After spending time stabilizing your IT service business, you begin to notice steady growth. However, as your client base expands, your bandwidth and available work hours start to shrink. This cycle can feel inescapable in the traditional model where IT service providers exchange time for money. Eventually, you run out of hours to offer, creating a cap on how many clients you can take on. After all, there are only so many hours in a day.
To avoid this situation, many IT professionals are turning to productized services to boost efficiency, streamline operations, and consistently deliver value to clients. For IT product managers, mastering and implementing this strategy can transform how they manage their business.
This comprehensive guide will explore productized services within the IT industry. We’ll walk through the steps to transform your current services into products, weigh the pros and cons, and provide examples to show the potential of this approach.
What are productized services?
Productized services are standardized services packaged together with clearly defined parameters so that they are sold like a product. This approach enables businesses to streamline delivery and create predictable, repeatable outcomes in place of custom, bespoke projects.
Some key traits of productized services include:
- Clearly defined scopes
- Reduced customization (though some flexibility may still exist)
- Fixed or tiered pricing
- Repeatability and scalability
In the context of IT services, productization means creating repeatable, process-driven solutions that clients can easily understand and purchase, much like off-the-shelf software or hardware products. For example, instead of building a custom cloud infrastructure for each client, you might offer a cloud migration package with predefined features and deliverables.
How to productize a service
Productizing your IT services requires a strategic approach. Though some steps might need adjusting to fit the specific service you want to productize, these rules are generally applicable.
1. Identify repeatable processes
Begin by analyzing the services you already provide. Identify which services you can standardize across multiple clients with minimal variation. Examples include network setups, security assessments, or managed IT support.
2. Define your offering
Once you’ve identified a repeatable service, break it down into its core components. Document the process, tools, and time required for delivery. Make templates, checklists, and workflows to ensure consistency. Creating a standardized process for delivering these components will allow you to offer the service as a “product.”
3. Create clear deliverables
The process you create should allow you to offer clients standardized results. Define specific, measurable outcomes for each productized service you can consistently deliver across client projects. Develop templatized reports or dashboards that you can update with each client's results and prove the value-add of the work.
4. Set fixed pricing modules
Fixed pricing is a key feature of productized services. Establish a pricing model that covers costs, ensures profitability, and remains competitive. Consider a tiered model to cater to different client wants in addition to offering just one set price.
5. Create a delivery system
Build a streamlined workflow for delivering the service. Automate where possible and ensure consistency. Employing project management software to track progress and manage resources can help here. A well-oiled delivery system is essential for scalability.
6. Launch and iterate
Create clear, benefit-focused descriptions of your products. Create various forms of collateral, such as a one-pager or bundled case studies to send when clients ask for more information. Make sure to highlight the value proposition and differentiate it from custom projects. As you introduce your productized service to existing and new clients, gather feedback and continuously refine your offerings.
Can you productize IT services?
The short answer is yes, absolutely. IT services are generally well-suited for productization due to their often repeatable nature and the increasing demand for standardized, reliable solutions. A product manager can break many IT functions into processes and package them into products that deliver consistent value. However, not every service can or should be productized. The key is honing on productizing repeatable services across clients without much change.
Does it make sense to productize your IT services?
While productization can offer numerous benefits, it's essential to consider whether it's the right move for your specific IT service business. Here are some factors to consider:
- Client base: Do you have a diverse client base with similar needs, or do your clients require highly customized solutions?
- Service complexity: Are your services straightforward enough to be standardized, or do they require significant customization for each client?
- Market demand: Are clients asking for similar solutions repeatedly, or do they prefer bespoke project work?
- Team structure: Can your team adapt to a more process-driven approach, or is flexibility a key strength?
- Profitability: Does productizing increase your profit margins by reducing custom work?
Productization is ideal when:
- You aim to scale without adding significant overhead.
- Your clients prefer predictable costs.
- You want to differentiate yourself in a competitive market.
However, productization may not work well if:
- Clients expect highly customized solutions.
- Your services rely on custom, complex configurations.
Examples of productized IT services
1. Managed IT support plans
Description: Managed IT support is one of the most common examples of productized IT services. These plans typically cover essential IT functions, such as helpdesk support, system monitoring, software updates, and patch management, all for a fixed monthly fee. Clients gain predictable monthly costs, no surprise fees, and comprehensive IT support without needing an in-house IT team.
Example plan:
- Basic plan: 9 AM - 5 PM helpdesk support, basic network monitoring, and monthly software updates.
- Premium plan: 24/7 helpdesk, onsite support within 24 hours, full network monitoring, and quarterly security audits.
- Enterprise plan: Includes vCIO services, security compliance management, and advanced monitoring with real-time alerts.
2. Cybersecurity packages
Description: Security services are highly in demand, and productized cybersecurity packages make it easy for clients to choose the level of protection that suits their needs. You might offer standardized security assessments, penetration testing, or managed detection and response (MDR) services. This approach allows clients to select the right level of security based on their risk tolerance and budget. As an IT provider, you can streamline service delivery by using the same tools and processes across multiple clients, ensuring consistency in results.
Example packages:
- Basic cybersecurity audit: Assessment of antivirus software, firewall settings, password strength, and compliance gaps.
- Mid-Level vulnerability assessment: Basic audit + scanning and identification of network, application, and device vulnerabilities, with a detailed risk report.
- Comprehensive penetration test: Advanced assessment + simulated attacks on systems and networks, detailed analysis of security gaps, and remediation recommendations.
3. Cloud backup services
Description: By productizing cloud backup services, you can offer packages that provide different storage levels, backup frequency, and disaster recovery options. You could distinguish this offering by creating packages for various client needs, such as a “Small Business” plan that covers a certain amount of data (e.g., 500 GB) with daily backups. The other plan for larger organizations could offer more extensive data storage, more frequent backups, and disaster recovery support that ensures minimal downtime during data loss. The standardized service allows you to automate backups without additional customizations while the clients receive peace of mind knowing their data is secure and easily recoverable.
Example packages:
- Small business starter: 500 GB of storage, daily backups, and a 30-day retention period.
- Enterprise: 1 TB of storage (or more), hourly backups, 90-day retention, and disaster recovery setup with a guaranteed recovery time objective.
4. Infrastructure as a Service (IaaS)
Description: Many companies are moving their IT infrastructure to the cloud, and productizing Infrastructure as a Service (IaaS) allows you to offer clients a pre-built environment that includes servers, storage, and networking components. IaaS packages enable businesses to scale their operations rapidly without investing in costly hardware. Clients avoid the complexity and expense of setting up their own infrastructure while benefiting from quick deployment and scalability. For the provider, productizing IaaS allows you to use the same underlying architecture for multiple clients, reducing setup times and operational costs.
Example packages:
- Starter package: 2 virtual machines (VMs), 500 GB of cloud storage, basic network firewall, and monthly performance reports.
- Growth package: 5 VMs, 2 TB of storage, advanced security options (e.g., multi-factor authentication), and weekly performance reports.
- Gold package: Fully customized environment with scalable infrastructure, 5+ VMs, automated load balancing, and 24/7 performance monitoring with custom SLAs (Service Level Agreements).
5. Network setup and optimization
Description: You could offer different bundles of services, such as installing routers, firewall configurations, and security configurations. Each successive bundle can include more advanced work so clients can choose between a reliable and secure network setup tailored to their needs. At the same time, you benefit from a repeatable service module that is scalable across clients with minimal modifications.
Example bundle:
- Basic bundle: Router setup, firewall configuration, wireless network installation, and basic network monitoring.
- Mid-tier bundle: VPN setup, enhanced security features, remote access configurations, and monthly network performance reports.
- Enterprise bundle: Network segmentation, SD-WAN deployment, real-time monitoring, and quarterly performance optimization reviews.
These examples provide a roadmap for how IT services can be standardized and packaged into productized offerings. By focusing on predefined deliverables, fixed pricing, and repeatable processes, these services become scalable products, allowing you to grow your IT business while providing value to clients.
Pros and cons of productizing IT services
As with any business strategy, productizing your IT services comes with both advantages and potential drawbacks.
Pros
- Scalability: Services are delivered more efficiently, so you can handle more clients without a proportional increase in resources.
- Predictability: Fixed pricing allows for a more predictable cash flow, making forecasting revenue and managing financial planning easier.
- Improved profitability: By optimizing processes and reducing the time spent on custom work, you can increase your profit margins.
- Easier resource management: With a clear process in place, it's easier to schedule the work required of each team member and accurately predict how long work will take.
- Reduced scope creep: Well-defined products help set clear boundaries and expectations, minimizing scope creep.
- Obvious value proposition: Packaged services are easier for clients to understand and compare, potentially leading to faster sales cycles.
- Efficiency: Standardized processes improve operational efficiency, reducing the time spent on each project.
Cons
- Less flexibility: Standardized offerings may not suit clients who require highly customized solutions.
- Initial investment: Developing productized services requires time and resources upfront to create processes, delivery systems, and materials.
- Ongoing refinement: Productized services require continuous improvement to stay relevant and competitive. The offers and packages may also need iterating as you receive more client feedback.
- Limited premium pricing: Highly customized services often command premium rates. Charging a premium for standardized services may be harder to justify to the clients.
Why productize services as an IT project manager
For IT project managers, embracing the concept of productized services can lead to more predictable project outcomes, easier resource allocation, and improved client satisfaction. You can streamline operations, increase profitability, and potentially reach a wider market by transforming your expertise into well-defined, packaged offerings.
Carefully assess your current services, market demand, and business goals before making the shift. Remember that productization doesn't mean eliminating all customization – the key is finding the right balance between standardization and flexibility to meet your clients’ needs.
How a CPQ can help productize a service
CPQ (Configure, Price, Quote) software plays a crucial role in productizing services by streamlining how IT service providers configure, price, and present their productized offerings to clients. When productizing services, it’s essential to have a system that enables quick, accurate pricing and seamless quoting processes across multiple clients with different needs.
ScopeStack’s CPQ software simplifies this by allowing IT project managers to configure services based on predefined packages quickly, automatically generate accurate pricing, and produce professional quotes tailored to each client. By automating these processes, ScopeStack’s CPQ solution enhances the efficiency and scalability of your productized services. It ensures transparency and speed in delivering quotes, giving you a competitive edge when pitching to potential clients.
If you’re curious to learn more about how CPQ software can help productize your service, contact us, as our team would love to hear from you.
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