The service management solutions marketplace may be up for grabs. Who is the natural owner of this market? And who can make it finally take off?
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On October 2, 2012, PTC acquired Servigistics1 (see Wheelers and Dealers in the Supply Chain Market). Those who have not been following the evolution of PTC over the past decade may ask, “Why is a CAD/PLM company buying a service company?” For me it brought up a broader question: what is the ‘natural home’ for the service function within the universe of solution providers and enterprise systems? Let’s look at some of the potential answers.
Service Is About the Product
PTC has a deep heritage in engineering design tools (e.g. CAD/CAM) and Product Lifecycle Management, managing product data from the design phase all the way through to production. The service solutions market does look like a natural extension for them, since so much of service is about the product. It is so important to have the correct, up-to-date specs, drawings, parts lists, and maintenance and repair procedures documentation (all that product data that PTC’s solutions create and manage) in order to efficiently and correctly perform service and repair. This is especially true for products where repair or maintenance procedures are potentially different for each different configuration or version. The broad adoption of mass customization, build-to-order, and increasing amounts of embedded technology makes this applicable to more products every year.
Service Is About the Logistics and Execution
But service is also about logistics and resource coordination; scheduling and dispatching service trucks and technicians in a way that optimizes resources within the service performance parameters of customer agreements. Companies like Descartes, Airclic, and others have extensive capabilities such as AVL (automatic vehicle location), dispatching, mobile workforce management, automated customer callback, navigation, data capture and proof-of-delivery or proof-of-service, reverse logistics, and so forth. A modern service provider needs these to operate efficiently, reliably, and competitively.
Service Is About the Supply Chain (for the Parts)
Service is also about planning and managing the materials—the service parts supply chain. What good is it if you have the service technicians and trucks and tools, but not the specific parts that are needed to fix the customer's problems? Some companies will throw lots of inventory at this problem (very expensive … and not necessarily that effective). Others try to control costs by keeping less inventory and just living with the resulting lower service levels and delays for the customer—not a great strategy for long-term growth. More progressive companies will do multi-echelon inventory optimization (using solutions from companies such as Logility, ToolsGroup, Adexa, Manhattan, JDA, PTC, and others) to ensure that the optimal amounts of the right parts are in the needed locations. For those lacking the resources or expertise to do this optimization and planning, there are managed service companies, such as Entercoms, that will do the heavy-lifting data management, planning, and optimization for you.
Service Is About the Face to the Customer
And finally, it is about the customer’s experience of the service you provide—how they are interacting with your company (how they request, diagnose, schedule, check status, and pay for service). These interactions happen over the phone, the web, and in person. The systems to manage all this, then, tend to be part of CRM, call center, and e-commerce systems, such as those from NetSuite and others.
There are, of course, other service-specific solution areas, such as warranty/contract management, depot management, and service knowledge management.
Unifying the Fragmentation
Like many complex enterprise solution markets, service has many different facets. As such, the market has tended to be fragmented among small best-of-breed service solution providers, with broad suite players weighing in with solutions in the various segments we’ve touched on—PLM, logistics, supply chain, and CRM. Any one of those broader suite players could have stepped up to the plate and extended their offering to more of a total suite for service. But they didn’t.2
This market has yet to really take off. As a result, there has been a fair amount of consolidation among struggling best-of-breed players. Through various acquisitions, Servigistics has assembled perhaps the most complete platform out there—covering all of the areas described above. With its acquisition of Servigistics, PTC is the one major player that has taken the plunge and decided to get serious—making it the biggest player in the service solutions sector, from a revenue and footprint point of view. There are a very few other smaller firms that have a broad footprint, such as Astea,3 that could give PTC a run for their money. But for now the big player is PTC. So, is this the time the service solution market will really grow into something substantial? There are signs that firms are recognizing the critical role service plays in driving margins and customer perceptions, such as the emergence of the Chief Service Officer function in the C-Suite. So, maybe the time is right. And just maybe it will be PTC that ‘owns service.’ Time will tell.
1 PTC told us that the Servigistics acquisition is the culmination of a strategy, driven by customer requests starting over a decade ago. In 2005, PTC acquired Arbortext technical publishing software, which creates configuration-specific technical documentation, such as how to operate, maintain, and repair a specific configured piece of equipment. PTC continued to build out service-related technology and in 2011 acquired 4CS for warranty management. -- Return to article text above 2 To be fair, Oracle has made efforts to pull together many of the pieces of service. It also acquired pieces, such as call center and warranty management from Seibel and JDE’s EnterpriseOne Service Management. But it has yet to find the right combination to make a substantial market. -- Return to article text above 3 And to a lesser extent ServiceMax
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