Do You Have a Formal Process for Services Development?

Over the years at ITSMA, we have seen an increasing formalization of the services development process, which sounds like a good thing.

And past ITSMA research says that it is. We found a correlation between services marketing performance and services development formalization. High-performance services marketers follow a formal services development process.

As companies have formalized their services development, they have also moved to centralize responsibilities for it. Centralization of services development has been driven by the globalization of services and the emphasis on integrated marketing communications strategies. IT services providers are striving to achieve global consistency in services offerings, capabilities, and positioning.

But it’s healthy to ponder whether all of the centralization and formalization are really having the desired impact. For example, is formalization shrinking services product development timeframes? Does productizing services by putting them through a formal development process increase the chances for success, or does it create cookie-cutter services? How does formalization affect creativity and innovation?

Many companies are realizing that ad hoc services created in the field can be costly and difficult to deploy on a larger scale. However, these services can represent a tremendous opportunity if they can be further developed or refined centrally with attention devoted to market and competitive analysis, resource requirements, marketing and sales strategy, and so forth.

Given the poor odds of success with new product and services introductions, it is very important to find ways to minimize the risks of new services development. ITSMA believes that a well-designed services development process helps weed out the less-worthy services product ideas and strengthen the ones with greater potential.

Perhaps the most important factor in designing a successful services development process is keeping in mind that it must be different from the typical product development process. Services development is more complex and sophisticated than product development. Therefore, to be truly useful, a formal services development process must be designed specifically for services. A formal process that does not recognize the unique needs of services development will be more harmful than helpful.

The factor that most sets services apart is people. Customers go through a process when receiving the service, and their needs will evolve as they accumulate experience with the service provider’s processes.

This deeper involvement with customers is one reason that some services providers are critical of a more formal services development process. They argue that the spontaneity of responding to customers’ needs will be lost to the process, with its gates and approval requirements. Furthermore, the formal process can stifle creativity, resulting in a portfolio of me-too services. These are certainly dangers if the new services development process lacks flexibility or if adherence to a process takes on more importance than the goal of creating winning new services. The process must be a means to an end.

At ITSMA, we think the best services development process is one that balances gut feel with formal process through flexibility.

But what exactly does that mean? A flexible services development process takes into account the fundamental forces driving services product development. These elements will help determine the timeframe available for getting the individual new service to market and, in turn, will decide how the services development process should be applied. These include:

• Types of new services products
• Impetus for new services development
• Technology requirements
• Capacity and competence requirements
• Process and infrastructure requirements

Each of these new service parameters will influence the path taken in the services development process and will form a foundation for designing flexibility into the process. The inputs to the model will determine the outputs that directly drive the level of detail in analysis and planning of the process followed.

Even if the new services development process is designed with built-in flexibility and is subordinate to the goal of achieving innovation, there will be times when a formal development process is altogether inappropriate. At these times, it may be best for gut feel to take over.

But beware! Sometimes the rigor of the formal process with its evaluations and checkpoints can save a lot of time and money. Some marketers believe so much in their gut feel that they take a chance. They ignore the research or rationalize the results. Even with the best marketing strategy and tactics, you can’t make a bad idea good.

Perhaps the primary benefit of a structured services development process is the multiple built-in steps for objective opportunity assessment. The process takes the emotions out of decision-making. However, if you decide that some services development initiatives are better handled with an unstructured process, proceed with this one very important caveat: do not work in isolation. Make sure you have access to peers who can act as a sounding board for your ideas. Keep the process unencumbered, but seek outside input.

ITSMA members can download a new ITSMA Tool, How to Create a Services Development Process, which describes the elements of a successful services development process in more detail.

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ITSMA specializes in helping companies market and sell services and solutions more effectively. We work with the world's leading technology, communications, and professional services providers to generate increased demand, strengthen customer relationships, and improve brand differentiation. ITSMA annual program clients include business leaders such as AT&T, Cisco, Deloitte, EMC, Fujitsu, Hewlett-Packard, IBM, Microsoft, SAP, and Tata Consultancy Services, among others. Our comprehensive research, consulting, and training on topics including ITSMA Account-Based Marketing℠, Brand Positioning, and Solutions Development provide the insight and experience companies need to improve business results. ITSMA is based near Boston, and has offices in London and Tokyo. Learn more at www.itsma.com.