SaaS Implementations vs Professional Services
Stop calling Implementation "Professional Services"
It's wrong, and hurting your sales
There is a common mistake in SaaS to call implementations “professional services.” This is usually done to differentiate between recurring revenue (Saas fees) and non-recurring revenue.
However, when most buyers hear “Professional Services”, they think of “customizations.” Implementations should not be custom. They must be well-defined, with repeatable and distinct deliverables and outcomes.
As a provider of Software as a Service (SaaS) solutions, your company will encounter two very important terms during the business process –implementation and professional services. Both terms refer to critical elements of customer success, and it’s important to understand the difference between the two.
Implementation: Implementation refers to the process of getting a customer up and running with your software. This includes the initial deployment (installation and configuration), integration with other systems, and data migration. The implementation process typically entails a set number of hours and costs that have been sold as part of the licensing agreement. Implementation is a one-time expense associated with a new customer installation.
Professional Services: While implementation is a set number of hours already defined in the agreement, professional services are additional consulting hours. Professional services go beyond implementation; they are focused on enhancing software use, optimizing business processes and delivering better results. Professional services can consist of a wide range of offerings, including training, best practices, troubleshooting, and customization. Customers typically pay for a statement of work (SOW), detailing each party’s responsibilities with respect to the professional services engagement. Professional services may be performed at any time as determined by the customer’s business needs.
Some other key differences:
Professional Services usually need to be scoped and will be structured into Time &Materials or fixed fees.
Implementations should always be fixed fees.
Professional Services for Saas is usually best thought of in the following scenarios:
Integrations
Customization of the software via APIs
Portals
Expert Services
Interestingly enough, many SaaS companies do these services during implementation, often for free, effectively leaving lots of “money on the table.” A good leader will recognize when these become repeatable and become more of a profitable solution that can be sold at a fixed price.
it is critical to make a clear distinction between the two, as implementation helps customers get started, while professional services help them get the most out of their investment.
(This was an excerpt from my newsletter.)
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