How to Create an IT Offering

This is the fourth post in a series about things they never taught me in school. Attending classes, I never learned how to create an IT offering. In fact, I never heard of an IT offering until I was 20 years into my IT career. At that time, elements like professional or support services were available in the industry but not yet mature. Let me explain.

Product and Offering Managers  

A product manager leads the creation of products. They don’t do it by themselves, they have a team. An example would be a new or existing systems management product focused on monitoring or performance management. Someone leads its creation and launch into the marketplace and takes it through all future releases and versions. Without a product manager, it doesn’t happen.

An offering manager leads the offering team. Like a product, an offering is something that an IT company creates to sell to buyers in the marketplace. However, an offering is typically a combination of elements. For example, it could be hardware, software and support services combined in such a way to be innovative or to save costs (as compared to doing it yourself) or both and more. An offering could combine many products and other elements to meet the needs of the marketplace. An offering can be more complex to develop and deploy than that of a typical product, and one major challenge is to make it simple to sell and understand by clients.

The product manager creates products and the offering manager creates offerings consisting of multiple products and other elements. An offering manager and product manager don’t have the same job, but not every IT company makes that distinction.

Challenges Faced by the Offering Manager  

Offering managers are challenged to define and integrate the components of an offering. Take, for example, a hosted IT service consisting of hardware, software and support services.

Hardware: Buyers may want the option to use dedicated or shared servers, firewalls and load balancers. They “may” want the option, so it is up to the offering manager and their team to figure that out. What does the marketplace want and need? The desire for options changes over time and may be different from country to country. Early in the history of shared services, German IT companies favored shared services because it reflected their desire to be practical and not waste resources. They sought the opportunity to have multitenancy on large servers. That wasn’t true in other countries.

Software: Buyers may want the option to have their devices preloaded with software or install it themselves. They may choose to have monitoring and management like patching and security compliance set up for them or do it for themselves. They want to supply their own software and licenses.

Services: Buyers may contract for system administration services for the OS and tools. They may choose to have offering-support personnel perform the set-up and ongoing support of middleware like WebSphere or CICS, or they may choose to do it themselves.

All of these potential combinations make this work complex. The offering team has to make a list of offering options, figure out their cost, determine how they can combine with one another (including rules: You can’t have middleware support without OS support), and somebody on the team needs to write up a statement of work for each grouping of activities like “set up an OS image” or “support a database.”

Standardized Yet Flexible

To define an offering you need to have a standard set of elements that make up the service like “bronze database support” or “provide small server image.” However, there will always be pressure for flexibility to handle variations requested by buyers. The offering needs to be standard yet flexible. There are internationalization and culture differences as well. For example, some buyers won’t accept a managed service without on-site support personnel, which has a big impact on the price of the service. The price difference depends on managing with a central pool of specialist supporting many clients versus on-site personnel dedicated to just one client. That makes a big difference in cost and price.

What Does the Offering Manager Do to Define the Offering?

The easiest way to answer this question is to discuss the work products that are usually created. Offerings all need a few or all of these 10 elements.

1. Offering definition: A document or presentation that explains the offering to decision makers including an estimate of the cost to develop the offering. This is sometimes called a concept paper or presentation.
2. Anticipated sales volumes (by quarter for four years): A projection of the anticipated sales volumes is needed to build the business case. The offering manager should get this input from sales leaders in the regions or countries where the offering will be sold.
3. Cost case: A spreadsheet is needed that identifies all the costs that go into supporting or delivering the offering. Without the costs, it is difficult to determine the price to charge.
4. Business case with ROI: Often, the finance department of the IT company developing the offering will supply a template to complete the business case and required analysis.
5. Internal training materials: Training materials are needed for the people supporting the offering. They need to know what is in and out of scope.
6. Sales materials: People selling the offering need training materials as well.
7. Proposal template: A template proposal may be required to be filled in by the sales team for presentation to the customer prior to presenting the contract and statement of work (SOW).
8. Pricing tool: A way to easily create a price for the offering based on the discrete selections of the client is needed. Tools are better than one-of-a-kind pricing because tools make it easier to change options and to support “what if” scenarios suggested by the client.
9. Client sales materials: The client who purchased the offering needs training materials.
10. Contract and statement of work: Both a contract, including terms and conditions and a statement of work defining the in-scope tasks and responsibilities of all parties is needed.

Sounds Difficult

It’s challenging to define and deliver an innovated offering. IT companies build offerings using   multidisciplinary teams supported by a process that helps with requirements gathering, template tools and management checkpoints needed to reach go/no-go decisions along the way. It’s hard to imaging a more interesting job in IT for someone who likes business and technology challenges and enjoys working with a team of people.

Next Week

Next week, I’ll explore something else they didn’t teach me in school: How to install, verify and move system software to production. This is a specialized and interesting activity.

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