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Profitably Pairing Software and Professional Services
Wearing our software product management hats, it’s easy to think that all problems should be solved with software. (To a hammer, everything looks like a nail.) Software PMs need to be looking for opportunities to combine professional services with software - because services can be highly profitable, meet customer needs more quickly, and market-test ideas for future products.
First, let’s set up an example. You’re the product manager for a financial application for businesses. Customers and prospects provide an endless stream of requests that need sorting and ranking. You’re inclined to tackle the most frequently demanded items and ignore the rarities, since development time is scarce and you want to meet the broadest set of needs. If you have a professional services or field engineering team, though, applying a second filter can generate revenue and valuable market information.
Users often need custom connectors to their third party data sources: employee databases, stock price tickers, whatever. Thinking narrowly, our instinct is to respond based solely on current demand, with three choices:
- Yes, our core development team will build a fully productized connector into our product, since lots of folks have asked for that specific data source
- No, it’s too specialized or too difficult, and our developers are busy until 2013
- “Here’s the developer docs and API. Knock yourself out!”
All of these miss the dual opportunity to get paid for solving one specific customer’ problems and (at the same time) explore growing this into a standard product feature. Many customers would rather pay your professional services team than write code themselves, which builds up your expertise along with a collection of one-off product solutions. While it makes money. And might prompt ideas for changes to your underlying product architecture.
Just as important, this provides product managers a market measure how various customers value add-on solutions. If you decide to incorporate it into the core product, you’ll already have market pricing data and much of the solution built.
Similarly, we sometimes under-invest in training and configuration help for software. Customers may want to pay us to educate them, which also produces better users. (Hint: training can be profitable as well as boosting application usage and reducing tech support calls.) Likewise, if we have high-end customers with unique configuration or design issues, we can avoid having our core software team solve every possible situation - since professional services teams can charge for one-off work. This does require your company to have a professional services team. If you’re not staffed for training and curriculum development, this may be a partnering opportunity.
The same thinking applies to consumer software as well as B2B. Segments of your consumer base may be willing to pay for human-delivered services on top of pure software:
- Offering editing and custom layouts for your newsletter publishing engine
- PR and book tour services for print-on-demand book publishers
- Resume reviews and career advice layered onto job postings
And so on. Once you’ve gauged market demand and price points, you might also discover some software improvements that support the professional services revenue stream. (For the above examples: automatic grammar checking; bookstore calendar synchronization; job-specific salary databases…)
Coming back to our original problem of too many enhancement requests, you may be able to shift from the core engineering backlog to professional services. Customers win by getting solutions quickly; field teams grow the company’s expertise; and you gather valuable information about solutions by market segment.
Some problems can be profitably solved by people in addition to machines. Look for professional services opportunities that bring in revenue while also teaching you about the market.