Let’s take a little breath and step back from all the murkiness AI is creating for your PS business and instead see it as the opportunity to work on one of the most important components – the Solution/Service Portfolio. If you are like most PS leaders and team members, you have not had the time to truly focus on updating what you provide in the market and why. When was the last time you pruned old or “dead” service offerings? When have you added new ones with a specific plan to scale them rather than continuing to deliver a handful of one-offs for a few “important” clients? What is your go forward pricing strategy to support the underlying “product” strategy?
As an investment in a PS business, AI is typically viewed and treated as a technical one – what it can do for you and your delivery team’s efficiency. However, it is a huge disservice to ignore its downstream commercial effects. To unlock the true benefits of your PS organization’s AI investments, you must evolve service/solution value positions, GTM messaging, pricing, and packaging. In other words, the Portfolio Strategy of your PS business.
Weaving the AI Investment into Your Portfolio and Pricing Strategies
Experienced buyers of professional services have new expectations, particularly about ROI (fees + time to outcomes). In other words, most of you reading this are hearing clients say, “fees and pricing should be lower now that AI does a lot of the work of your team….”. Well, maybe they are correct yet maybe they are missing other elements as well; it is your job to convey them.
Let’s start with what your Solution/Service portfolio should address: it is the intersection of your target segments and clients (i.e., “where to play”) and what outcomes you provide via solutions and services (i.e., “how to play”). When evaluating and refining the future state portfolio strategy, both need to be addressed with openness and honesty and need to include:
- Outcomes: Everyone in the market is seeking outcomes from their PS partners and providers. What outcomes does your PS team provide? Does everyone on your team agree to them and how they are in fact obtained/delivered?
- Fees/Pricing: Faster delivery or fewer hours needed leads to awkward pricing conversations, yet not all of these must lead to lower fees. For example, delivering the same outcome in half the time as it used to take provides tremendous value to clients, and many are willing to pay the same or even more as a result. Remember, they want the outcome and shortening the time to get it drives their economic model just like it does yours.
- Packaging and Productizing Solution/Service Offers: AI allows for packaging some solution/service offers into tiers when you consider a client’s target outcome, time to benefit from that outcome, the order of magnitude of that outcome, etc. In other words, the updated portfolio may have at one end of the spectrum a category, or tier, of services that are fast and relatively simple resulting from leveraged AI assets and at the other end of the tier spectrum some services that require more human capacity/capability – and time – to realize an outcome.
- PSaaS: Be deliberate with what Solution/Service offers can and should be provided as a service subscription.
- AI Solutions and Services: Naturally, it may make sense for some PS organizations to provide AI-specific solutions and services as part of the portfolio.
- Value Propositions and GTM Messaging: Update these based on the specific combinations of each of the above to “sell the promise”. Note that they are likely to be much more modular and sophisticated/nuanced than in the past and therefore require upskilling your GTM resources accordingly.
You may notice I did not mention changing delivery or delivery models resulting from AI investments. Why?
Well, while AI can provide efficiency and it should be embedded in your delivery model(s), which are not necessarily an underlying part of the portfolio strategy. Rather, we view AI as an enabler for PS delivery (unless, as mentioned above, it is also an offer to be delivered depending on your PS business) and we are proposing and encouraging PS leaders to treat it as such and become hyper focused on selling the value of outcomes to your clients rather than how you use AI to make that happen.
Portfolio and Pricing Flexibility
Lastly, keep in mind that your portfolio and pricing strategies are not meant to be static. After all, your market(s) are dynamic and continuously evolving and your portfolio and pricing strategies should be as well. Therefore, plan for and be prepared for many scenarios that include:
- Clients that prefer buying projects and deliverables AND those focused primarily on business outcomes
- Variable fee/pricing structures – gain share, fixed fee, hybrid, etc.
- Solutions and services that accommodate a client’s target time to outcome – some will be fast and therefore require a willingness to “fix” things after the initial deadline and others will be willing to proceed at a slower pace to de-risk the outcome
- Solutions and services that are pre-packaged vs. tailored vs. custom – each has its own fee structure, value proposition and time to outcomes
- PSaaS that is consumed and delivered “on demand” vs. discrete projects and programs
With these many moving elements, we suggest developing a summary framework, or matrix, that allows you to define and convey the modular nature of the portfolio aligned to target markets, clients and buyers. This becomes the basis for specific targeted GTM campaigns, training and enabling your teams and colleagues, etc. so everyone can provide the same messaging for your PS organization’s value and target outcomes directly aligned to your clients’ needs. Remember, sell the promise…..
Is your organization ready to refine and optimize its Portfolio and Pricing strategy? Let’s talk.
For additional McMann & Ransford insights specific to the PS market, please visit McMann & Ransford – Management Consulting.