A CEO’s Perspective on Professional Services Management – Part 2

By Rudolf Melik, CEO, Tenrox - October 13, 2010
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"Managing an embedded services team in a high tech company"

In Part 1 of this article, I shared some of the challenges an embedded service team encounters from the perspective of senior management. The observations were based on our experiences at Tenrox and my discussions with other Chief Executive Officers (CEOs) and executives in various software and high-tech companies. In Part 2 of this article, I included other challenges encountered by the Professional Services (PS) community and offer some solutions and lessons learned for the problems presented.
 
Professional Services team is too busy
You are going to run into this problem in any growing high-tech company. There is no fast or easy solution to a busy services organization that seemingly has no time to contribute to product improvements and the roadmap.  The following are some suggestions that have worked to encourage more consistent PS participation in Research & Development (R&D):
 
-          Mandate what you expect: if project managers and executives are not contributing to the R&D product roadmap and do not attend product related training, then senior management can make such participation mandatory. For example, the company policy can state that a project manager must participate in two hours of product roadmap review and eight hours of new product training per quarter before any utilization or customer satisfaction bonuses are released.
 
-          Reward what you expect:  you can set up a bonus plan for consultants that are not commenting on, testing or learning about the pre-release products. A small standalone bonus may send the right message. You can also try an “accelerator” bonus where consultants get a sizable percentage increase in their utilization bonus if they spend a minimum of 16 hours on product Quality Assurance (QA) and training per quarter.
 
The following are some of the suggestions that have worked to handle peak load:
 
-          An embedded service team should not be managed like a pure consulting organization. While maximizing profit margins and running a tight ship are necessary for survival in a consulting shop that type of efficiency and focus on the bottom-line will severely damage an embedded service team. The more the Vice President (VP) of services tries to maximize utilization and squeeze every ounce of revenue/profit out of the team, the more likely it is for the service organization to experience very heavy loads, high stress and lack of available resources to meet peak demand. One of the following approaches (or a combination) can reduce resource overload and overbooking:
 
1.       Hire approximately 10 to 15% more PS resources than forecasted: during periods of lower demand PS resources can be trained on new product releases, contribute to R&D, and perform QA tasks. These are all productive activities that keep the service resources busy until the next peak cycle. Senior management should not punish VP of PS for the lower utilization rates and should acknowledge the necessity of a built-in PS resource buffer.
 
2.       You can invest in Just In Time Resourcing (Just-in-Time Resourcing℠ is a pending trademark of RTM Consulting, LLC.) or similar warm resource pool techniques to tap into highly skilled resource pools that are not on your payroll (See the white paper A Primer on Just-in-Time Resourcing℠ at http://www.tenrox.com/en/downloads/whitepapers/center.htm ).
 
Knowledge sharing -or lack there of
 
I included the following quote and feedback from Marty Duffy  because I think we can all do so much more to institutionalize knowledge sharing. It is amazing that most companies pay little attention to such an important activity.
 
In some companies, knowledge sharing, lessons learned, and best practices are not communicated and taken advantage of in a rigorous way. Usually, people are either too busy to report the lessons learned or too busy to find the information that can help them. If you take time out of the equation though, there still seems to be a gap in the methods of communication. It is a challenge to set up a common means of communication where service members can quickly report information, such as best practices, new intellectual capital, or potential pitfalls. In my company, we address these communication challenges by sharing knowledge using internal white papers, instruction guides, wikis, online forums, and the knowledge base in our Salesforce CRM database. Once a consistent communication means is set up, an ongoing effort must be made to monitor these items to ensure that the field is quickly adopting and using them.

- Marty Duffy Director of Professional Services Operations BigMachines
 
I would also like to add to what Marty said that if you are really serious about knowledge sharing and you think it leads to significant gains in productivity, then reward it. Set up a creative mechanism for rewarding employees that contribute to knowledge sharing by establishing monetary bonuses or perks over and above the defined base compensation and existing bonus targets.
 
Problems are thrown over “the wall”
Some of the feedback I received was that the root cause of this issue is that this happens because the service team is too busy. I agree. I think what we choose to reward (compensation), mandate (compliance) and expect (culture) are also important factors to consider. The following are examples of what can work to reduce throwing things over the wall:
 
-          Product issues: designate a single point of contact between the embedded service and product teams. A highly technical contact that is respected by both teams will review any escalations and identify any configuration, training and service related issues. This will substantially reduce the “cry wolf” syndrome described in Part 1
 
-          Marketing activities: all the feedback I got on this topic involves establishing a bonus system to encourage marketing related contributions. Not much new to suggest here. Marketing has to follow up, engage the clients directly when appropriate, and do the heavy lifting on this one
 

Most PS initiatives are tactical

Having tried a number of approaches and based on all the feedback I received, asking or expecting Professional Services managers to think more strategically will have limited or short term success.  The Professional Services management team feels that they already have a day job so what is the boss asking me to do exactly?

What seems to work more consistently than the other alternatives is to bring in a change agent. Hire (or transfer) someone whose primary responsibility is to make a major change from business as usual. Give this person the time, the authority and the resources he or she needs to work on the transformational projects. A change agent should be chosen very carefully since the wrong candidate can do more harm and good. If the wrong approach is taken, some team members may feel threatened and try to sabotage or delay the changes. An ideal change agent candidate will champion the new initiative, communicate to all the reason the change is needed, bring everyone (or most) on board and see the project through to its total and successful close.