Going from zero to sixty is about time to market (speed) but also about critical mass (people) and building a sizable business (revenue); yes, there is a double meaning here which applies. Time to market along with quality is important but can be categorized as competing priorities when racing to drive product adoption with customers, maximize revenue potentials within a sales process, and provide best of breed knowledge to maximize ROI for customers. In other words, when PSO becomes a strategic part of your overall business you have to get it right as there is a high price to pay for people and getting it wrong. Getting it right means creating a PSO brand and product that shapes competency within an industry and creates best practices and a trusted advisor role that sits between customers and the business they serve. Bottom line, building this capability from the ground up requires a lot of careful planning, communication, and measure for success to keep an organization aligned and aware of changes taking place as they are happening. When adding PSO capabilities to a traditionally Product-focused organization there is also a cultural change that needs to be accounted for which introduces ambiguity with elements that are both intangible and at times somewhat immeasurable. To minimize risk and in further keeping with the theme of objectifying your business, both hard metrics (revenue, utilization, etc.) and soft metrics (enablement activities, practice development, etc.) with tangible KPIs need to be brought forward and used as indicators for what success looks like.
As the title suggests, this article seeks to take you through some considerations for building a successful PSO and leave readers with a model that reconciles both theory and practice and helps create a PSO brand and product that makes its way into daily life and as such becomes indispensable Zero to sixty is about building critical mass with unblemished quality while also operating under growth pressures and profitability demands that ultimately delivers PSO as a key strategic weapon in the solution selling world we live in.
The Tipping Point – Plan the Work and Work the Plan
In a perfect world, the process of building a PSO would start on day one when a company is formed but this is not the reality of how things actually work. When an idea is born and unique intellectual property is generated there is of course the need to seek validation in the marketplace through demonstrated sales results and customer feedback. It is typically at the point where a unique idea and the organization overall have organically evolved and the equation of product actually deployed is outweighed by product sold. As this equation plays itself out organizations often hear the worst from customers as they drive deeper and deeper into capabilities and functions with no real understanding around implications and how the solution was designed to work against known use-cases and business benefits. It is at this point that PSO is typically introduced to help unlock customers and take the company to the next level of execution.
As touched on in prior, building a solid business plan is the first step towards establishing PSOs role and contribution to the organization; again, this needs to be concrete, measurable, and definitive in terms of strategy. As an example, a PSO business plan establishes a timeline which depending on assumptions and overall business drivers puts a stake in the ground which from a management perspective provides guidance around execution. As an example, a PSO business plan should address the following areas at a minimum:
Vision and Strategy
- Mission Statement / Organizational Objectives
- Go-to-Market Plan
- Channel and Partner Strategy
- Investment Plan
- Headcount Plan and Organizational Model
- PSO Delivery Methodology and Engagement Framework
- PSO Organizational Alignment and Footprint
- Sales Integration
Financial Model – Building Profitability
- Investment / Revenue Plan
- Services Attachment
- Margin Growth
It is important to emphasize that starting off with a simple mission statement and well-formed set of organizational objectives is the most fundamental part of the planning process and provides a foundation from which everything else is built. As an example, a mission statement which dictates building PSO as a profit center as opposed to a pure enablement function changes the course of decisions and planning. This is not to say that you cannot build a mission statement which takes profit and enablement into account with a single statement but these priorities need to be articulated as such and invested accordingly. Any changes to the mission statement will have implications on the rest of the business plan and may involve months, if not years, to change the course of direction so try to get this right the first time.
Shaping Capabilities and Sales: Building a Professional Services Funnel
As discussed above, when people are your product there is a considerable amount of effort that goes into building your brand and managing to the strategy and plan outlined. Hiring to tiers (junior, senior, etc.) initially is simply impractical so it is most important to hire seasoned personnel that require focused deep technical enablement and have the rest accounted for. The fact is, teaching technology is relatively straightforward but the soft skills associated with PSO and consultative acumen take years to cultivate and in some cases simply cannot ever be established; so hire top talent and clearly profile individuals back to your mission statement and goals and objectives. Again, the business plan created is the beacon that guides all decisions and keeps the organization honest as it develops – if there is misalignment take immediate action to remedy and protect your core strategy. Along with people, a solid methodology is required to provide a framework and maturity model for your customers. Although a methodology is a methodology is a methodology, much like the mission statement a solid methodology becomes the basis of how you progress customers through a lifecycle, build portfolio services, and generally sell to customers as success. The more you build around your methodology in the way of tools and offerings, the more value your PSO generates as you can speak to customers about an end-to-end story and how you step them through a process that makes them successful.
Once you have established a core team, and outlined a solid methodology, it’s now a question of sales and building a funnel and backlog of projects. Simplicity is key and nothing beats block pricing when it comes to turning on the sales engine and mapping this scheme to all your services products. As an example, you could go to market with capabilities and bench tiers and sell those discretely but this not only represents a finance nightmare but also introduces a fair amount of complexity for your sales team to articulate to customers. Even if you can effectively enable your sales team to speak to tiers and value you will always get customers who will argue against project management, substitute a junior resource for a senior, and otherwise boil everything down to a pricing discussion that in the end requires a compromise and deviation from the engagement model that your PSO is built around. The answer to this is block pricing which at a high level blends your rate structure and bench tiers to a unit of pricing that includes everything that is needed to make a project a success in one rate. As an example, a well-formed project includes a certain percentage of project management (to manage your efforts to time and budget), senior architects (technical leads to create the solution), and implementation resources to execute. As an example, please refer to the chart below:
The elegance of block pricing is that it allows you to protect your engagement model, drive healthy margin, and give sales a simple way to have a services pricing discussion. In the end it is about selling success and with a unit of pricing that includes the right balance of resources, expenses, etc. you now have a rate card that becomes the basis of all your custom and packaged services. Another benefit to block pricing is the margin flexibility that affords you the flexibility to build Partners into your engagement model which will eventually provide you with scale and extended capabilities.
Conclusion – Planning the Work and Working the Plan
As PSO makes its impact across the broader organization you should start to see and capitalize on further benefits with measured KPIs in the form of lowered support calls or less time per incident, increase in sales transactions, more qualified feature requests, and stronger relationships with customers and partners gathered through satisfaction surveys. We have discussed how to build a strategy and go-to market plan but how this plan is actually operationalized takes time and success with execution – taking care of building your foundation right the first time will make all the difference as you mature. Ensuring success with a strong strategic plan, a well balanced portfolio of services, coupled with strong operations (quote-to-cash and PSA tool) to efficiently drive scale, is in the end what makes all the upfront work worth it. Developing a PSO portfolio and capabilities that seamlessly wrap themselves around your Product to drive solutions, product adoption, and value is both an art and a science as indicated at the start of this article. To tell this story is one thing but to actually deliver true consultative solutions requires focus, a culture of excellence, and an eye on innovation as a key value within the organization. Over time, as PSO offerings become more predictable, customer references take shape through documented case studies (testimonials), and key Partner and Alliance relationships begin to create market pull and drive self-sustaining revenues, you will have confirmation that your plan was worth the time and effort invested upfront to create the necessary alignment to build your PSO for long-term success.