The Productization of Services and Solutions

1. The Productization of Servicesand Solutions October 21, 2010 Presented on behalf of: BPMA Presented by: Steve Hurley Managing Director Solutions Insights

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

3. About Solutions Insights Our Clients 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 IT & Telecommunications Industry Other Industries

4. Level Setting—Basic Concepts on Solutions

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

6. Let’s make sure we’re all singing from the same sheet of music… Asolution is a combination of products, services, and intellectual capital, focused on a particular customer problem which drives measurable business value. DEFINITION Source: ITSMA Solutions Council, 2007 Some of the corporations with senior executive representation on the Council were:

7. We hear different words that describe the same process. Standardized Packaged Replicated Solutions Productized

8. Most of the reasons why we want to have productized solutions are obvious… The Solutions Continuum <10% >90% Customized Standardized • 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 • 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

9. The opportunity to add value to products through services was great. The Solutions Opportunity 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 Source: Neil Rackham, presentation at ISBM conference, September, 2010

10. 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

11. Now that you know a little about us, let’s find out about you. Online Survey I am primarily responsible for: • Product development and/or management • Solutions development and/or management • Product marketing • Solutions marketing • None of the above

12. Now that you know a little about us, let’s find out about you. Online Survey My biggest challenge is: • Understanding customer wants and needs well enough to provide them with a solution • Understanding how to integrate the right components into a solution package • Getting the right people inside the organization to collaborate with me in creating solutions • Working with external partners • Developing the right go-to-market strategy for solutions • Getting the sales force to shift from product to solutions selling

13. 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?

14. Key Challenges

15. Here’s where you tell me what you think about productizing solutions… • Biggest challenge • Importance to the business

16. During the presentation, please take notes for a future research project./ Potential Areas of Research: • Methodology • Tools • Competencies • Other

17. Product Development vs. Solutions Development

18. Here is an example of the range of elements that comprise a horizontal solution. EXAMPLE Infrastructure &Security Industry & ClientKnowledge Service Element1 Applications Service Element2 Service Element3 Business Processes Best total Solution to specificmarketplace Service Element4 Generic Solution Tailored Solution Service Element5 Consultancy & Enterprise Solutions RegionalKnowledge Service Element6 Products Delivering customer-centric, bundled offerings targeted at solving business issues accompanied by compelling value propositions

19. There are several successful product development models. Testing & Validation Launch Discovery Scoping Business Case Develop-ment 1 2 3 4 5 6

20. Solutions involve more stakeholders and resources. Testing & Validation Launch Discovery Scoping Business Case Develop-ment 1 2 3 4 5 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

21. The Product Manager typically has responsibility for developing a product and getting it to market. Product & Service Offerings Customer Areas/Verticals Services Offerings/Horizontal Solutions DeliveryModels Products Professional Services SI Managed Product Launch 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.

22. Now they are responsible for combining a range of products and services into solutions packages. Solutions Packages Product & Service Offerings Customer Areas/Verticals Services Offerings/Horizontal Solutions DeliveryModels Products Professional Services SI Managed • Playbooks • Value Propositions • Sales team tools • Business impact scenarios • Success stories • References Example: SM has to integrate P1, P2, S2, S3, and S4 into an integrated Mission Critical solution.

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

24. We see 3 main steps in the productization process.

25. We have internal and external sources for inputs to our solutions. Sales and delivery Customers Sources ofInsights Competitors Third parties

26. Identify New Opportunities: Cisco’s I-Prize Socializes Innovation

27. 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

28. Strengthening customer connections:CSC’s WikonnecT • Challenge: • Deepen relationshipswith 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

29. A solution that was successful once now needs to be vetted for replication. Corporate ExecutiveBoard Yes, if resources needed exceed limits Sourcing BU uses the solution Funding No No SolutionOriginatorCompletesSolutions Capture Form Solutions Manager reviews; ensures criteria met Solutions Council evaluates for cross-BU application Criteria met Yes Solutions are stored in MS IP is licensed Yes, if resources needed are within limits Accept No No action, or remove from database Search/Locate Leverage of thesolution is achieved and the productization process has begun Evaluate Accept/Reject Deploy

30. Describe the components.

31. Describe the delivery method and plan.

32. Most companies have a collaborating body that makes decisions around solutions offerings. • Getting buy-in across the organization • Broad representation • Get resources and authority to invest • Surfacing all opportunities and avoiding redundancies • Making the case: • 1,2,4…viral • At least 10 buyers • Financial thresholds • Strategic fit National Solution Leaders Industry SolutionTeam Leaders Marketing Leader Solution Council Regional Solution Leaders Role • Set strategic direction • Prioritize investment decisions • Prioritize branding & marketing initiatives • Operational consistency • Investment review/IP harvesting • Issue resolution Solution Engineering Leader Alliance Leaders Solution Infrastructure Leader Customer Advisory Council

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

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

35. The classic way to set up a repository is creating a very dynamic relational database. • Create searchable categories and fields Customer Areas/Verticals • 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 Solution Accelerator Kit Customer Service Framework Reference Architecture Vertical 1 Vertical 2 Offerings/Horizontal Solutions Vertical 3 DeliveryModels Professional Services SI Managed Example #1: a systems integrator “the Cube” Example #2: a software company “detachable Lego blocks”

36. 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

37. 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?

38. The Changing Roleof the Service and Product Managers

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

40. 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 Internal and External Contributors Integration of Multiple Products & Services Customization

41. 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!

42. Questions

43. Thank you! Steve HurleyManaging DirectorSolutions Insightsshurley@solutionsinsights.com +1-781-686-1607 www.solutionsinsights.com