Implementation vs Professional Services

Note from Jeff:

I was asked to put together a few bullet points on the differences between Professional Services and Implementation. Many organizations have been naming their Implementations as Professional Services or reporting under the “PS” organizational structure, especially when the product is complex by nature.

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 fee.

• Implementations should always be fixed fee.

• Professional Services also needs to use the concept of time tracking, which is generally advised against for Implementation.

• Implementation will generally be defined by the number of users and features that need to be put in place. The deliverables should have clarity so there are no surprises for either side. Generally speaking, it’s better to over-deliver than under-deliver when it comes to Implementation. Lastly, a timeline should be agreed upon as to when the Implementation is expected to be completed.

• 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. Collectively, implementation and professional services give customers a complete solution, designed to handle any and all of your customer’s support or enhancement needs. Combining implementation and professional services with a customer-oriented approach to software development can help reinforce customer success and increase loyalty.