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PRODUCTIZING SERVICES IN THE IT SERVICES INDUSTRY

Updated: Dec 13, 2023

Let’s dispel a myth. Just because you offer a customized service, doesn’t mean that it can’t be standardized and delivered on a large scale without sacrificing any quality.


Welcome to the world of productization.


So often paving the way for business and tech trends, the IT service industry is one of the many areas in which productizing service offerings can be the answer to happy customers and high profits.


This guide will show you why this is the case for productizing your services in IT, and how it can be the solution to creating a profitable business you can sell.


Ready to learn more? In this guide, we’ll dig deeper into:


Use the links above to skip ahead to the sections you’re most interested in.


WHAT IS A PRODUCTIZED SERVICE?


A productized service brings together the skills and expertise of a service provider into a standardized solution for a clearly defined target customer. It’s the same offering for all customers, with rigid pricing and a standardized delivery method. The end result is a higher quality service that commands less effort to sell.



CAN IT SERVICES BE PRODUCTIZED?


The IT services industry has long been adept at adopting technology trends and turning them into a sellable and valuable entity. Productization of services is very much the same, not only providing major value to customers, but also strategizes the role of the services industry and contributes to growth.


To begin productizing your consulting service, a great starting point is to choose a part of your daily processes that you’d aim to offer to clients on a per-purchase basis and get across to them its specific benefits and how it will aid their own business practice. Something as simple as a landing page can help to pique the interest of customers to see you as a more regular vendor.


For more information on this, see our guide on productizing services in IT consultancies.



HOW PRODUCTIZATION HELPS THE IT SERVICE INDUSTRY


Non-linear growth


IT services businesses typically have linear growth patterns because of their resource-based delivery models, as well as the time that must be invested into developing customized solutions for each customer. Productized offerings in an IT service business can enhance their ability to scale effectively due to reduced dependency on resources seeing as the same solution will be sold to different customers. This will greatly cut down the time spent on customizations for each individual case, and can instead let delivery teams focus on perfecting one standardized product.


Improved profit margins


Cost pass-through is a term used to describe what happens when an IT service business changes the price of its service it supplies following a change in the costs of producing them. It is often a big deterrent when customers are deciding whether or not to purchase a tech product or service from an IT services organization. A productized service diminishes this and as a result means customers will only be exposed to the complete solution. Service providers assume a more collaborative role and the ability to achieve higher margins rises as the company scales.


Lower customer acquisition costs


According to Outbound Engine, it can cost five times more to bring in a new customer than it does to keep an existing one. While we have long banged the drum of improving customer success to reduce churn, new customers must eventually be targeted. Selling a productized offering can help cushion the blow of the high costs we’ve just highlighted. With a more standardized and repeatable process, you reduce the overall cost involved in the sales cycle, which can be a crucial way of lowering your customer acquisition costs.


IT SERVICES THAT CAN BE PRODUCTIZED


IT Consultancy


IT consultancy, and the wider consulting landscape as a whole is a prime target for productizing service offerings. If an industry as personalized as consulting can work out how to sell their expertise as a product, and package this so it is standardized, then companies are seeing much quicker turnaround times, and will effectively be able to have more customers through the door but without sacrificing their good service.


If you’re an IT consultancy firm and you’re looking to learn more about how you can successfully productize your service offerings, see our guide on that here.


Cyber Security


The public cloud is being used by more companies by the day, with many of them beginning their journey with smaller pathfinder projects that rapidly grow as engineering teams better understand the value of services focused around fast delivery. As workloads grow, estates can spiral out of control and can result in poor configuration, which opens the door for data to become under threat. This creates the need for a solid cyber security system, the vendors that offer this as a productized service can really benefit.


By treating your cyber security as a product, you can ensure that feedback will be directed to the appropriate team to solve just once, and the problem doesn’t need to be solved multiple times. It is not left behind to be solved a number of times by different teams.


Cloud Services


Cloud services are great for customers, but it presents a range of problems for service providers. Being a service provider of the past typically meant the more services you provided to your customers, the more revenue you’d earn. Today, cloud products are clearly defined services, so a lot of value that companies used to offer in offering various services has all but diminished. So what’s the answer?

Productizing a cloud service offering of course!


A big aspect of this is productizing a customer’s migration over to the cloud. Despite the customer, their size, requirements, and goals, a productized migration will be able to fit all of them like a glove. Simplicity is a very important feature for many customers when navigating the market, and no market can at times be more complex than the technology and IT service industry. Where tech can often be confusing, a productized service offering sets clear outcomes and makes it easy to understand.


IT Management


IT management is really how companies can structure and control all of the above and more. From cloud computing to analytics, companies are managing an unimaginable amount of data, all of which needs managing and safeguarding. With all of this being just the tip of the iceberg, you begin to wonder how businesses can cope with it all. The answer is productization.


Examining the existing IT management process with a productizing lens serves to strengthen and streamline the execution model to maximize business value. More often than not, as long as customers are recognizing the value they are supposed to be getting, then they will want any service to be as simple and painless as possible. To offer a standardized IT management service that requires little personalization and long audits will likely be the dream for many prospective customers looking to lessen the load with IT services.

 

WHAT NEXT?


Want to understand more about how you can productize your service offerings? Our new playbook, How To Productize Services Delivery, is the free, detailed guide to what you need to do. This playbook covers:

  • Frameworks to design, build and sell services packages

  • The metrics that are used to monitor success

  • Sales enablement toolkits and pricing strategies

Visit our Precursive Products page to discover how we can help you deliver a great productized service to your customers. Alternatively, book a demo today to see it in action for yourself.



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