Services Are Products; Products are Services
A few years ago, we decided to replace our deck. The wood had started to splinter and a bunch of the nails were coming up, and so we rarely used it. I called the deck builders and they showed us a number of plans. We picked a plan, negotiated a price, and then one day, they showed up and built the deck we’d chosen.
We didn’t buy plans and tools and hours of labor; we bought a deck.
Yet so often with services, our clients don’t buy a product; we force them to buy plans and tools and hours of labor.
Standard or custom
Is every service delivery a custom project? If so, perhaps that’s because many firms don’t use product management fundamentals in defining services as products.
Let’s apply product management skills to services. What is the customer problem? What is the ideal solution? Can you deliver it consistently? Is it a viable business that leverages your unique capabilities?
You’ve standardized your products, favoring configuration over customization. Why not do the same with services?
I worked with a professional services team to help standardize their services as “products.” At first, the team was resistant. They said, “Every deal we do is unique!” Yet when we looked at their recent implementations, they were all basically the same. The only differences came from scale (the number of users) and the interfaces to related systems. But even those systems were mostly standard—the most popular sales, marketing and customer systems. Using the IDEA prioritization method, we quickly determined the interfaces to offer—and they already had customers implemented with those systems. In no time, they had a library of available interfaces which required minimal customization to implement.
Consider this: A statement of work is a requirements document for a single customer. Evaluate a number of services agreements and you probably have just what you need for a product definition.
Now take it further. Having defined the product, you can create positioning, packaging, pricing, promotions, and sales sheets because you know what problem you’re solving, what capabilities you’re deploying, and what you’re selling.
Just as with my patio deck, explore combining today’s products (ie., components) into problem-solving suites to create a complete solution. That is, combine your tools, methods, and labor into a product the solves a problem for a market segment.
Microsoft 365 (formerly Office365) is a suite that solves a number of problems—primarily simplifying billing. One vendor, one invoice, one login for a toolkit of business productivity tools. Focused on key markets—home, business, enterprise, and education—with multiple packages in each.
Word and Excel and Teams are individual software components needing a product manager. OneDrive is a service needing a product manager. The Microsoft 365 suite is also a product needing a product manager.
If you’re going to market and sell it, you need to determine what “it” is. What problem does it solve? For whom? Is it a viable offering? Does it leverage your organization’s capabilities?
Software, hardware, services, components. Each must be managed as a product.
What’s a product?
I define it like this:
A product is a system that delivers benefits to a defined set of customers.
Therefore, services are products if they are delivered systematically and solve real problems.