Vendor Professional Services – A.K.A. Special Forces
This past month HP Enterprises spun off its professional services division to Virginia-based Computer Sciences Corporation (CSC); a move most people agree was smart and even overdue. In fact, HP’s professional services division, in large part derived from its 2008 costly acquisition of Ross Perot’s EDS consulting firm, was never a good fit at HP. It’s not that HP acquired a consulting arm that didn’t know its stuff. Rather, it’s more that in doing so HP immediately put itself in direct conflict with its own channel partners (as many other software vendors have done).
Lessons to be learned here by others.
It’s not uncommon in the tech sector for vendors to find their own consulting arms competing directly with their ‘partners’. In all the years I have been an analyst, I cannot remember a single channel-related conversation with a partner that has cast a vendor’s professional services arm in a good light. In fact, to be absolutely clear about this, the consultants, system integrators, and agencies that make up vendor channels absolutely and universally loathe vendor professional services teams. And who can blame them? Yet, if you speak to the executives at the technology vendors, they always tell a different story: “We work really well with our partners and have a great set of relationships – our professional services don’t compete with them, they actually support and augment our partners”.
That is, of course, how professional services are supposed to work: providing expertise and support to the partners. But there is clearly a chasm between the vendors’ perceptions and the partners’ reality.
Professional Services teams are essential to technology vendors.
It’s about giving the customer options. The professional services team should be the undisputed experts on the vendor’s own technology, and not all customers want to bring in an outside consulting firm. There will always be occasions when the vendor cannot defer to a channel partner, and they will need to get involved directly to help a customer.
Vendor professional services teams have insider knowledge on their product, making them a good choice for basic technology-centric (vs. business/strategy-centric) implementations at key client sites and an ideal partner to parachute in and rescue projects gone wrong. In such scenarios, professional services are somewhat akin to military special forces – small, expert teams for infrequent but truly critical situations. I was once (many moons ago) a soldier myself in the UK Army, and like all regular soldiers, I looked up at the likes of the SAS (Special Air Services) with awe and appreciation. However, I recognized they had a very limited role to play. Similarly, most channel partners appreciate and understand the special role that vendor professional services teams can play.
So where precisely does the disconnect come from?
Quite simply, it is when senior executives at the technology vendor get involved. All too often these senior execs are disconnected from the real world, and they see the professional services team not as emergency services to ensure customer success, but as a cost center. For example, if the vendor numbers are looking a bit sketchy in a financial quarter, there may well be pressure on the professional services team to go out and grab more business. That “more business” is often taken directly from partner mouths; bidding directly against the channel partner, or worse, going behind the partner’s back to boost the numbers a bit. In other cases, the professional services team grows too big for their own good and in turn need to go out and win work (rather than have it handed to them) to justify their existence, again putting them in direct conflict with channel partners. In both cases this is a basic misuse of professional services, and it will have lasting negative consequences on the channel, eroding trust and loyalty, often permanently.
Professional services teams should be a tactical and specialized force, not the general army.
Our advice to technology vendors large and small is simple: only use professional services teams tactically and be as open as possible about their role. Position them as an extension of customer support. Measure the value of professional services in terms of accounts saved and overall customer satisfaction – not revenue generated. For ultimately the role of professional services is to save the loss of revenue and customers, not to become a P&L in its own right.
The second piece of advice we offer to technology vendors with professional services teams is to understand their limitations. The professional services team will be experts on the vendor’s products, but they are unlikely to be experts at much else. In the case of business applications for example (WCM, CRM, ERP, etc.), customers engage with a partner not simply to install and get the software/service up and running. They want to leverage the specific industry and process expertise the selected partner brings. Some partners understand the minutiae of financial services requirements, while others have an incredibly deep grasp on elements of the retail supply chain. The bottom line is customers need more than product skills.
The vendor’s software, no matter how much they may love it, is at the end of the day, a toolset. And in unskilled hands, software is little more than a blunt instrument in what it has to offer.
As industry analysts, we are fortunate to have a unique perspective on things as we get to talk to and are confided in by integrators, agencies, vendors and buyers providing us with a 360-degree perspective. We also have a platform to say things others cannot, or will not. So, in reminding everyone that vendor professional services teams are akin to special forces, talented but to be used sparingly and with caution, this might be one of those things that we have the liberty to say, where others do not.
To round this back to CEO Meg Whitman’s move to spin off HP’s overly large and ultimately counterproductive professional services team, she made the right decision: HP’s professional services division conflicted with HP’s channel and, frankly, caused more trouble than it was worth.
Few vendors have such a large professional services operations and have little to shed. But even so, their misuse in pursuit of quarterly profits can erode the trust of a valuable channel permanently, and that’s simply not worth it. Professional services teams should be valued for what they are: special forces that bring a huge tactical advantage, but only when they are used sparingly and in the right situations.