By Betsy Burton
I recently went through the process of reviewing Aragon Research’s tPaaS (transformation platform as a service) market Globe with several market providers. One of the issues that I found most interesting was that many of the providers still operated under the model where products/ services are a distinct and differentiated part of their business from their “services” business (consulting and customer support). Surprisingly, even providers that started as cloud service providers still operate this way. And it isn’t just the tPaaS market, this distinction is broad in the industry.
Why are we clinging on to this business and operating model, given that most organizations are providing services (cloud-based software and hardware solutions) as well as customer support and consulting services?
This model for operating our business is outmoded for many technology and service providers. It doesn’t represent the solutions selling and supporting model that modern cloud-based solutions try to support. And can limit the ability for organizations to deliver integrated solutions.
Traditional Product And Services Business Model
The traditional product and services way of operating a technology and service provider business is left over from the time that organizations developed and delivered products that customers bought and ran on-prem. Customers would often buy customer support and upgrade services based on the products they own and paid for as a subscription. In addition, any consulting services were paid for by project.
As a result, most technology and services providers developed an operating model that include:
- a product development unit that includes developers, testing, documentation, project managers, etc.
- a customer service or experience unit that includes customer service.
- a consulting services unit that includes specialized consultants by industry, region and/or solution.
The challenge is that these organizations ran independently which made supporting cross-organizational information, experiences, tools and, even, goals and objectives cumbersome, if not impossible.
A Service is a Service
There are several providers of iPaaS service offerings that could be very successful in the tPaaS market if they only tapped into their broad portfolio of technology, support, and consulting services in an integrative way.
For example, several providers, including SnapLogic, Salesforce/MuleSoft, Microsoft and Oracle are providing leading iPaaS services. And if they integrated more of the business services in their consulting and customer engagement service areas, they would have a much richer tPaaS offering. IBM has a long history in data and application integration. If it integrated some of the business architecture services in its architecture and consulting services, it could take on a stronger position in the tPaaS market.
The Problem and Solution
The problem is that these providers are largely set up to operate as business units which is an inside-out perspective on the market. It makes sense given their traditions and how organizations traditionally support their business. But it isn’t services, solutions or customer-focused.
The solution is for service providers to ensure their business operating model reflects the services, solutions, and customer experiences they are trying to sell. In other words, an outside-in perspective. This would mean changing their leadership structure, cross-organizational culture and, likely, their pricing models and financial reporting.
Bottom Line
Changing how technology and service providers operate their business will be a difficult position for some. If technology and service providers want to be successful in the services solutions businesses, they will need to rethink how their organization and operations reflect how services are used and consumed by their customers, now and in the future, as well as their business marketing and branding.