Are You Bundling Services?

Sydney Outsourced CFO Thomas Taylor - Friday, July 13, 2018

These days smart firms are forming their service offerings into bundled products that better align with and meet client needs.

Once upon a time you sold products or services, or maybe both, but professional services were seen as different. There was a fair bit of snobbery involved in this as well.

Things are changing and it’s great to see people moving away from hourly charges to bundled products. Clients love to know what they are getting and what they need to pay for that. Monthly charges are even better for them because they get to commit in stages. The thing is though, monthly charges are good for you too because recurring revenue is a very valuable thing for your business. Having said that, it takes extra discipline to move towards this model of working, in fact for some people it involves learning a whole bunch of new disciplines.

It takes a commitment to truly understanding what value looks like for your client, building enabled teams, effective marketing, heaven forbid a sales component to articulate the offer, great reporting and use of KPIs, plus industrial strength billing and costing systems. Even hourly rate systems are hard to make robust, but for many many people they are at least fairly easy to understand.

Once you break free of the old model you need to be absolutely sure that you know how your machine works and how to keep it in rude health. Some firms struggle to understand their costs and margins, or repeatedly quote too low for fixed fee work. For them it might be dangerous to move away from old fashioned billing methods until they sort these things out. Or these changes could be a good chance to get moving. A short, sharp shock if you will. Either way it might be a difficult period of transition.

Hopefully we might help you avoid some of the pain points.

Smart firms are carefully building robust systems and processes, defining the skills that their people would need in order to undertake each particular task most efficiently. Then employing, and training, or outsourcing to, people that best suit those tasks. Wherever possible removing the bullshit jobs that are headed for the scrapheap anyway.

It was once assumed that the costs for professional services, and therefore the prices they could charge, would reduce over time as they moved, all too late, to copy the efficiency gains of 20th century manufacturing. It was thought that as the technology used for tracking time improved, firms would be able to remove employee “inefficiency”. And by inefficiency they pretty much meant laziness. Like some sort of 1880s fiddling with the lighting levels to see if it made people work faster.

But really it’s not so much to do with time at all, but efficient resourcing based on the most effective activities and process design. Not just on the amount of time spent doing it pretty much the same way it’s always been done. They are very different things.

Most probably the future will move away from having all the firm’s people involved in performing an increasingly smaller subset of all of the firm’s tasks based on their status. Instead, successful firms will move from a process pyramid to a more linear design.

 

Photo by Austin Chan on Unsplash


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