Five Key Insights from Analyzing the Professional Services of the Top Twenty Public SaaS Companies
Scaling SaaS: The Role of Professional Services in Major B2B Companies
One of the several major differences between SaaS companies that have reached scale and smaller SaaS businesses is the professional services they offer to their customers.
Professional services encompass the consultation services provided by SaaS companies to make sure that their customers maximize the benefits and capabilities of their software platforms. These services, which need to be delivered by experts and consultants, are tailored to each customer and are difficult to automate because they depend on the specific context of each customer. And while the biggest B2B software companies have a broad range of consultation services, smaller SaaS usually only offer product support.
I believe that the topic of professional services is worth considering, even for early-stage SaaS founders, as it is likely to undergo interesting changes in the coming years. This is why I'm starting a series of three articles on this topic:
In the first article (this one), I will share what I learned while analyzing the professional services offered by twenty major public B2B software companies.
In the second article, I will focus on smaller SaaS companies and how these professional services generally emerge.
In the third post, I will explore the impact that AI could have on the professional services offered by SaaS companies.
Without further ado, let's start with the various insights I collected while analyzing the professional services of the top twenty B2B public software companies.
Insight #1: A wide variety of professional services
The first aspect that struck me when I analyzed the professional services of these twenty public B2B software companies is the range of consultation services available.
The core professional services can be grouped into several broader categories:
Implementation Services: These consultation services help businesses implement these suites of products. This includes consultants assisting with data or software migration, setting up and configuring software, or building integrations with the customer’s existing systems. Basically human help to get starting.
Managed Services: In many cases, these large B2B software companies also offer managed services where professionals manage and administer software solutions on behalf of the client, including regular updates, performance / health monitoring, and customization as needed.
Advisory Services: Here, the professional services aim to provide strategic guidance to align business goals with the software purchased. Experts offer insights and recommendations on best practices and how to leverage the software to solve specific business challenges. So it’s not only about running and managing the software but also how to make the customer run its business better.
Success-Oriented Services: This category includes various success plans offering different levels of support, coaching, and training programs. Those can include 24/7 support, one-on-one coaching, in-person or online training sessions, academies, and more. Basically all “education” and workforce training related services.
Innovation Services: These services help customers explore new ways to use software platforms to innovate within their businesses. So here it’s not just about optimizing how software works for a customer, but how the customer can evolve its organization to grow its business. It's similar to SaaS companies having traditional business consulting divisions.
In addition to these core groups of professional services, most public B2B software platforms come with specific services:
Shopify, as an eCommerce platform, offers SEO consultation services to improve the ranking of products.
Crowdstrike, as a cybersecurity platform, offers incident response services with a team of experts assisting in identifying the extent of a breach, eradicating threats, and recovering from incidents.
Workday offers advisory services that help HR teams on topics such as workforce planning, talent management strategies, and organizational effectiveness.
etc.
Other insights
100% the top twenty public B2B software companies offer professional services. Obviously I was not surprised to see enterprise first companies such as Salesforce or Workday offer a wide range of professional services. But even platforms more targeted at SMBs, such as Shopify, do have some (see Shopify Plus). Obviously, they are much more limited and usually offered to their bigger customers, but they exist nevertheless..
Several companies generate tens to hundreds of millions of dollars of revenue with their professional services. For instance Salesforce reported more than $500M of revenue generated by its professional services in 2023. It was $291M for ServiceNow, $650M for Workday or $46M for Hubspot.
But for some of them the revenue generated is too small to report. Not all companies have a service department generating millions of dollars of revenue. Some companies such as Shopify or Datadog suggest that they do not generate enough revenue from these services and hence don’t specify them in their annual reports.
Many of the biggest SaaS platforms “outsource” professional services to independent consultants and consulting firms. Most of the biggest platforms such as Salesforce have built ecosystems of third party consulting firms and consultants that their users can contract with. Basically, instead of internalizing all the professional services, they “outsource” it to trusted third party partners. It’s worth noting that it’s a strategy that Shopify has adopted. Instead of ramping up their professional services internally, they rely on an ecosystem of third party experts.
Conclusion
In conclusion:
Professional services are a necessary component once a software platform scales. This is why so many public SaaS companies offer consultation services.
However, offering more professional services does not inherently enable a software company to scale; it is more of a consequence than a cause. Simply offering more professional services will not automatically lead to scaling. But once a company does scale, there is usually a need to enhance these efforts.
It seems that even the largest companies do not want to significantly expand their professional services. Beyond scalability issues, since professional services require intensive human labor, managing a professional services department that generates tens or hundreds of millions of dollars could be a business in itself. This is why many companies prefer to delegate these tasks to an ecosystem of third-party consultants.
Super interesting, thanks for the great piece and looking forward to the 2 next ones !