6 Steps to Retooling Your Professional Services During the Expansion Stage

I recently connected Instructure with the talented Ken Lownie. Ken specializes in building and scaling professional services teams. He is now an independent consultant focused on early-stage tech companies that need to establish or improve their PS function. Ken did a great job evaluating Instructure’s PS and customer support functions. The company has grown incredibly fast over the last two years, and started to experience scaling issues, particularly in their professional services. The primary issue was managing the function at a reasonable gross margin. Ken’s evaluation resulted in a comprehensive set of recommendations on how to evolve the Instructure PS group into a scalable and profitable function. I asked Ken to write a short post on the importance of developing a framework around scaling professional services in software companies, as well as the key elements of that framework. Here’s what he came up with. Thanks Ken!

As software companies navigate the expansion stage, one key challenge is to take their professional services from a “necessary evil” to a driver of customer satisfaction and profits. Typically, early-stage software companies are delivering mostly technical services with a mostly technical staff, missing a large opportunity to deliver services that drive the use of their products deeper into their customer’s business, increase customer delight, and contribute a fair share of profits to the business. Leveraging that opportunity means transforming the services business across several dimensions. Here are six key steps you should take to ensure your professional services business matures as your whole business scales.

1) Invest in Project Management

Most early-stage software companies have too many technical team members and not enough project managers on their services team. The result is projects that run off the rails and frustrate clients rather than delight them. Remember, project management is about MANAGING PROJECTS AND RELATIONSHIPS, not just using tools like Microsoft Project, AtTask, or Central Desktop to track a project that is headed in the wrong direction! Invest in a great tool, but also hire experienced project managers who have the proven ability to manage scope, manage challenges, and manage customers.

2) Revamp Your Professional Services Offerings

If you do not have a clear set of defined professional service offerings with clear deliverables and a compelling value proposition, you need them now. And even if you do, defining and marketing the right portfolio of professional service offerings will immediately deliver additional revenue. Add offerings that fit the “better” and “best” slots as well as the “good,” because some customers will always want enhanced services packages and those enhanced offerings will deliver enhanced profits.

3) Get Serious about a Delivery Model

No professional services business needs an overblown delivery methodology, but every services business needs a standard, phased model for delivering projects. And it needs to be religious about using the model. That’s because by doing the same projects over and over again in the same way, there is a greater opportunity to successfully incorporate what is learned along the way into the model. That allows your company bring what is truly proven to be best practice to the next customers.

4) Separate Roles from Titles and Levels

A professional services business is like a theater group that has to put on many productions, and any player in the troupe may have to take on any role. On your professional services team, no one needs the title of project manager — “project manager” is just a role that some people play on certain projects, even while they take the trainer role on other projects. The secret to high utilization is to have maximum flexibility in deploying resources where they are needed, when they are needed. So keep project roles (“project manager”) separate from title and levels (“Senior Consultant”), and you have one less obstacle to high utilization.

5) Design Feedback into the Delivery Process

You are never more intimately connected to your customer than during a professional services project, so be sure to get feedback on your product, your company, and the delivery process throughout the delivery of each project. A simple ten-question survey collected after each phase of a project will provide enormous insight into how your customers feel after the sale, and will also provide enormous insight alongside your Net promoter efforts. As the survey data builds, it becomes easy to see in the accumulating data where in the process customers tend to become frustrated or disillusioned, allowing you to pinpoint your efforts to improve outcomes.

6) Instrument the Business

The professional services part of any business is also the easiest place to implement a complete set of operating metrics that will illuminate where the business is working and where more work is needed. Knowing your revenue per head, profitability per project, and project pipeline will all ensure that you are tweaking the business to contribute to the company’s profitability. A complete Services Scorecard is an essential tool for any company transitioning its professional services business. These six steps will not guarantee that every project will be a success, but they will go a long way toward ensuring that your services business is enhancing customer relationships, delivering referenceable customers, and contributing its share of profits rather than impeding the rapid growth of the company. For more professional services insights from Ken Lownie visit his “On Services” blog.