Precursive Pillars

MANAGED SERVICES: PRECURSIVE BEST PRACTICES

WHAT ARE MANAGED SERVICES?

Managed services across software, professional services and IT consulting are growing in prominence as companies seek more durable, recurring revenues. Managed services can take different forms but are typically a packaged service offering where the vendor provides services to the customer on an annual basis.

Companies typically bundle a mixture of services and support into a managed offering that is purchased up front by the customer in order to provide ongoing support and expertize. Managed services are typically recognized as recurring revenue and are therefore increasingly favoured by investors. In some instances in technology companies managed services is booked as Annual Recurring Revenue (ARR) often where the retention rate is very high or if the product and service is combined and sold as a single SKU to the customer.

Examples of Managed Service Packages:

Enterprise support packages featuring enhanced SLAs and co-ordinated by Customer Success or TAM functions.
Service Credits where customers drawdown on credits over time.
Expert-on-Demand which can see the vendor provide a technical resource dedicated to the customer, e.g. embedded enterprise architect.

WHEN SHOULD YOU SELL MANAGED SERVICES

Take a look at the telltale signs that scream "you need managed services."

CUSTOMER SUCCESS

You have a customer base that requires or demands ongoing guidance, driving further value from your product or service then you should consider how you package ad hoc work into a managed service.

MOVING BEYOND SUPPORT

Existing support is being stretched by customers who are looking for more tailored guidance or customers are putting requests into support that go beyond the remit of support and in reality represent technical consultancy, configuration or customization needs.

RECURRING REVENUES

Managed services provide the opportunity to move more Professional Services revenue from the one time column to the recurring column. Increasingly investors and boards want to improve services gross margin and recurring revenues can help to increase utilization of staff who may otherwise be on the bench between projects.

GENERATE MORE REVENUE

Managed services represent an opportunity for services leaders to have more control over their revenue streams. Analyze support cases to identify which customers are being over-serviced and where the common “how to” requests sit - the case load may also highlight where customers need training services.

WHY ARE MANAGED SERVICES IMPORTANT?

Managed services are a key pillar of the maturing of a services organization. Take an outside-in approach, not starting with “how can we generate more revenue” but rather focus on what is inconvenient for the customer, regardless of who does the work. Services Recurring Revenue (SRR) is more highly valued by the market and investors. In software companies, there is a direct correlation between ongoing services consumption and ARR growth rates.

For Consultancies and Professional Services firms, most can’t see beyond their 3 month backlog and so recurring services represent a great opportunity to not start from zero every year but rather have future bookings to rely on and grow. In some services firms Managed Services was traditionally less than 10% of overall revenues but now it is common to see investors pushing for a 60/40 split of project to recurring services revenues.

We've had a lot of amazing operational improvements over the last year, an easy-to-use tool has made it a lot easier. We knew we were spending a lot of time on average or warranty work, with Precursive we can now easily track this.

POLSOURCE CAN NOW MAKE BETTER DECISIONS USING REAL-TIME DATA ON UTILIZATION AND SALES PIPELINE WITH PRECURSIVE'S NATIVE PSA SOLUTION

Brandon Marsee.

Head of Finance | Polsource

READ CASE STUDY

PRECURSIVE IS THE ULTIMATE MANAGED SERVICES SOLUTION

Precursive provides a range of services packages to our customers including implementation packages where we use a “blue printing” approach to provide tailored pre-build configurations for customers across our core industries: Software/SaaS and Professional Services. Increasingly we fold this initial implementation into an subscription service where the implementation is in the first 90 days and then we provide ongoing services across the customer lifecycle.

Our customers are typically at different stages of maturity and have a variety of operational resources in their own companies to leverage a Professional Services Automation solution. Therefore we provide services that are tailored to the customers maturity model - in some cases this means we provide on-demand technical consultancy with our Salesforce certified technical architects and in other instances we will build reports and dashboards as the metrics and KPIs for the customer evolve over time.

ONBOARDING SERVICES

Industry specific onboarding services include pre-build workflows to enable better sales handovers, project accounting including revenue recognition, and resourcing and capacity planning configuration based on best practices.

Precursive Revenue & Profitability Dashboard

TECHNICAL CONSULTANCY

Precursive provides technical consultancy to help customers with configuration updates and additional automations.

REPORTING & DASHBOARDS

Precursive helps services leaders build compelling dashboards to monitor and track key KPIs including revenue, margins, attach rates, achieve rates, book to bill ratios, utilzation, time-to-value, NPS and CSAT.

ADVISORY SERVICES

Precursive provides consultancy to customers to help them navigate the growth of their PS function. Precursive customers leverage our Maturity Model to help them refine their strategy, improve execution and better package their service offerings.