying patterns, need to respond to businesses faster, and need to demonstrate value and return on investments (ROI), the focus is increasingly on the “customer” than just a product or a service that is up for offering. Customers today carefully evaluate every penny being spent. They expect to realize value from investments faster. Customers are tired of siloed approaches either by just having a product deployed and not having a working solution, or having a solution frame-work, but the underlying products not being stitched to deliver the value the customer expects from the investments made. Gone are the days where companies could deploy a product and take months or even years to tweak it to a customer need. Or suggest a service without having their own skin in the game when it boils down to technology or products involved. Customers today expect product companies to not just deploy a product, but to provide a working solution tailored for their needs. Customers today expect services companies to have the required levels of expertize, coordination and relationships with involved products and technology stacks, to effectively tailor-make a solution to meet their needs. They do not expect the ball to be dropped in either of the cases to have prolonged deliveries. Customers today are looking for working solutions. Customers today are looking for faster realization of value. Customers today are looking for a positive experience to respond better to business needs rather than being tied up with large IT projects.
The shift is really towards using products and services together effectively to deliver effective solutions.
~ Seema Joshi