Home > Articles > Software Development & Management

  • Print
  • + Share This
Like this article? We recommend

Phase 4: Productized Services

Please don't let the name scare you away. The concept of productized services is really quite simple. It's all about leverage. To enter this phase, a professional services organization must be committed to leveraging its valuable intellectual property. This section reviews how leveraging intellectual property positively impacts your business.

Value Proposition

When offering consulting services, the product company brought several cards to the customer table:

  • Product expertise
  • Technical expertise
  • Business problem expertise
  • Risk management

If the product company is disciplined enough to capture and quantify experiences from customer engagements, it can position risk management and expertise to a new level. By demonstrating proven delivery methodologies, the product company can greatly reduce the fears and risks of a customer. Also, the product company should have no issues establishing its credibility regarding a targeted solution.

Strategic Focus

As always, revenue remains a focus. References remain important. However, repeatability is the hallmark endeavor of the productized services phase.

Critical Skills

The most important skill set required to drive repeatable productized services is talented senior technical staff. These folks are the brain trust that validates technical architectures and delivery strategies. The stronger they are, the more differentiated your service offerings.

Marketing managers who understand how to position and market business solutions are also crucial to this phase.


Product marketing managers and solution marketing managers are not the same. Different skills in different mindsets. Product marketing managers typically focus marketing efforts on differentiating product capabilities. In the world of computer hardware, this is marketing based on "speeds and feeds." Solutions are much mushier entities. They're often differentiated based on intangible concepts like "lower risk" or "improved employee productivity." Solution marketing managers must position at the business problem level; product marketing managers may design very successful marketing campaigns that never address a general business problem.

Required Operational Infrastructure

In this phase, we return to a project-level focus.

Required Operational Reporting

From a reporting perspective, the global organization must understand what projects are most profitable and why. These become candidates for productized services. Detailed project reporting is critical.

Required Operational Processes

From the process perspective, a new step must be added to the project management lifecycle process: the intellectual property (IP) capture process. Every geography must have delivery teams that are educated on how to capture and submit project IP that can be reviewed by the Services Engineering team.

Target Mix

Valuable IP should be managed and implemented by direct staff. This means that much of your revenue should be direct revenue. A target revenue mix of at least 60/40 should be the objective by this phase.

Revenue Growth Rate

Top-line revenue growth is much more challenging at this phase. The hiring and training of delivery staff is a longer and more complex endeavor. Revenue growth rates of 20–30% are manageable. Higher growth rates affect the quality of your service delivery.

Target Gross Margin

And now for some real upside. By aggressively managing a target solution portfolio, you can realistically expect to enjoy a target gross margin of 30% or greater. This is true for three reasons:

  • Customers are willing to pay a premium price for your well-referenced and valuable solution expertise.

  • Your delivery teams have become extremely efficient at delivering your target solutions.

  • This is the phase where you start to see revenues from reusable components like software.

Let's compare two fictional professional service organizations: Solutions 'R Us and We B' Solutions. One of the advantages of We B' Solutions is a high margin revenue (50% gross margin) coming in from reusable IP components. Look at the numbers in Figure 3 and see how much that component can help lift overall gross margins for the business.

Figure 3 The scorecard for two professional services organizations with different revenue mixes.

Target Operating Profit

Now, for the best part. By offering productized services that are highly differentiated, you improved your gross margin. This leads you to a very respectable operating profit of 13%. The number speaks for itself.

So there you have an overview of the four phases through which a professional services organization and product company can migrate. Again, a critical success factor for professional service organizations is to clearly understand each phase, the priorities and challenges of each phase, and where your PS organization sits within the maturity curve.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020