Role of Service Providers in Product Acceleration

Digital engineering service providers, with the capability of driving innovation, have merged as leaders in product acceleration. These service providers are aggressively expanding centres of excellence (CoE) to beef-up digital capabilities to drive digital transformation.

Back to table of contents

About Persistent

About Zinnov

Understanding Leadership Voices

Learn More

Lorem Ipsum is simply dummy text of the printing and typesetting industry.

Article

Accelerating Product Development

4 minute read

Approach 1: Build to Sell — for Co-engineering or Engineering Acquisition

Approach 2: Build & Sell — for Product Acquisition and Operations Takeover

Type of Partnership Business Models

Through this approach, service provider either co-engineers or take over engineering ownership of PE firm’s portfolio products. Generally there is re-badging of portfolio company engineering employees, reducing employee cost to zero from day one. The service provider provides engineering R&D, product development and support, while the portfolio company drives product roadmap guidance and governance. The main intent here is to enhance and maintain mature and legacy products or to create complimentary products to protect the brand and arrest customer attrition. The portfolio company owns all IPs used to build products.

Approach 3: 360 degree partnership — for Engineering Acquisition and GTM

Different engagement models used to partner with service providers

Service providers offer various innovative business models to partner with to drive product acceleration. GCoE collaborate with service providers through one of the following engagement models:

Private equity firms look for those service providers who can:

Joint CoE with private equity firms

To set up joint CoEs with PE firms service providers employ different approaches, such as:

Approach 1: Build to Sell — for Co-engineering or Engineering Acquisition

The portfolio company assigns the client contracts to the service provider and enters into a revenue sharing model. The service provider takes over the product, sell and support customers. The service provider provides R&D, support and product management, as well as drives product roadmap guidance and governance. This approach, like the earlier approach, includes the possibility to reduce the portfolio company’s cost to zero from day one due to re-badging employees.

Approach 2: Build & Sell — for Product Acquisition and Operations Takeover

Approach 3: 360 degree partnership — for Engineering Acquisition and GTM

Approach 1: Build to Sell — for Co-engineering or Engineering Acquisition

Approach 2: Build & Sell — for Product Acquisition and Operations Takeover

The service provider not only co-engineers products along with the portfolio company but is also involved in selling and post-sales support. In selling, along with Sell-to, the service provider engages in the Sell-with and Sell-through model as well. In certain scenarios the service provider also offers white-labelled professional services to portfolio company.

Approach 3: 360 degree partnership — for Engineering Acquisition and GTM

Examples of Service Providers driving Transformation through CoEs, Client Labs & Design Studios

How Service Providers are setting up CoEs, Client Labs & Design Studios to drive Transformation

Source: Zinnov and Persistent. No part of this whitepaper/report may be quoted, reproduced or circulated without the explicit written approval from Zinnov or Persistent.

\ Scale projects quickly to match PE’s investment philosophy \ Accelerate development, shortening time to market \ Deploy product quickly for value creation

To provide scale, accelerated development and quicker deployment, service providers help set up Joint Centres of Excellence (CoE) with portfolio companies as per the below:

Next steps

Private equity offerings

See how Persistent can help you drive transformational value within your portfolio companies

Learn More

Join a leadership roundtable

Register for an upcoming PE leadership virtual roundtable to discuss value creation strategies with other PEs and portfolio companies

Speak with an expert

Schedule a one-on-one discussion with our leaders who can help you identify value levers

Learn More

Global Technology Centers

Software & Hi-Tech

Next steps

Private equity offerings

See how Persistent can help you drive transformational value within your portfolio companies

Learn More

Join a leadership roundtable

Register for an upcoming PE leadership virtual roundtable to discuss value creation strategies with other PEs and portfolio companies

Speak with an expert

Schedule a one-on-one discussion with our leaders who can help you identify value levers