Microsoft moves its tanks closer to the front in the service management wars

We’ve been predicting the field service management wars at diginomica for some time now.  Last year Oracle fired off an opening salvo with the acquisition of TOA Technologies.

Yesterday Microsoft moved its tanks closer to the front with the purchase of FieldOne, a 53-strong New Jersey-headquartered provider of cloud-based field service applications.

FieldOne's Sky platform provides field-service workers with work order management, automated scheduling, asset contract, inventory and procurement management, workflow capabilities and mobile collaboration.

FieldOne’s offerings will be added to the Microsoft Dynamics CRM business, explained Bob Stutz, corporate vice president at Microsoft Dynamics CRM, in a blog post:

FieldOne is a great fit for Dynamics CRM adding to our extensive customer service capabilities – which includes chat, knowledge management and self-service functionality from Parature which we acquired in January of 2014.  Like Parature, FieldOne is offered to customers as a cloud service. It’s built on Microsoft technology for fast integration, it already works great with other Microsoft productivity offerings like Office 365 and SharePoint, and has cross-platform capabilities meaning it can work on different devices enhancing the mobile experience which is so critically important in field service management. FieldOne was built from the ground up to leverage Dynamics CRM, and this means that our customers can take advantage of its capabilities right away.

Having field service functionality is critically important for modern customer service, he added:

This is a unique, and transformational point in time for these solutions as enterprises look to improve their responsiveness to customers with service in the field – taking service directly to the customer anytime a service cannot be managed by phone or other channels.

In this critical area, FieldOne really stands out. They have the baseline functionality that organizations need to drive a more effective field service operation. They are a leading provider of end-to-end solutions that enable businesses to drive revenue, reduce costs and deliver great customer service.

Their industry-leading solution specializes in delivering a full set of capabilities that include work order management, automated scheduling, asset contract, inventory and procurement management, workflow capabilities and mobile collaboration – providing enterprises with a comprehensive modern field service solution. This gives companies the ability to do things such as adjusting routing on the fly and delivering service arrival estimate times within a smaller window, which is essential for more personal customer engagement.

Expanding service management

The acquisition is indicative of the growing appreciation of the importance of service management to the enterprise beyond the traditional IT service management (ITSM) definition of the past.

Adam Holtby, IT infrastructure solutions analyst with Ovum, notes:

Adopting an enterprise service management solution to build an integrated technology layer across various business units benefits an organization in many ways. For example, work and activities become more transparent, better defined, and more effectively automated and reported upon.

The opportunity is evident, but capitalizing on it represents a key challenge for vendors offering enterprise service management solutions. In Ovum’s experience, the greatest challenge lies in communicating the value proposition to a broader market. Many executives in the wider business still perceive ITSM solutions as tools to support break/fix and request fulfillment. The ways in which ITSM solutions have evolved, and the wider value they can now deliver, need to be better communicated by vendors.

At present, this message is often conveyed to the wider organization by IT, and although this approach is fine, it will be important for vendors to market their value proposition directly to the broader enterprise, focusing on the business benefits.

That’s underway, according to Dave Yarnold, CEO at ServiceMax, who says:

For years, we’ve been touting that this is one of the largest untapped enterprise software markets.  There are more than 20 million field service professionals around the world, and the impact they’re having on their companies and the global economy is profound.  Additionally, of late we have seen an increased sense of urgency within our customer base asking us for help in dealing with the growing move toward smart connected products (IoT), and a fundamental shift to an outcome-based business model based upon a combination of services and products. Field service systems are a key component in both of those movements.

This latest move by Microsoft is further validation of the potential of the service management market, he adds:

The global Field Service market has huge potential, is poised for growth, and is applicable to all vertical service industries and businesses of any size. We’ve now seen Oracle and Microsoft make acquisitions in this market.  Given the size of the opportunity, my take is that every significant enterprise player will soon need to have a well-defined approach to this very strategic market.

Inevitably with Oracle and Microsoft now having made acquisitions to bolster the service management capabilities of their CRM and customer service offerings, attention will fall on the independent players in the market, such as ServiceMax and ServiceNow. Will the likes of Salesforce emulate Oracle and Microsoft in this space in the same acquisitive way that the three have played tit-for-tat in the marketing cloud business?

My take

My colleague Phil Wainewright recently questioned Microsoft’s intentions for Dynamics. His view was that there were two options - sell it off or make acquisitions to bolster it. It looks like it’s the latter.

Coming on top of those merger discussions with Salesforce earlier in the year (which we hear didn’t come to fruition due to the asking price), Microsoft’s in a mood to beef up its CRM reach.

Away from that, it’s another sign of the service management market being a very lucrative sweet spot right now. If Yarnold is right about every enterprise player needing to get its field service story straight, the independent players which have put in the hours to build a brand and a footprint in this market are very well placed.

Disclosure - at time of writing, Oracle and Salesforce are premier partners of diginomica.