October 21, 2010 Presented on behalf of: BPMA Presented by: Steve Hurley Managing Director Solutions Insights The Productization of Services and Solutions

October 21, 2010

Presented on behalf of:BPMA

Presented by:Steve HurleyManaging DirectorSolutions Insights

The Productization of Servicesand Solutions

© 2010 Solutions Insights. All Rights Reserved. 2

Today’s Agenda

●Level Setting—Basic Concepts on Solutions

●Key Challenges in Productizing Solutions

●The Changing Role of the Service and Product Managers

●Key Takeaways


About Solutions Insights

IT & Telecommunications Industry

Other Industries

We help B2B companies develop, market, and sell integrated solutions that deliver increased business value; our main areas of focus are:

● Strategic Integration● Offering Distinction● Customer Connection● Sales Acceleration

Our Clients


Level Setting—Basic Concepts on

Solutions


In preparation for this webinar, we’ve recently talked with over a dozen companies.

Level SettingLevel Setting Challenges The SM/PM Role Key Takeaways


Let’s make sure we’re all singing from the same sheet of music…

A solution is a combination of products, services, and intellectual capital, focused on a particular customer problem which drives measurable business value. Source: ITSMA Solutions Council, 2007D

EFIN

ITIO

N

Some of the corporations with senior executive representation on the Council were:



We hear different words that describe the same process.

Standardized

Replicated

Productized

Packaged



The Solutions Continuum

Customized

<10%

• Focused solely on solving a unique problem for a specific client

• Lower economies of scale• Significant labor input• Higher risk of hitting the KPIs• Likely to be less profitable• Harder to scale

Standardized• Solutions can be provided to a

number of clients who had the same problem

• Higher economies of scale• Less labor intensive• Lower risk of hitting the KPIs• Likely to be more profitable• Easier to scale• Expensive to implement

Most of the reasons why we want to have productized solutions are obvious…

>90%




The opportunity to add value to products through services was great.

10% weretransactional

10% wereconsultative

Consultative•Advice focus•Expertise decision•Want meetings

Transactional•Cost focus•Convenience decision•Don’t want to meet

Most customers would pay a little extra for some advice

The Solutions Opportunity

Source: Neil Rackham, presentation at ISBM conference, September, 2010



The need for real, consultative-based solutions is greater.

More buytransactionally

The Solutions Opportunity

Consultative•Advice focus•Expertise decision•Want meetings

Transactional•Cost focus•Convenience decision•Don’t want to meet

The middle is going away.

Source: Neil Rackham, presentation at ISBM conference, September, 2010


Now that you know a little about us, let’s find out about you.

I am primarily responsible for:1. Product development and/or management2. Solutions development and/or management3. Product marketing4. Solutions marketing5. None of the above

Online Survey


My biggest challenge is:1. Understanding customer wants and needs well enough

to provide them with a solution2. Understanding how to integrate the right components

into a solution package3. Getting the right people inside the organization to

collaborate with me in creating solutions4. Working with external partners5. Developing the right go-to-market strategy for

solutions6. Getting the sales force to shift from product to

solutions selling

Now that you know a little about us, let’s find out about you.

Online Survey


Group Question

●Do all of the key players in your company have the same definition and perspective of what a solution is, and what productization means?


Key Challenges


Here’s where you tell me what you think about productizing solutions…

Level Setting Challenges The SM/PM Role Key Takeaways

• Biggest challenge

• Importance to the business


During the presentation, please take notes for a future research project./

Potential Areas of Research:● Methodology● Tools● Competencies● Other


Product Development vs. Solutions Development


Here is an example of the range of elements that comprise a horizontal solution.

EXAMPLE

Applications

Infrastructure &Security

Business Processes

Consultancy & Enterprise Solutions

Products

RegionalKnowledge

Best total Solution

to specificmarketplace

Industry & ClientKnowledge

Tailo

red

Solu

tionG

en

eri

c S

olu

tion

Service Element1

Service Element2

Service Element3

Service Element4

Service Element5

Service Element6

Delivering customer-centric, bundled offerings targeted at solving business Delivering customer-centric, bundled offerings targeted at solving business issues accompanied by compelling value propositionsissues accompanied by compelling value propositions



There are several successful product development models.

Core Differences: Distinctive Offering DevelopmentCore Differences: Distinctive Offering Development

Two Examples of the Product Development ProcessTwo Examples of the Product Development Process

Stage-Gate Process

The PACE Development Model

Scrum/Agile Model

Discovery 1 Scoping 2 Business Case 3 Develop-

ment 4 Testing & Validation 5 Launch 6



Solutions involve more stakeholders and resources.

Core Differences: Distinctive Offering DevelopmentCore Differences: Distinctive Offering Development

Two Examples of the Product Development ProcessTwo Examples of the Product Development Process

Stage-Gate Process

The PACE Development Model

Scrum/Agile Model

Discovery 1 Scoping 2 Business Case 3 Develop-

ment 4Testing & Validation 5 Launch 6

The Solutions Differences:The Discovery Process:•Needs are identified for single or small customer sets•Addresses a business challenge/problem

The Development Process:•Collaboration across several product and service groups, with the customer, and external partners•Inputs based upon the solutions application


The Product Manager typically has responsibility for developing a product and getting it to market.

S1 S2 S3 S4

P1

P2

P3

Services

Pro

duct

s

Product &Service Offerings

Example: PM is assigned P1 for development and deployment. It is a stand-alone product offering, or becomes a component of a horizontal solution offering.

A B C D E

1

2

3

4

5

6

Customer Areas/Verticals

Professional

DeliveryModels

SIManaged

Serv

ices

Offerings/Horizontal Solutions

Product Launch



Now they are responsible for combining a range of products and services into solutions packages.

Security

Mission Critical

Outsourcing

CRM

SolutionsPackages

Example: SM has to integrate P1, P2, S2, S3, and S4 into an integrated Mission Critical solution.

• Playbooks• Value Propositions• Sales team tools• Business impact scenarios• Success stories• References

S1 S2 S3 S4

P1

P2

P3

Services

Pro

duct

s

Product &Service Offerings

A B C D E

1

2

3

4

5

6



Professional

DeliveryModels

SIManaged

Serv

ices



Product & Solutions Development Comparison

Factor Product Development Solutions Development

Focus Improving operational efficiency and/or output

A key business issue or challenge

Offer Components

Often has singular attributes and functionality

Integrates a range of products and services into a new offering

Collaboration Typically developed by a single Business Unit within an organization

Requires several BU’s to collaborate, as well as external partners

Component Management

Relatively easy to document and capture in a knowledge management systems

Span products, methods, systems, and processes, and delivery resources

There are several key differences that make solutions development much harder.



We see 3 main steps in the productization process.



We have internal and external sources for inputs to our solutions.


Determining the Components


Identify New Opportunities:

Cisco’s I-Prize Socializes Innovation




Identifying new opportunities: Innovation Jams at IBM

● Challenge:– Accelerate exploration

of new opportunities

● Solution:– Periodic series of online innovation “jams”

● Program:– Enlist thousands of employees, partners, and customers in

collaborative jam sessions around core themes and ideas

● Results:– Institutional crowdsourcing; internal excitement; dozens of new

investments




Strengthening customer connections:CSC’s WikonnecT

● Challenge:– Deepen relationships

with insurance clients

● Solution:– Private social network

● Program:– Build, market and sustain full-featured,

issues-based online community

● Results:– 11,000 users, 700+ companies– Deep customer insight– Extensive customer collaboration– Increased customer loyalty




No

A solution that was successful once now needs to be vetted for replication.

SolutionOriginatorCompletesSolutions

Capture Form

Solutions Manager reviews;

ensures criteria met

Sourcing BU uses

the solution

Corporate Executive

Board

Solutions Council evaluates for

cross-BU application

Deploy Accept/Reject

Search/Locate

Evaluate

Criteria met

Funding

Solutions are

stored in MS

IP is licensed

Leverage of thesolution is achieved and the productization process has begun

Yes, if resources needed exceed limits

No

No

Yes

Accept


Selecting the Solutions

No action, or remove from

database

Yes, if resources needed are within limits


Describe the components.

Solution Capture Form

Solution Name/Type:

Primary Solution Area: Drop down

Other:

Value/Benefit to Customer:

Brief Solution Description:

Solution Elements

For all applicable solution elements, enter a brief description and the associated Business Unit:

Elements Description BU

Products

Services

Systems

Processes

Methodologies

Other




Describe the delivery method and plan.

Indicate the method of delivery for this solution.

Managed Services

Professional Services

System Integration

Does the solution rely on resources/assets supplied by partners?

Partners:

Describe:

Has this solution been bid by other BU’s:

BU’s:






Most companies have a collaborating body that makes decisions around solutions offerings.

● Making the case:● 1,2,4…viral● At least 10 buyers● Financial thresholds ● Strategic fit

● Getting buy-in across the organization● Broad representation● Get resources and authority to invest● Surfacing all opportunities and

avoiding redundancies

Solution Solution Engineering Engineering

LeaderLeaderAlliance LeadersAlliance Leaders

Solution Solution Infrastructure Infrastructure

LeaderLeader

Marketing LeaderMarketing Leader

National Solution National Solution LeadersLeaders

Regional Regional Solution Leaders Solution Leaders

Industry SolutionIndustry SolutionTeam LeadersTeam Leaders

RoleRole• Set strategic directionSet strategic direction• Prioritize investment decisionsPrioritize investment decisions• Prioritize branding & marketing Prioritize branding & marketing

initiativesinitiatives• Operational consistencyOperational consistency• Investment review/IP harvestingInvestment review/IP harvesting• Issue resolutionIssue resolution

Solution CouncilSolution Council

Customer Customer Advisory CouncilAdvisory Council


Three critical elements for the Council to be effective – criteria, key decision makers, and commitment.

• Does this offering support our brand positioning?

• Is it consistent with external messaging of the firm?

• Is it an expected area of growth over next 3-5 years?

Strategic Strategic ImportanceImportance

X%X%

PrioritizedPrioritizedSolutionsSolutions

• Is the market highly fragmented or entrenched?

• Do competitors have superior capabilities? If so, how big is the gap?

• How compelling is our perspective to the marketplace?

CompetitiveCompetitiveOpportunityOpportunity

X%X%

• Does a methodology exist that is articulated and integrated across capabilities?

• Has this methodology been tested/applied in real client circumstances with credentials?

• Do we have the capabilities in the firm?• Do we have sufficient bench/org structure to

scale?

Ability toAbility toExecuteExecute

X%X%




One of our clients uses a 3-stage model for classifying and managing their solutions portfolio.


Storing & Retrieving the Component Data

Level Characteristics

1 Basic marketing support provided: relatively high degree of customization

2 Pre-sales support is provided; some of the pieces are known but not well productized, the services required to deliver is still highly customized

3 Significant part of the solution is productized; detailed, verifiable technical and product knowledge is understood; services are well mapped out


The classic way to set up a repository is creating a very dynamic relational database.

Create searchable categories and fields

Example #1: a systems integrator

“the Cube”

Example #2: a software company

“detachable Lego blocks”

A B C D E

1

2

3

4

5

6



Professional

DeliveryModels

SIManaged

Serv

ices

Services Capabilities & Offerings•Solution Assessments•Solution Fast-tracks•Delivery Resources•Proven Methodology

Solution Components•Example Workflows•Specific Solution Portlets•Pre-Built Controls•Testing & Promotion

Reference Architecture•Mined from prior real-world engagements

Services Capabilities & Offerings

Customer Service FrameworkCustomer Service Framework

Solution Accelerator Kit

Reference Architecture




Another approach is to let the internal market decide.

● The “Google” approach– Entered by anyone; incentives

create the draw– Simple guidelines are followed– The internal market determines

how sophisticated the offerings need to be

– The greater the internal demand, the more the justification for an investment in standardization




Group Question

●Do you have a defined process for taking a customized solution and standardizing many of its components? How do you decide which solutions can be productized?


The Changing Roleof the Service and Product Managers


For many SMs and PMs, being asked to manage a solution is…an unnatural act!

Activity Skills Requirements

Inputs Get the offer requirements from the customer; while sales may occasionally be a proxy, the usual path is to the customer directly

High interpersonal skills; significant customer facing skills

Identify the product and service elements and determine how to create or improve the total offer

Knowledge of the product, services and solutions portfolios

Development Activities

Manage a cross-functional, cross-organizational product and services team; often includes one or more partners

Team management—large; ability to work across BU’s and channel ecosystem

Create the solutions roadmap, including when, how and what types of services are required at the various stages of the customer’s solutions life cycle

Engineering and technology applications; services/solutions mapping; labor & resource management analysis

Improve the solution during the implement processes; codify the solutions components, identifying the customized and standardized pieces

Project and program management skills; strong problem analysis skills

Ensure that quality standards are met TQM knowledge and application

Outputs A solution offer that is a mix of customized and primarily standardized components

Value proposition based upon the customer experience and overall business benefits



In summary, here are the 3 main transitions to a Solutions Manager.

From a tailor to a chef…

From spinning a ball to a dozen plates, and…

From managing small to large groups


Customization Integration of Multiple Products & Services

Internal and External Contributors


Here are the 4 messages that I want you to leave you with.

● Make sure there is a common understanding of what solutions customization and standardization means

● Identify the technologies and processes that can be standardized

● Develop a storage and retrieval system that you are confident can be built and maintained

● Start with low-hanging fruit; in fact, you may never get very high up the tree!




Thank you!

Steve HurleyManaging DirectorSolutions Insights

[email protected]+1-781-686-1607

www.solutionsinsights.com

Documents

October 21, 2010 Presented on behalf of: BPMA Presented by: Steve Hurley Managing Director Solutions Insights The Productization of Services and Solutions