To differentiate in an increasingly competitive market, companies are building recognizable spikes in capability — for smaller players, competing against the breadth of offerings from larger players is simply not possible, and for larger players, they need to demonstrate speed and agility, especially with newer technology and offerings. The recent growth of outsourced product development, software engineering and digital engineering bears witness to this differentiation strategy. The industry is also seeing the rapid growth of players focused more on being longer-term managed services providers or managed security services providers (MSP/MSSP), whether in core IT, application management or cybersecurity management.
At the same time, increased investment from private equity is creating new opportunities for growth while reshaping operations and the dynamic between senior leadership and shareholders.
Finally, Spencer Stuart’s market-leading capabilities help our product economy clients build world-class services capabilities. Product companies can only help their clients realize meaningful returns on investment when they support them across the services value chain, from consulting and advisory through product implementation, all the way to customer success. In some cases, services revenue can become a significant top-line contributor in addition to a company’s typical software or hardware sales. A successful services organization can be profitable while also serving as a market differentiator. As a result, product companies are increasingly focusing on amplifying their services offerings — typified by the increasing demand for leadership roles like chief customer officer and chief services officer.