Digital Transformation - We talk about it all the time, and many of you are planning for such transformation or are already in the midst of implementation. But what happens with the services practice? How would the market expect the System Integrators, Managed Services Partners, or the Captive Services organisations of software vendors to adjust to the Digital Transformation? It is not business as usual.
The traditional model
Services Practices offer all or a subset of added value services during a solution lifecycle - Envisioning/Strategy, Selection, Implementation, Support, and/or Managed Services. Traditionally, the practice would be divided along those lines with regards to management and steering. From an operational management point of view, this makes total sense. The nature of the services rendered are different; ranging from short advisory, to complex implementation programs, through to annuity-based capacity management. In larger businesses, it is not unusual for these services practices to be separate profit centres. As customers, it sometimes becomes apparent when dealing with the separate services departments - information hand-overs, different goals while interacting with you, overall leaving a sense of disconnection between your goals and the services provided.
Why the traditional model simply is not good enough (anymore)
With the Digital Revolution, we are getting more connected, and making the connections smarter - with one goal: to better serve our customers. Serving our customers is not just implementing a customer relationship management system here, a support agent there, and perhaps an operations system. Digital Transformation is a Business Transformation, supported by the latest technological wonders. But first and foremost - it is a transformation of the business, centring around the customer. It is therefore imperative that the service providers helping you in your digital journey, are making similar changes. A transformation that removes silos, invokes collaboration, and puts you, the customer, at the centre of all operations throughout your services lifecycle. Whilst collaboration can be encouraged, and customer centricity incentivised - the traditional model is simply aimed at optimizing the specific categories for services rendered, not the ongoing lifecycle experience. A new trend to remediate this is the introduction of customer success teams. A customer success manager is appointed to coordinate the various services through the lifecycle. This is a good step, but an intermediate step - a truly transformed organisation has customer success so ingrained in the services, that it is not a separate department, or team. One has to consider the larger the size of the organisation the more it prohibits a very rapid transformation, in particular if it involves Profit and Loss reporting for publicly traded organisations. The customer success teams can be effective in crossing the silos.
A transformed services organisation - it is all about customer experience
In a truly customer centric organisation, everyone is involved in customer success, everyone is goals on customer success. In a customer centric services practice, the work is broken down based on benefit to the customer, not according to effort that is costed. An account management structure is in place, where the account executive (or director, manager- whatever term may be used) is accountable for 1) customer experience, 2) customer adoption of technology (especially in captive services organisations), 3) growth in revenue and share of wallet, and 4) account profit margin.
True customer centricity
A business that is truly customer centric is organised around its customers. All metrics and incentives point to customer success in exchange for profit. The entire solution lifecycle is a seamless organic flow of activities that lead to customer benefit and growth - and not just in name only. Any incentive that does not support business growth directly resulting from customer success, is a metric that is internal focused and should be re-evaluated. For example: individual utilisation targets and incentives for consultants is a pure internal metric. Customer success is completely indifferent to individual consultant utilisation. To the contrary - consultants on the lower threshold of attainment would be incentivised to "take things a bit slower" to make the cut between bonus or no bonus. The flipside is also true - consultants over achieving on their attainment are stretched and constantly overworked. A services practice does need to maintain a practice wide utilisation, as a healthy consulting business capacity can only be planned if you measure the actual. Another example is the profit margin of a consulting business within a larger services practice (which adds strategy, support, and possibly managed services - and in case of a software vendor, software sales/subscription as well). In a lifecycle services provider, measuring the profit margin of each individual service component is optimizing each individual component regardless of the optimal operation of the whole - sometimes one part of the organisation can sacrifice 2 points, so the other part can make 3 points extra. This is nothing new - we know that the value of the total can exceed the sum of its parts - if assembled the right way. In this case, the value of the total should be broken up into value by customer (added value is exchanged for profit). A truly customer centric organisation will have a notional Profit and Loss account cantered around customers. This allows the Account Executive to balance the various offered services to maximise the total for that customer. The customer will notice the benefit because all the processes, all activities, are leading to customer success - a realisation of benefits for using the solution in question. This is a positive shift from processes hindering customer success and apologetic Account Executives explaining why common sense could not apply.
Digital customer centricity
Add to the above the Digital Transformation - there are new ways to be truly customer centric, where not only is there focus on the customer itself, but also the success of their customers when using the customer's services/products. The amount of information required to look that extra step in the value chain was a prohibiting factor until now - we are able to access vast amounts of data, intelligently analyse this with the aid of AI, and visualise this to provide a customised path to benefit for the customer. Digital Transformation can be the pathway for the services practice to become truly customer centric - how far along is your services practice?
Originally posted: 11 October 2017