J.B. Wood is president and CEO of Technology Services Industry Association (TSIA). He is a frequent industry speaker, and author of the popular books, Complexity Avalanche (2009), Consumption Economics (2011), B4B (2013), and Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business (2016), and has appeared in leading publications, such as Fortune, The New York Times, and The Wall Street Journal.
He works with the world’s largest technology companies on strategies to extend their innovation platform beyond the lab, and into the customer experience, particularly in the age of cloud and managed services.
What is TSIA, and describe what do you do?
We are a research and advisory firm that helps technology companies of all sizes achieve profitable growth by optimizing their service and XaaS (anything-as-a-service online) businesses. We collect hard data from across the tech industry to help our member companies identify best practices for achieving specific business outcomes. We are the world’s foremost experts on service business operations and financial performance.
Right now, there’s a lot of focus on the concepts we’ve presented in our recently published book, co-authored by myself and our executive director, Thomas Lah, called Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business.
Tech companies that sell traditional assets (like computer technology and industrial equipment) are feeling the pressure to enter the XaaS or Managed Services marketplace, but many don’t know where to start. Getting them through that transition without their traditional product business suffering too much in the process is what a lot of our recent focus has been about, but overall, we’re mostly about helping companies identify where they are performance-wise, and how to get to where they need to be. Digital transformation is just one part of the help that we offer, but it’s something that’s a hot topic in tech right now.
In regards to your unique business model, how do you position yourself differently, and what can you elaborate about the model?
Put simply, we have the largest vault of data-driven insight the technology and services industry has to offer. By conducting regular benchmarks and deep-dive studies from Fortune 100 to SMB technology companies, we’re able to stay current on what’s happening across the industry and spot trends as they happen.
Our dedicated team of data analysts and research executives then work together to translate that data into board-ready, contextual insights and proven best practices our members can use to grow and advance their businesses. This way, we can help our members compare their current performance against industry peers and pacesetters to identify what they’re doing well, and where they can improve.
To further help our members apply this research toward achieving a specific goal, we now offer a SaaS solution called TSIA Outcome Chains, which maps all of our content to specific business outcomes our members would like to achieve.
TSIA offers the fact-based detail and expertise that you just can’t get anywhere else, and we’re happy to do the heavy lifting so you don’t have to.
Can you tell us about the book you co-authored, and why you wrote it?
Thomas and I co-wrote our previous book, B4B, to introduce the concept of focusing on customer outcomes, rather than just selling products and services, the rise of cloud-based business models, and the transition technology companies are making from products to services.
Technology-as-a-Service Playbook: How to Grow a Profitable Subscription Business takes the concepts introduced in B4B even further. We’ve found that many companies who want to make this transition to the Cloud/the XaaS business model are struggling to do so, and if they’ve already started, they’re still struggling to be profitable. We wanted to provide these companies with the plays they can run as they work to establish and optimize their own technology-as-a-service offers and move their XaaS business forward.
What do customers most enjoy with TSIA?
Our members frequently tell us how our research, benchmarking, twice-yearly Technology Services World conferences, and thought leadership have given them the resources and help they need to overcome their top challenges, improve their processes, and achieve their desired business outcomes. For example, if a member needs to make structural changes to their organization, we’re able to provide them with the industry-validated data and best practices they need to make the case for funding and fact-based decisions.
We’re committed to making sure our members get value and business outcomes out of our knowledge and expertise, and our growing membership community is proof of that return on the investment.
How can a company succeed, and make money, in the Cloud?
The harsh reality is that, despite their rapid growth and popularity, the cloud business model has yet to be profitable, but the promise is there. In our research, TSIA is seeing some clear patterns emerging that can help business leaders think more completely about the journey to profitable XaaS, which we call “The Friction Curve.” We, of course, go into greater detail in the book, but the Friction Curve can be summarized as having three stages:
- Future Aggregator Stage: At this stage, you’re trying to gather as many initial users as possible, but you still might be experimenting with pricing models. You want to make it easy to use your service, so you make it fast, easy, and cheap to try your offer, but this means you may not have much revenue to offset your costs.
- Mid-Term Wedge: Once you’ve proven your product market fit, you need to begin proving your financial model by methodically increasing the friction in your offer, such as charging for things you used to give away for free. This way, you can then start making a profit off of each customer, eventually leading to your revenue to surpass your costs, which we call a “wedge moment.”
- Current Profit Maximizer: At this point, you either are, or will, soon be generating profit. You’ll need a well-developed portfolio that monetizes each customer in various ways, but it’s crucial to ensure customers stay on your platform by keeping your core offer easy for them to consume, with smartly-layered advanced monetization strategies that keep them engaged at every step of their journey with you.