Many technology vendors sell analytics as a product.
However, many marketers want to buy analytics as a service (because it’s easier to get a tangible Return on Marketing Investment that way).
This results in a dilemma of whether to position analytics as a product or service.
Before exploring ways to address this dilemma, let me clarify that I’m using the term “service” to refer to a managed service delivered using a technology platform. In this context, it’s different from the second “S” in “Software As A Service”, which emphasizes the business model of a SaaS to be sold as monthly subscriptions à la cable, Internet and other “services”.
Palantir from USA and Mu Sigma from India are two companies who have succeeded by positioning their analytics offerings as a service.
However, most technology companies have opted to take the product positioning for their analytics offerings. This could be because product companies enjoy the following real / perceived advantages:
- Product development is intellectually more satisfying
- Product results in IP
- Top talent prefers working on products
- By coding someone else’s requirements, service offers little scope for creativity or innovation
- The service business model is perched precariously close to a risky outcome-based model
- Product companies enjoy a higher valuation-to-revenue multiple than services companies
- Most investors fund only product companies.
From this list, it’s clear that many of the factors undergirding this dilemma go beyond analytics and cover a fairly wide swath of other technologies, especially big ticket size, ROI-based ones.
Systems Integrators can bridge the gap between what a vendor offers (product) and what the customer wants (service). But very few product companies are able to attract SIs.
Therefore, the product-or-service dilemma can’t be cast away so easily.
Component Based Solutions Assembly takes the product v. services dilemma by the horns. The framework was launched by Gartner in the early 2000s.
Under CBSA, technology vendors start with a library of reusable components and build massively customized solutions on top of them.
The component core helps them enjoy the advantages of a product company.
The massively customized solution helps them demonstrate tangible ROI to prospects and customers.
As the following exhibit shows, CBSA is often the best of both product and services worlds.
While a CBSA strategy is more complicated to devise and execute than a pure-product or pure-service approach, it has proven very effective in breaking out of the product versus service dilemma.
To translate CBSA into faster deal flows requires sophisticated marketing and selling skills. With our experience of taking CBSA solutions to market successfully, we can be of help there.
