The Top Five Challenges Product Companies Face When Delivering Projects
By Team Kantata
Professional services teams that are embedded in product businesses have a unique mission. Making a profit when delivering services isn’t always the highest priority for these teams, but that doesn’t mean services leaders aren’t thinking about the bottom line.
The organization flourishes when services teams have the capacity to meet all incoming demand from new and existing customers and when they have the bandwidth to keep projects on track. Customers receive benefits from the product sooner, they’re happy with the service they’ve been provided and they’re more likely to renew or buy more. In sum, services drive success in product companies by accelerating time to value and creating satisfied customers.
In contrast, services become a bottleneck on growth and stand in the way of the scalability of the organization when the services team can’t grow at the same pace as incoming demand for products that require enablement. This can also happen when too many projects take on extra scope, eating up valuable resource time and blocking other work.
A product-centric business cannot continue to grow unless there is a team of service delivery professionals to support that growth. For example, if an organization invests in product development and sales but not in PS, projects become a blocker to customer success and product adoption. The worst nightmare of any product business is a customer that churns before they’ve even started using the product because project delays make them doubt the enablement timeline and ROI they were promised.
Kantata helps product companies overcome the challenges that stand in the way of successful project delivery, customer satisfaction and time to value. To validate what we’ve been hearing from our customers, we conducted a survey with Vanson Bourne that asked business leaders in software and hardware companies in the United States – that have a professional services team and at least 500 employees – what their top challenges were when it came to delivering projects. (You can see detailed results from the survey in this white paper’s appendix.)
In this white paper, we will explore the top five challenges the 125 respondents highlighted when asked what stands in the way of services success in their organizations.
1. Satisfying customers without constantly going into fire-fighting mode
It was clear from the results of our research that the biggest hurdle professional services teams face is not having the right mix of resources, time, tools and processes to be proactive and stop customer fires before they happen. This leads to fire-fighting mode, where professional services teams are dashing from one customer escalation to another without the time to attend to customers who aren’t having an urgent issue at the moment.
When this challenge arises — and 47% of respondents in our survey identified fire-fighting mode as a challenge they currently face when delivering projects, 6% more than any other identified challenge — customer satisfaction is still possible, but it’s precarious. Service level agreements might be met, projects might wrap up on a reasonable timescale, but because service delivery professionals are moving from urgent issue to urgent issue, there’s likely limited ability to put together the kinds of proactive strategies that keep customers not just satisfied but delighted with the product they’ve purchased. Since PS is only able to respond to the loudest voices, customers who aren’t making as much of a fuss about their requirements, desires and issues might not be seeing their return on investment as fast as they could be.
Fire-fighting mode also affects time to value. Projects might be wrestled to the finish line in enough time to satisfy most customers, but the cycle of reactive interventions means projects aren’t finishing as quickly as needed to meet the targets of the business. Ultimately, slower projects means slower adoption of the product.
Not only was this the most prevalent challenge at product businesses according to the research, it was also seen as the single challenge that was most hindering the success of the organization by the largest number of respondents — 21% of those surveyed felt that trying to satisfy customers without getting stuck in fire-fighting mode was holding their business back more than any other challenge. The prevalence of this challenge seems to go hand-in-hand with the challenge that was identified by the next largest number of respondents.
2. Inability to accurately anticipate upcoming/future resourcing needs
Our research specifically focused on surveying software and hardware companies, where 41% of those surveyed reported they were currently struggling with their inability to predict what skills and capacity they would need to keep up with upcoming demand.
Companies that sell products resist conventional wisdom when it comes to providing professional services and consulting. The majority of these product-centric businesses aren’t looking to build up a sizable backlog of project work. Instead, they want to be able to address demand for professional services as quickly as it comes in. This way, no customers are left waiting for professional services to set up their desired version of the product.
Companies need to be able to staff projects efficiently, finding the right resource for the right project at the right time, every time. Accordingly, product-centric businesses always want to have the exact number of people with the precise mix of skills available to tackle new projects as they come in, ready to kick-off and manage those projects without any delay. However, because of the time it takes to hire and onboard new people, arriving at that perfect balance of resources in PS isn’t as easy as simply having the budget set aside.
Keeping professional services from becoming a bottleneck on organizational growth requires foresight, the ability to look ahead and see what upcoming demand for a certain product might be over the next few months. The next step is to understand what project work the demand is likely to generate and how many resources with certain skills will be required to handle those projects.
Professional services teams struggle to keep their heads above water when the business can’t get that picture of upcoming demand in time to make hiring decisions. 14% of surveyed business leaders claimed their inability to accurately anticipate future resourcing needs was hindering the success of project delivery more than any other challenge.
In cases where businesses underestimate the demand for projects, the PS team is stretched thin. That means PS falls back into fire-fighting mode, or worse, PS is unable to staff required projects, hindering the company’s ability to bring in new business. Overestimating demand for PS in the pipeline has its drawbacks as well – resources end up stuck on the bench waiting for work, creating cost for the business without being able to contribute to customer success.
3. Keeping staff engaged and clear on what to prioritize
Having the ideal mix of resources and skills does not mean it will always be clear to the business how to assign capacity and capabilities. Even if the business had a crystal ball — a 100% accurate vision of what projects will be coming — individuals would still experience fluctuating demand. There would be hot spots, where individuals are working 12 hour days to keep up with everything on their plate and cold spots, where they’re looking for opportunities to help the business with some of their extra capacity.
PS teams tend to run more hot than cold, as the first two challenges above indicate, but whether someone feels overallocated or underallocated, the success of the business and its ability to retain talent hinges upon how clear people are on what their priorities should be and on what makes the work they’re doing important and impactful.
Our research showed 41% of respondents reported they were currently facing challenges around keeping their staff engaged and clear on what to prioritize. The high percentage of businesses identifying it as a top challenge in our research suggests that staff engagement and clarity of mission and vision is important to running successful projects.
Service delivery professionals are always trying to balance the competing interests of their customers, who want more work done sooner but for less money and of the business, which needs projects to stay close to the agreed-upon scope and budget. If the business is sending mixed messages about priorities, particularly when it comes to what the priorities of PS should be, or whether PS even is a priority, it can add to the strain. This strain makes it more likely that valuable PS resources get burned out or that they leave the business altogether.
Customer satisfaction is built on the backs of hard-working services teams, but many survey respondents indicated that the services team can become an afterthought in some product-centric businesses. One particularly telling statistic: 74% of respondents reported there was at least some resistance from senior management in investing in new tools that would improve project delivery. 30% of those surveyed said there was a lot of resistance.
This seems to be leading to teams using ill-fitting tools to overcome their challenges. 83% of those surveyed said they had been forced into using a tool or solution because it was being used elsewhere in the organization, despite that tool not necessarily being a good fit for their team. Not only can this exacerbate the sense that certain teams or individuals are not a top priority for the business, which has impacts on staff engagement; it also means those same teams and individuals are not using tools that meet their specific needs and that help them prioritize key actions for the business.
4. Getting business units and/or teams to work together effectively
Competing priorities aren’t just a challenge within the professional services team, they’re a challenge when working across teams too. 39% of respondents in the survey highlighted alignment between business units and teams as an issue they were currently facing in their organizations when delivering projects. 17% of respondents indicated that getting different parts of the organization to work together effectively was the primary blocker standing in the way of successful project delivery.
Friction between teams or business units is not unique to product-centric organizations. As any business grows, problems that could once be solved over the watercooler become harder to address when teams are spread out and co-workers in different parts of the organization don’t know each other well.
Our research does indicate that software and hardware companies have an added dimension to worry about when it comes to friction between teams around project delivery. 45% of those surveyed by Kimble said that their organization was not completely aligned with the services team on how projects should be delivered.
This lack of alignment between teams can create competing objectives and slow down the ability of the organization to make decisions effectively. Good decisions that account for the interest of the business and the customer require a shared vision and shared visibility into the same information. Agile decisions that contribute to time to value require shared information to be available quickly, with different teams able to get on the same page and act in unison.
One of the keys to improving the agility with which projects are delivered is identifying where decision-making bottlenecks are causing delays. Kantata has found through working with our clients that these bottlenecks are most likely to occur where multiple teams are required to achieve an objective.
5. Committing to projects that are appropriately scoped and priced
A common area of dysfunction in product-centric businesses is between sales and professional services teams. This was validated in the research, where 96% of those surveyed said that their sales team oversells or overpromises on projects and services that the PS team will be involved in. 62% of all respondents indicated that this happens the majority or all of the time.
More specifically, 37% of respondents reported currently facing issues around committing to inappropriately scoped or priced projects. Understanding and addressing this challenge in software and hardware companies isn’t as simple as blaming salespeople for making unrealistic promises that the services team can’t keep.
In order to close lucrative deals and get new customers using the product, the sales organization needs to have some flexibility around what they can say about services timelines, scopes and budgets. Sometimes, an enablement project that should take fifteen weeks might need to be promised at twelve weeks in order to stay on par with the competition. A project that should cost $30,000 to break even might be sold at $23,000. In both cases, the extra strain on the business and the services team might be worth the $80,000 of annual recurring revenue the business would lose without making those commitments.
What makes the difference is the involvement of PS in helping to shape those compromises. When PS has no involvement, they are more likely to have projects handed to them that are not achievable, forcing them to break promises and risk seeing the new customer back out of their contract.
Where PS and sales are working together to come up with a cohesive strategy that will both get new business in the door and keep it there, the “promise-makers/promise-breakers” paradigm is replaced by an aligned unit with a shared vision. Not only are customers less likely to feel betrayed by changes in scope or timeline, but PS will have more time to prepare for the commitments being made, the hand-off from sales to PS will be smoother and projects will kick-off sooner, all of which increase time to value.
Professional services teams that are embedded in product businesses tend to be highly focused on customer satisfaction. However, there are a myriad of challenges that may arise that can get in the way of getting customers up and running swiftly. This article is just a sneak-peek into the roadblocks that can get in the way of building strong customer relationships and ultimately a sustainable business — the next step is to learn how to overcome them. To learn our top five suggested strategies for combating common challenges of PS teams within product companies, check out our eBook, Five Steps To Getting Customers Successful Sooner.
Appendix: Vanson Bourne Survey Findings
Included in this appendix are the relevant findings from the market research undertaken by Kantata in collaboration with Vanson Bourne.
Respondents facing this challenge
Question: What challenges does your organization currently face when delivering projects? [125 respondents, omitting some answer options]
Of those facing challenges, respondents indicating this challenge is hindering their organization the most
Question: Which challenge do you feel is hindering your organization the most when delivering projects? [117 respondents, respondents only saw the challenges currently faced, omitting some answer options]
How much resistance is there from the senior management/C-suite in the organization to invest in new tools/software that would improve project delivery? [125 respondents, omitting some answer options]
In your organization, have you/has your team ever been forced into using a tool or solution because it’s used elsewhere in the organization, despite it not necessarily being a “good fit” for what you would use it for? [125 respondents, omitting some answer options]
How often does the sales team oversell or overpromise on projects and services that the professional services team will be involved in? [125 respondents, omitting some answer options]
How well aligned is the organization as a whole with the services team on how project delivery should deliver its services? [125 respondents, omitting some answer options]