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Is there a model that describes the different strategies that a company may use where the organisation is split into an engineering division and a professional services division?

This is the sort of model that is followed by companies like Microsoft, whereby Engineering (or R&D) produce the core software, and professional services can then help clients implement that software.

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I've added this question here: area51.stackexchange.com/proposals/62281/strategy/62284#62284 –  SHC Nov 27 '13 at 12:18
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1 Answer

up vote 2 down vote accepted

I don't know that there is a specific name for that "model", but it's a reasonably common approach. In addition to Microsoft (your example), AT&T*, HP, IBM, and quite a few others follow the same approach. Even Dell and others are starting to embrace this approach.

The reasons should be fairly obvious.

R&D activities need to be run in a different manner than a typical profit / loss model. R&D is explicitly for activities that may never pan out. The corporation may push the R&D towards more likely to be practical / applicable efforts, but there isn't a guarantee that a product will result. As an example, IBM used to heavily fund basic research. As of the mid-2000's, researchers were encouraged to focus on aspects that were more likely to be applicable to market needs.

Services divisions are a typical example of a normal profit / loss model. A Services division can measure utilization rates, profit margins (or losses), service backlogs, etc... All of which are in alignment with selling a product (a service).

*I'm not certain about AT&T having a separate R&D division anymore, but they certainly used to.

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thanks for the response. I'm interested in the different approaches for the interaction between R&D and Professional Services. For example, is it ok for R&D deliver unfinished software components that R&D finish? When would this work? When wouldn't it work? I think I need to post this as a new question... –  SHC Feb 19 '13 at 15:44
@user1502048 - yes, that would be a separate question. Short answer to the new questions: R&D frequently (<hyperbole> always!!! </hyperbole>) delivers not-quite-ready for production code, but that's the nature of their work. Services folk are in the field making things production ready and aren't as good at finding new things. R&D is finding new things but isn't so great at making production ready. –  GlenH7 Feb 19 '13 at 16:40
I think I have confused Engineering with R&D. Using the example of Microsoft: Microsoft R&D should produce the conceptual product. Microsoft Engineering should make production quality products. Microsoft Professional Services should help clients implement the product? –  SHC Feb 19 '13 at 17:01
@user1502048 - I'm not as familiar with MS's organization, but what you described sounds accurate, yes. –  GlenH7 Feb 19 '13 at 18:28
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