It’s been a very interesting couple of years for ServiceMax. The company has long touted the benefits of IoT industrial data and servitization, where it’s customers are using data to turn products or assets into utilities. It’s one of the few software companies out there that has been able to put these buzzwords into practice.
As such, we weren’t too surprised when GE Digital snapped ServiceMax up for a whopping £915 million in November 2016. And since then it has arguably remained the jewel in the crown for GE, which has run into some trouble over the past twelve months or so, struggling to convince markets of its value and investments. ServiceMax, however, continues to grow and scale at speed.
We’ve regularly checked in with ServiceMax over the years, where it started to gain traction in the market by selling to OEM manufacturers that wanted to escape the break-fix scenario of field service management and instead move to a predictive maintenance of products. This resulted in customers then using data to sell their products as services (hence, servitization).
Since then, and under the umbrella of GE Digital, given the considerable reach of GE industrial customers, ServiceMax has been able to branch into new markets with the launch of its Asset Service Management (ASM) product, selling to asset operators (e.g. transport companies, oil and gas) seeking more predictive solutions.
However, what holds for ServiceMax in the future? One area of interest is the ‘uberization’ of field service workers and how it could become the ‘network’ between its customers and its agents (but more on that later).
As an update, in the past year Dave Yarnold stepped aside as CEO, with COO Scott Berg, who has been with the company for nine years, taking the top job. We got the chance to sit down with Berg in London last week, where he explained ServiceMax has picked up new customers in transportation (LA’s MetroLink) and in oil and gas (Tecpetrol) following the launch of its ASM product. ASM, for ServiceMax, is about expanding its market opportunity. He said:
In a software company, you’re constantly trying to calculate the total addressable market. One of the things that we’ve been working on hard on this year is to prioritise where we are going next. Where is the market expansion opportunity?
There are two parts to the market opportunity - the OEM space that we’ve always been pretty strong and devoted to. And then this new notion of an asset operator, or asset owner, being another one. And then the whole predictive service, which we have spoken about a lot this year.
Berg said that it’s been an “efficient pivot” in terms of capability from OEM to ASM for ServiceMax, but that there has also been investment in new capability. Berg explained:
For example, there are some big things in there like crew management. OEMs tend to work in a ‘one person go in and do it environment’, and in a ‘break-fix orientation’. If you look at the ASM and these operators, they’re definitely working in teams, managing the crew membership - what set of people and skills are going to go to this? You’ve got longer duration work, so it becomes a bit more like a project plan, rather than an assignment of a work ticket.
Berg said that this has led ServiceMax to consider the workforce planning element, particularly around integrating BI for its customers’ project management. He said:
What our customers now want us to do is help them scenario plan. Do I have enough people to meet the load of what’s likely to happen next October? It’s not something we have today, but it’s something we are working on.
The relationship with GE
As noted above, GE has had a tough year and the markets haven’t responded positively. However, I got the distinct impression from Berg that ServiceMax is utilising the advantages that GE offers in terms of new customer prospects and scale, but is also treading its own path and operating as an individual business unit.
Commenting on the recent performance of GE, Berg said:
Our go-to-market tends to be quite separate from GE as an industrial company, for the most part. We haven’t seen any impact. Our business continues to grow. Employee-wise we are up 50% from a year ago. We’ve continued to expand. I also think when you’re selling to big companies, I think they have a very mature and wise view.
These things happen, they’ve happened to them before...GE will get through this. I think it helps that we are selling to companies of a similar calibre to GE, there’s an understanding, an empathy and a wisdom about it. But the growth that we continue to drive seems somewhat immune from some of the stuff you read in the Wall Street Journal.
Third party service network
Interestingly - and it’s worth noting that this hasn’t materialised in any sort of product as of yet - ServiceMax is considering how it could make a play as a third party services network for its customers. The idea is that its customers, particularly on the OEM side, are making use of new labour market models, where they use contingent labour on an ad-hoc basis to service their clients in the field.
We hear a lot about the ‘Uberization’ of the labour market - but this is exactly the model that ServiceMax believes it could adopt as a new market opportunity. Berg explained:
Increasing amounts of research suggests companies executing field service will increasingly use third parties to deliver against that service. Almost like an Uber-type delivery model. But as a consumer, you want to have a brand experience with that company in how it’s delivered. You don’t really want to know if you’re a badged employer or third party. And you want it to go just as well regardless of who is sent.
It could be ad-hoc on a day to day basis, and the work gets thrown out to be bid on. You could see there are ten jobs in the vicinity, where companies could see who is available to address the workload they’ve got that day.
The big vision for us is - we do a lot of work with our own manufacturers that use third parties, could we do more for those third parties and create a bit of an economy from both sides? Can we do things that better enable our OEM manufacturer to crowdsource or uberize demand planning and supply with third parties?
And can we create solutions that third party service providers would use, that they can readily pull in demand from a range of OEM manufacturers? I think it’s trying to address that market from both sides. We could become the network. Definitely. I think there’s some big opportunity there.
Watch this space...
Finally, I wanted to get a sense from Berg, as the company continues to grow and as it branches into new market areas, what does he anticipate being the main challenges? Namely, Berg is focused on scaling appropriately. He said:
I think that growth, in a way, is success and is also a challenge at the same time. At our size, we have a plan over five years to be five times this size, on a revenue basis. Going from where we are, happy little us, hundreds of customers - to thousands of customers.
That requires a big step up in our efficiency in how we view the market, investing heavily in the marketing side in true targeted account marketing, really understanding down to the name of who those targeted companies are. I think one of our challenges is our growth and how do you go five times where we are? The next horizon is an order of magnitude bigger challenge.