Empower Your Software Product with a Successful Professional Services Team: The Challenges

Keys to Strengthening Your Product Platform with a Robust Professional Services Arm

As expansion-stage software companies establish their presence in the market, they invariably start encroaching into the domain of big-pocketed competitors. In particular, they begin to compete for increasingly larger, more complex implementation of their software solutions. Instead of selling solutions to small to medium enterprises and early adopters with limited budgets, the company now finds itself bidding for multi-million deals for major Fortune 1000 companies.
For software companies selling to business, selling into increasingly larger and more sophisticated customers is one of the key strategies to get rapid, scalable growth.

Why a Skilled Professional Services Team is Crucial

An essential requirement for any such enterprise software solution is the implementation and professional services that come with such a complex, costly solution. A sufficiently powerful software platform that will be playing a major role in the client’s business (hence justifying its cost and stickiness) will invariably require complex integration with the client’s existing IT infrastructure and other software solutions, as well as some level of customization. For it to be successful, it will also require a thorough training process, which needs to involve not only the future users of the software but end consumers of its data and outputs.
Most of these activities need to happen to either onsite at the client’s premises or via in-person teleconferences. Much of the client’s technology infrastructures still reside in the client’s data center, behind the firewall, and, besides, when it comes to getting users familiar with new software interfaces, nothing beats person-to-person training and coaching.
Most major technology vendors staff a large professional services group that do implementation, customization, and customer success-oriented training that have become an indispensable part of their package of solutions to their enterprise customers. To compete successfully with these companies and establish a strong presence in the enterprise market, expansion0-stage companies will need to develop an effective professional services organization, as well. This poses a number of major challenges for the company:

Resource Utilization & Feature Prioritization

As with most early stage software companies, the center of gravity of the organization has probably been the product organization, and the focus of the company has been to build a general, all-purpose platform that can serve all customers with minimal customization. Building a professional services organization whose goal is to customize the solution and tailor it to the customer needs will invariably create conflicts in resource utilization and product feature prioritization within the organization.

Recruiting and Managing a New Team

Not having built a professional services organization before, the company is likely to stumble as it tries to recruit for the team, fill in the different roles in a professional services group, and manage the team for profitability, success, and customer satisfaction.

Temptation to Shift Focus Away from Core Product Offering

Many companies become dependent on the professional services organization to get into major enterprise customers by offering “strategic services” or “pilot implementation” at deeply discounted rates. While this is a good tactic to get in your foot in the door and win a customer, it hurts profitability and makes the company too dependent on a human resource-intensive revenue model. Ultimately, the professional services organization needs to be running at break-even, but should not be the driving force of the sales strategy, as it should still be the company’s core software product that makes the difference.

Hiring and Retaining Top Talent

The most valuable asset of a professional services organization is the skills and personal relationships of the professional services staff, and therefore the main challenge with building such an organization is with recruiting, developing, and retaining the talent.
In my next post, I will discuss how companies can plan ahead to prepare for these issues, even in the earliest days of their expansion-stage growth, when the professional services demand is just beginning to take shape.