Software Services

Bill Grabe, Former VP IBM Services and Former Managing Director General Atlantic

Bill Grabe is an Advisory Director at General Atlantic. Bill joined General Atlantic in 1992 and retired as a Managing Director in 2010. He has been an integral part of GA’s global expansion, initially in Europe and later in India and China. Prior to his affiliation with General Atlantic, Mr. Grabe retired from the IBM Corporation as an IBM Vice President and Corporate Officer. In his last position he was responsible for US Marketing and Services and was a founding member of the board of ISSC, the precursor to IBM Global Services.  Bill currently serves on the boards of Quality Technology Services, Lenovo Group Limited, Gartner, Inc., and Covisint Corporation.

Summary Notes on Software Services

• Should a software company keep services in house or outsource?
  • Generally, software companies are successful because they have a great business model: produce product, replicate at low cost and sell at volume
    • Product intensive process
  • Services businesses depend on hiring people who perform more and more people who perform a service
    • Labor intensive process
  • Most companies provide a blend of products and services as products often require unique knowledge to install and understand
  • Good to keep services at a minimum
• Scaling the services team
  • Hiring ahead if you can see demand is OK, but you risk building up a huge cost structure if you get ahead of yourself
  • Rule of thumb: 80% of people on services should be working with customers at all times
• Best practices for software services
  • Keep the services content to a minimum
    • If going to have services to get product installed, at some point this becomes more market support
  • If running a services business and think it can grow, recognize the margins are tough
    • There are competitors with massive services organizations who can do mundane work better and cheaper than you
    • Need to run services business as business by itself and make sure utilization, margins and profitability are present