Much has changed from the old days of the set-it-and-forget-it software implementation. Maintaining connections with customers and ensuring they are successful with their investments is no longer a big bet — it’s table stakes.
Today, companies are looking for much more than just product features and functionality from Enterprise Portfolio Management (EPM) solutions, and business software solutions in general. They’re looking for value-driven solutions and are seeking ways to assure themselves that they are reaching desired business outcomes. Most technology companies at an enterprise business level have faced the challenge of meeting this requirement. It’s important to not be reluctant about the challenge and see the opportunity ahead to be successful.
Addressing adoption challenges
Having solid technology isn’t enough. For most technology providers, a services component is key to maximizing the value of that technology – for both the provider and the customer. Without an ongoing services model, companies can’t ensure they’re on a journey of achieving value from the solution and that exposes both parties to risk.
To help companies avoid stagnation, more focus needs to be placed on helping them optimize and develop the value of technology over time — and this is where Professional Services Subscriptions can be a game-changer.
What are professional services subscriptions?
Professional Services Subscriptions bundle together various services delivery elements covering multiple actions or motions throughout regular engagements and payments. In the same way that software has evolved from perpetual licensing to subscriptions, professional services are following the same trend. For example, one service or component might involve project management to support and service participants, whether it's customers or vendors that are accountable to the project scope and for the desired project outcomes. Another element may be at a technical level around the solution configuration, or to provide business analytics and reporting. Regardless of the architecture of the services needed, providers can offer more flexibility and predictability in service and cost.
For example, Changepoint buckets its professional services subscriptions in the following way:
- Adoption strategies and support, which for us includes the ongoing assistance needed to drive continued optimization and adoption of the Changepoint solution. Examples of Subscription Plans:
- Analytics Assurance. Business analysis and development support for our product’s built-in analytics to help customers improve organizational visibility and enable data-driven decision-making.
- Administration Augmentation. Our hands-on configuration, monitoring, and maintenance of the customer’s Changepoint PPM software environment ensure that they spend less time administering their system and have more time to focus on their business.
- Education Service Plans. Education services grant unlimited access to flexible, on-demand learning systems, for example, the Changepoint Learning Center. The educational material in the Changepoint Learning Center is designed to help our customers increase their Changepoint solution knowledge, increase employee efficiency, and achieve greater business value.
Ultimately, these services offerings provide companies with a comprehensive approach, with predictable budgeted costs, a timeline for services, and ongoing delivery.
How does this services model benefit customers?
Few companies have unlimited time and resources, nor a crystal ball to accurately predict all of their business needs in the future. The professional services subscription model alleviates uncertainty and enables agility for customers by ensuring they are steadily empowered with the services they need to be successful, without the risk of unpredicted costs. A few customer benefits should include:
- Successful outcomes. Adopting this professional services approach helps customers consistently achieve the outcomes they may otherwise be unable to on their own, usually due to internal resource limitations either in availability or expertise.
- Predictability. Compared to an ad hoc services engagement, a professional services subscription model ensures predictable budget spend, and consistent resource engagement. There’s also built-in accountability for ongoing engagement.
- Increased flexibility. Customers typically become more mature as they consistently consume services that scale their efforts, and the model is flexible to their needs at any given time.
- Financial wins. Traditionally, standalone services or software packages are paid upfront at a much higher price point than a subscription service. When you look at this service model from a financial perspective, these plans are priced to be very appealing, especially when considered on an hourly basis.
In Changepoint’s experience, professional services subscriptions enable our software customers to accurately budget to maintain reliable, on-going expert assistance with the software services they use. Regardless of the customers’ maturity with the software, we provide on-going, hands-on assistance to ensure our customers are successful.
Adoption rates
We’ve found that 90%+ of our customers are likely to renew their software license agreements and even adopt additional subscription services, as a result of these subscription offerings. A major reason for that is the partnership between us and our customers that establishes ownership and built-in mutual accountability. We recognize and work to help our customers understand the benefits of their subscription services so that they get better value out of our platform — and it has resulted in much higher levels of customer satisfaction, ensuring that customers get the Return on Investment (ROI) they expect, and beyond.
Considerations when rolling out subscription services
Implementing a professional services subscription model is not only a major transformation for the provider, but it will also be one of similar magnitude to customers as well. These transformations can have lasting impacts on customer success and satisfaction and are important to consider and keep in mind when rolling this model out as a provider.
- Changing mindsets. This model requires a close-working approach and a change in services culture and delivery mindset. Depending on your organization, this shift could be very dramatic. Success depends on a strong cross-functional team approach; there is a need to provide ongoing training and interaction, forcing the disbanding of silos and establishing an organization-wide mindset. This model relies much more heavily on the team to bring success rather than the professional services lone wolf.
- Buy-in. There will be major transformations in the way you market and sell these services. Customer experience will change dramatically too, as they budget and plan their services engagements on a more regular rhythm. Both sides come with change and pivots that require buy-in from the top of the organization, down. Without that buy-in, the necessary work isn’t likely to get done to ensure success.
- Cross-functional connections. It’s equally important to ensure teams understand that there are various services delivery elements bundled together, and they need to be much more in tune with the kinds of cross-functional connections that exist. They are fully reliant on other teams to ultimately achieve a good customer experience and so increased communication and collaboration is needed to successfully deliver on the promise of subscription services.
The future of professional services subscriptions
We have seen double-digit growth in subscription services year-over-year. We predict that in fairly short order, the professional services offering is going to grow close to 40% of our total services revenue, if not more.
Will this model fit every service provider?
The short answer is generally yes. But there needs to be a change management component as some of your company’s thought processes may need to be shifted. Your services delivery teams will need to stretch from not only being billable and focused on the utilization of hours but to now think about the future. This is not just a one-time plan or about building a bunch of reports and considering the work done. Offering professional services subscriptions requires services teams to not only be focused on customer retention but also take ownership of customer success — and this will likely require retraining of services delivery teams.
As a services provider, you should be asking, “How do we become more mature as our customers become more mature?” The ethos of this delivery aims at partnering with customers for the long-haul and requires a completely different mindset. Most of our customers see the value of our services because they regularly maximize the benefits of them and that results in ongoing renewals of these services. Ultimately, they gain the full benefits in the way that it's intended.
Advice to professional service subscription providers
Success in offering enterprise software often comes down to how well you know your customer’s needs and how well you enable them to deliver results to their business. For us, staying creative and open to new ideas, developing a delivery perspective that adds more value, and listening to our customers to understand them better has ensured customers are achieving better business outcomes; renewing subscription licenses and services; and remaining highly referenceable.
In real-time, we’re finding that this model can withstand the test of significant adversity. Going into this quarter amid a global health pandemic we anticipated a potential decrease in sales activity for our subscription services. We were wrong. This quarter we have seen a significant double-digit overachievement of our forecast for new subscription sales. Additionally, we see 100% renewal rates for many of these services. It validates for us that with the right approach to helping customers, they will always be more interested in finding additional value from their software investments.
