I have been in so many interesting conversations throughout the past few weeks! Just last week I presented the need for and concepts behind value added services (VAS) to nearly 500 people, either in person or on the phone. And these were not only services people, but executives in sales, product strategy, corporate strategy, and others. And it is working. It’s pretty clear that the business case for taking control of product adoption is going to happen.
A couple of companies are jumping out in front by piloting new VAS offerings to large customers. From what they have told me, customers are eating it up. I expect that these initial pilots will have crappy margins because we are all new at it. But that is to be expected in any new service type—it’s all part of the “services laws of gravity” we talk about in the book.
Just today a major software company took a 10% stock price haircut today, and one of the major reasons was around “unused licenses.” Especially in this jobless recovery, we need to have every possible user at every possible customer using the product. Otherwise we won’t get any license growth. If companies aren’t hiring, they don’t need more licenses. Or worse, if they do a layoff, they have “newly unused” licenses. Now you have an inventory of unused licenses at that customer, which must be used up before they buy more. Either way, we need a plan in place to solve this problem if the product side is to get growing again anytime soon.
If anyone is doing interesting things around strategies to drive license utilization—either additional seats or additional capabilities—please let me know. I want to make you a star!! JB
Technology Services World, held October 19-21 in Las Vegas, brought with it major announcements for the services and support industry, proving to be the most powerful and vibrant TSW event to date. The most significant announcement was the merger of AFSMI, SSPA, and TPSA—the three leading professional associations of the services and support industry—to form a single, global association: TSIA, the Technology Services Industry Association.
TSIA brings together a rich heritage—spanning more than three decades—of serving the needs of professionals across the full spectrum of technology services disciplines. If ever there was a time that technology services professionals needed one place to go, one voice to speak for them, one source of reliable data, that time is now.
Check out the video of the unveiling:
Tags: Announcement, Las Vegas, Technology Services Industry Association, TSIA
This is a powerful press release from Oracle and really demonstrates their commitment to driving a next generation of support services.
As you can see, they are embracing many of the concepts in the book. Things like “help ensure outstanding customer experience and business results” and “the move from reactive to proactive support” and “share Oracle Customer Services best practices and help customers get the most value from their Oracle investments” are the right kinds of wording and intention. Nowhere in there do I see the words “uptime” or “availability” or “continuity.” Good for them. Still a long way from truly being VAS, but definitely positive.
As I am sure you know, Oracle has a special need to reinforce the value of support since they are taking a hard line on support discounting. Nonetheless, I like the messaging and hope more companies take an aggressive stance on promoting the value of their services.
Man—this first week since publication and the TSIA announcement has been a blast! The reaction from everyone in Vegas exceeded my wildest expectations. It is clear that this is not an if discussion for the industry, but a how one. And the media pickup was unreal—all over the world, business press, IT press, and financial press. I think it is great to see services finally getting picked up by mainstream media.
This week I also have learned that the book is making its way into the CEO’s office at some of the largest companies in the tech world. This is exactly what the industry needs—to have a debate about the next-generation business model for tech companies of all sorts.
One thing you may not know is that, last Tuesday in Vegas, I asked 10 incredibly smart people (chief service execs, consultants, TSIA execs) to sit in the Board Room at The Mirage for three hours to discuss next steps. Here is what I mean by that:
The feeling I get is that companies are quickly buying into a few key assumptions (like the maintenance value prop is in trouble, or that technology adoption rates are slowing, or that the complexity avalanche is limiting the size of tech markets, etc.), and that something like VAS may be the way out. A way to get everything growing again. As I said, the question is not if we need to do something, but how. That is the question I posed to these 10 smart men and women. How does the industry or a single company within it go from VAS as a vision to VAS as reality?
The discussions were great.
There were two high-level takeaways. The first is that we need a deck for the CFO that summarizes the story. I already have V1 of that done. The second is that we need a roadmap that lays out the steps that a company must go through to move from today’s business model to the desired end state. Also made a high-level pass at that. Fortunately, one of the guys on our BOD, Todd Hewlin, is an ex-McKinsey guy who currently works with Geoffrey Moore at TCG Advisors. He was at the meeting and has taken my early scratchings and has agreed to evolve the model.
So we are working to stay ahead of the discussion that seems to be gaining steam. I’ll keep you posted on our progress. This is an exciting time to be in tech services! Don’t forget to tell me what’s happening at your company! JB
Tags: Announcement, Book, Complexity Avalanche, Las Vegas, media, TSIA, VAS
It feels great to finally have the book done. The folks who have read it so far have been really excited. I think if you have been in services for more than a few years, you probably have thought about many of the concepts in the book at least once. That is really how the book happened; I have heard so many smart members say so many smart things to me over the years that I really felt like someone should write this stuff down!
That is really what is on my mind now—not so much, “Will the services community respond to the book?” but “What about beyond the services community?” Hell, the services community wrote the book. But the key to this book is how it plays to the CEO, the CFO, the head of sales, etc. To properly execute the strategies in the book, we need a different business model. And this is something we are not going to be allowed to decide unilaterally. Value added service (VAS) is a board-level decision.
So my really big ask of all of you is to get this book into the hands of all your senior executives—both inside and outside services. And tell us here in this blog what their reactions are! Last night, I was at a cocktail party and was talking to two very senior execs at one of the industry’s biggest companies. They were saying that their CEO still believes that if your services business gets too big, it means you’re not a good product company. I’m there thinking, “That’s so old-school.” I know it is.
Tech products are complex. It’s a fact. If we knew how to make them simpler, we would do it. Another fact is that every product has a “consumption gap” problem. Some are big and some are small…but every product has one. So if you really want customers to get value, then you need your services organization to close that gap. If that means services are 10 percent of revenue, then okay. If it means that services are 60 percent of revenue, then okay, too!
You know that services sell products. I know that services sell products. And very soon, it will be common knowledge. So I hope that everyone does two things. The first I already mentioned: Get the book into the hands of all your non-services execs. The second is to really think hard about what the implications of the book are to your particular business. If you are lucky, your CEO might actually ask you that question. You won’t get a lot of swings at that pitch, so be ready! And don’t forget to tell me how the conversations are going!!! JB
Tags: Book, C-level executive, CEO, Complexity Avalanche, Technology Services Industry Association, TSIA, Value Added Service, VAS
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