COMMENTS
I think there is a compelling point here about what market leadership is and what it really means. However, there is one clear message that I see with regards to Servigistics/Click recent merger.
I do not see any huge impact in the merger in terms of increased value to their customers. What I see is pretty much different.
They are dressing up the company and plan to sell it to the highest bidder. This would probably happen within 3 years after this merger.
So, in short, will there be more software development? Maybe, maybe not. The small ones can be done but certainly not the big ones.
Will there be some kind of expansion in the organization? Highly unlikely. Merger is the best time to cut cost and get rid of overlapping functions.
So, in short, in the next 12 months, they will attempt to show great improvements in the bottom line and will try and show attractive pipeline and increasing revenue in their install bases, for one single reason.....they are dressing up the company for a possible sale in 3 years time, or maybe earlier.
Servigistics owes many of its former employees money that they didn't even think of paying. How can they be a market leader if they can't even pay and treat their employees right?
I always feel that VC money is like drugs. The first one feels great, but if you are not careful, you get a false sense living 'pain free' as you consume more and more.
The direction of Servigistics vs. Click is quite different. Click became a shopping mall of 'software'- where is the focus?
Servigistics--lots of focus and great command of the services industry--but looks like they depended too much on the VC community. Too bad. Having had lots of experience with PE's who buy 'distressed' companies, I am concerned that the nipping and cutting that will happen will be extreme. Their goal will be to make profit. And in a down market we know what that means.
However, the value of services to business has never been greater. So, my coaching to all the services providers is work on your sales strategies, be creative, and don't slack back on marketing and sales. You need to be there with prospects and opportunities, or you are not a player. Sadly, most efficiency player don’t listen much to the market or understand what makes the real value of a company and cut the esprit de corps, while cutting expenses and we never see the luster come back. Let’s hope for better!
I have penned my own impression of the developments in the service parts planning software segment on my blog, Supply Chain Matters.
I tend to agree that caution is in order.
http://www.theferrarigroup.com/blog1/?p=897
Very interesting. I would like to ad a dimension not covered in the article. That is the frequency with which mergers have nothing to do with expanding capability, but in simply buying a customer base and killing a competitor. The number of completely anti-competitive mergers that are of this type and approved by FTC demonstrates they are derelict in their duty. When Oracle bought Peoplesoft, Larry Elison kept talking about how he planned to kill the Peoplesoft suite, that is until his lawyers began telling him to pipe down as what he was describing was illegal under US anti-trust law. Anti-trust laws were a great accomplishment of the US, and the general public's lack of appreciation for them is quite galling. I would expect to see the combined offering "steamlined" that is a lot of software dropped.
Your point, Tim, is eloquently stated. However, the history of these two companies, and your own, should lead anyone to wonder whether service parts planning is, in fact, a market or simply a function within a larger planning and execution framework.
Both Servigistics and Click Commerce have followed paths to break out of the niche and address a broader problem set that, presumably, brings them more revenue. We can question the tactics but, to me, this strategy is one of only two choices available to each of you. The other is to become an innovative specialist and rely on others to provide the broader infrastructure within which you can operate.
Perhaps, it’s a question of the end-game. Do your (and their) investors want to go all-in and risk losing it all or tread the patient course of a specialist knowing that a big pay-day is unlikely?
Thanks for all of the good feedback. Steve makes some interesting points about the choice of expanding into a broader problem set or to remain a focused innovator.
First of all, since service management in general has unique requirements, most companies have a range of heterogeneous systems to which a planning system must be integrated. Because of the monolithic nature of ERP systems, it is difficult for them to be effective in these heterogeneous environments.
Second, the unique requirements in a space like the aftermarket require continued product improvement and domain knowledge which will come from innovation partners and result in continual improvement of the solution. Extending too far beyond that space means loss of focus, lack of synergy with the extended solutions, and more competition with a broader range of best-of-breeds as well as with the ERP vendors.
By "sticking to your knitting" and expanding functionality in a given space, a vendor remains dedicated to its customers. By 'patiently' continuing to deliver customer value, growth will continue, especially as the weaker competitors lose their focus.
There are 3 issues to point out here. The first is the deliberate misrepresentation of this transaction. One would think from the announcement that 2 companies controlling their destinies came together and formed a new company. This is far from the case. The fact that Bain Capital gave up on Servigistics and sold out and that the deal is actually an acquisition by a lead VC is far from what the headline suggest. Bruce Richardson should fess up and disclose how much Servigistics pays AMR for their "research". This is the misrepresentation and cheerleading by analysts that brought us the dot com bubble. The SEC should review this and take proper action.
Great point Fred, this is gross misrepresentation.
The Servigistics sale is a fire sale and the employees lost all their equity. This is a bed they made. The CEO forced out the very successful VP of Sales because he questioned the company's strategy.
Brought in a face man sales VP who got rid of their top sales guys because they thought he was, well, an empty suit. Then the company tanked just as the equity market dried up.
Now they are dead in the water, joined with Xelus, who you may recall, was sold for $1. (Not a typo---ONE DOLLAR!)
Who would bet their business on these guys?
AMR should be ashamed to make such a ludicrous comment.
While I haven’t been a part of the Servigistics team since last December, I do have a few bits to offer concerning the recent change in ownership which has been referred to as a ‘merger’ in the media. If I were an existing customer of the Servigistics service parts planning tool or a new customer considering an implementation I would have some questions about the company’s continued commitment to service parts planning and the cost/benefit of an implementation. In recent years Servigistics has made some strategic decisions with respect to the parts planning tool that make it considerably more difficult to implement. The most significant being the elimination of ‘trigger based’ analysis to the ‘time phased analysis’ which was brought into the product as an alternative to the early ‘trigger based’ planning. The original parts planning product was strictly ‘trigger based’ (ROP based) and while there is a lot of data (demand history, stock amounts, locations, etc.) it was very straightforward to implement and allowed for a fairly rapid implementation. It was also a very effective method on planning most service parts support environments. The ‘time phased’ planning added a lot of complexity and while needed for some complex planning environments such as aerospace and automotive it was actually overkill for most client’s needs. New clients especially need to evaluate whether they need this additional complexity and the added difficulty of implementation and ongoing support. Existing clients need to get a sense from Servigistics on how the product roadmap will build upon the existing platform and whether the expertise within the remaining Servigistics team is sufficient to support it. The current parts planning tool is quite complex and requires considerable experience and planning savvy to effectively implement. New and existing clients should question the expertise and experience of the remaining Servigistics implementation team members. If my example and the example of the Xelus ‘merger’ are of any value then I expect the experience of the remaining personnel is somewhat lacking. I was concerned during my last couple of years with Servigistics that they were taking their eye of the parts planning side and focusing on expanding the footprint with dispatch and routing in the search for expanded revenue. Several large clients attempting to implement the newer offerings from Servigistics severely strained resources. Couple this with their cost cutting reductions of some experienced service parts planning personnel and you have to question the ability of Servigistics to efficiently implement a very complex product in challenging environments. You probably need to question why Servigistics felt justified in discounting the need for experienced service parts people as a part of their implementation team as well.
It appears that you are all scrambling over about 10 to 20 deals per year equating to about 100 million dollars in total market size (maybe?) for parts planning. Why all the hullabaloo over something so small? Has everyone bumped their head? Of course you all have to consolidate and cut costs. Sell into the installed base. Where else are you going to go? Cannot go deep. Has to be broad. Perhaps Baxter is the smartest of them all...
This blog seems like a support group for people who were let go from Servigistics. I suppose the venting is good therapy and certainly the folks at MCA enjoy reading it. So, I guess everyone wins - except of course the reset of the marketplace. Why so much mud? If you want businesses, consulting firms and analysts to take you seriously, I would suggest a little more maturity. I don't see anything like this on web sites from Baxter or Servigistics? Attacks like the ones in this blog typically make much more of a commentary about the source than the target.
'Clay,' thanks for the note. We have received a lot of responses to this blog, clearly indicating that we hit an area of interest, and in some cases a lot of emotion. Some of the responses supported the MCA point-of-view and others disagreed with it, and we have chosen to display them all. We thought it important to the service parts community that our view be heard given all of the communication from the acquired companies that represented a a different and we felt biased point of view.
Several of the responses were from former Servigistics employees and shared a good bit of unhappiness with their former employer, which is not unusual for companies who have been through some ups and downs. Most respondents have given their real name, and we suspect a small number provided psuedonyms, which is concerning but expected and difficult to know for sure.
As a moderator in for what for us is a new social medium it is a hard call as to whether we should allow all comments, and we will continue to do so for now. We believe strongly in what we said and think that others should have an opportunity to state their point of view as well, and we respect the intelligence of our readers to read and judge for themselves what is valid.
Why all the hype about a merger of a failing company? Why is Servigistics trying to mislead the industry? Look, this is a tiny market and they just did not make it. Neither did Xelus. Now both are acquired by a firm who advertises on their site that they buy troubled companies.
So it's over. Deal with it. ORACLE and SAP both have made their calls and they are now dominating the industry.
I just do not understand why Servigistics is trying to mislead people that this is a "good thing." Everyone knows what happened---they failed and now they are in a scrap heap. Just be honest and people will respect you more
The so called merger of Servigistics and Click Commerce creates an interesting opportunity. While both companies are accused of being in a distressed financial condition, I believe their product portfolios have unrealized value to the marketplace. Both companies offer broad functionality beyond simply parts planning. We see this as a key to survival in the Service Management Systems market. Time and time again, we’ve seen a trend toward software vendors expanding their system functionality vis-à-vis acquisition, strategic alliance, or organic development.
A deep dive into Servigistics and Click Commerce’s software functionality shows that their respective solutions portfolios are targeted to different ends of the Service Market. We see Servigistics as a field service oriented resource planning application (e.g., parts, people, pricing, etc.) whereas Click Commerce offers a full suite of applications targeted to the Aftermarket & Reverse Logistics Supply Chain market. The field service market is about optimizing SLA performance levels whereas the Aftermarket Supply Chain market is about visibility and velocity.
Clearly, the issue is for Servigistics and Click Commerce has always been over market execution. Despite broad functionality, neither company has been effective in selling a total integrated solution to their respective customer base. Most customers own a limited number of applications as opposed to the full suite. Furthermore, their software applications are complex and costly to implement. This makes it difficult to sell against ERP vendors who claim to offer a single source solution and point solution vendors who can divide and conquer the customer and win customer accounts on the basis of a best of breed comparison.
There is an opportunity for Click and Servigistics to bring the applications together and create fully integrated, end to end, closed loop solution that meets the needs of both field service and reverse logistics supply chain market participations. We suspect that this is the end game for Marlin Equity but it will only happen after a lot of cost cutting, re-staffing, re-tooling, and repositioning. The real question is how much time, effort, and cost will this require.
Many people believe the market for Spare Parts Planning is limited and doesn’t deserve so much attention. Our research suggests a contrary view. The market seems limited because most software vendors are only concentrating on large deals within a limited number of market segments. The demand for Service Parts Optimization is extremely large when one considers the vast array of manufacturers, resellers, distributors, and service providers in a wide array of market segments with spare parts planning requirements. The problem is one of supply of affordable and easy to implement applications targeted to small and medium size businesses. On-Demand based solutions are one way to bridge this gap which is something we’ve also noticed lacking from Servigistics and Click Commerce’s product portfolios.
I'm glad that mca holds the truth as a priority. Given that and the fact that mca was replaced by Click/Servigistics, when will the logo and quote come down from your website?
Servigistics seems to be the one with a truth problem. Perhaps they want to face up to the fact that they totally screwed up the service parts market---going from top in the field to the graveyard of dead zone software firms.
Perhaps they want to admit to their customers that their investments made in Servigistics, in good faith, were squandered on stupid hiring and failed sales plans.
Perhaps Servigistics wants to tell the world how they were "replaced" at a major auto manufacturer in Sweden because they could not get the product to work.
And while they are at it, maybe Servigistics wants to fess up to the fact that they have lost all the equity for hundreds of employees---many of whom are now interviewing with other firms---because they were so arrogant that they thought they could succeed with B players and preposterous marketing claims.
The great thing about capitalism is that hubris does indeed precede the fall---and fall they did.
Just a shame that their customers and employees have to suffer because Servigistics has a brain dead management team.
When you say service parts market? You mean the tiny baby pool of a market that is service parts? The shallow end of the software pool? Ok. And that was screwed up by Servigistics? Ok. Right. Got it.
Market Size is all relative. We have completed extensive market research on the size and structure of the market for Service Parts Management (SPM) Systems. This is a global market. In the U.S. & Europe the combined market is approximately $1.2B. Service Parts Planning tools become a feasible option for companies with 100 or more Field Service Engineers over which there are approximately 7,000 in the United States. The tools become an optimal solution for companies with more than 250 Field Service Engineers. There are almost 1500 of these in the U.S. Given these data points, we feel justified in asserting that the SPM market opportunity is significant.
The issue for Servigistics was about execution. First, they spent a large amount of money with analysts and on marketing communications. Second, they expanded their product portfolio to include field service scheduling and part pricing application. However, they marketed these products to service parts logistics managers who weren't necessarily the right buyers for these products. Third, Servigistics built a parts pricing market research and consulting group to support users of the parts pricing product which resulted in more costs. Lastly, Servigistics continued to sell their products to the same group of market participants, year after year. Rather than create new demand and expand their visibility to new users and market segments they continued to market the same message to the same audience. In essence, Servigistics was focus on demand fulfillment not demand creation. More importantly, they assumed the market had full knowledge of service parts management issues and that everyone needed a solution. The reality is that only a small percentage of individuals in an OEM fully understand the complexity of parts planning and forecasting, and a smaller number know how to make a business case to invest in new software to perform this function. So on one hand, Servigistics over-estimated the demand for their applications but on the other hand only marketed to a small segment of the market which was not necessarily the correct segment to market some of their applications to.
Is MCA really in much better shape? With a small customer base, a front end that sucks?
Robert, I did want to respond to your note. I'm pleased to say that MCA is in good shape, with a very happy & growing customer base, and we have been successful enough that our employees maintain control of the company rather than VC's. We have always been known for a better planning engine, and while our front end never "sucked" in the early days it was certainly not a strength. In 2006 we had a complete redo of our front end and workflow and have since then have received consistent feedback that its the best in the market, and that has been reflected in our win rate.
We like the service parts planning market and see significant opportunities for continued growth as long as we continue to generate customer value and innovate.
Tim
haha. Tim - I could sure use some of that koolaid splashing around over there at mca hq. Does management not fill you in on the reality of what's happening at mca? In any case, newsflash - Longworth and Battery are VCs. And stock options do not equal ownership. haha.
And a happy Labor Day weekend to you "Robert Brown!" You clearly have some misguided information about MCA, and I will clear it with a brief response. I'm at 617.823.0664, andreae@mcasolutions.com if you want to discuss - I think its important that accurate information is out there, and although I think we've done enough coverage of this subject, I'm interested in your feedback.
MCA senior management has been transparent to its employees on company direction and financial status, which, has been a significant contributor to very low employee turnover relative to our competition. We have a tremendous board which includes seasoned software executives, and as you note, we have two leading venture capitalists, Battery Ventures, and Longworth Venture Partners, as investors.
While our VC investors are actively involved in working with our team on both tactics and long term strategy, the founders and employees have a controlling interest in the company. This means that every decision made by our management team takes into consideration the long term impact to our employees and customers which makes us a good bit different in approach than companies that have been controlled by their external investors.