ServiceMax Maximize London - service management as a C-Suite business issue...and a matter of life and death

Profile picture for user slauchlan By Stuart Lauchlan October 10, 2019
Summary:
Service management is now a recurring revenue priority for business which opens up new opportunities for ServiceMax.

Barua Epstein
Barua, Epstein

It’s been over six months now since ServiceMax was bought out by private equity firm Silver Lake  and Neil Barua became CEO. In the time since we first spoke to him, it sounds as though he’s become even more conscious of the role the firm plays, citing the comments made by one new customer who declared:

We're gonna do this partnership, but just so you understand, if you don't do this well, people die.

No pressure then. But the point Barua makes, keynoting at ServiceMax’s Maximize London event this week, is well made: the tech that his firm provides to organisations around the globe is essential to the operating capabilities of firms in sectors such as healthcare and pharma. If such companies suffer downtime or outages, it’s serious stuff:

I take that as a real responsibility....it's driving the company and it creates the ability for us to want to work with [customers] very closely to respond to their needs as fast as we can. Because if we don't, this is not just that you don't get your Uber car to show up. People die. And that is a very, very big responsibility.

Despite the weight of that responsibility, Barua gives the impression of having embraced his new role with enthusiasm, telling Maximize delegates:

How are things going? It's, very early days. But it's been seven, eight months and I will say that we have started off our new life at ServiceMax with a bang.  We are very strong so far in terms of customer momentum. We've had in the first half of the year probably be the best first half we've had in multiple years, if not the entitreity of the company since its inception. We've posted the largest deals.

We have a lot to do to innovate to work with (customers) in concert, to lay out the things that we said we were going to do, to do it properly with all of you. We've plenty of wood to chop.  But  I just want to give you a feeling and a view from my board meeting last week, so this is fresh off my mind. The board is thrilled. We have a lot of momentum in the business and our intent is to continue to work with (customers) to drive that even further.

It’s a case of right time, right place, right product, he suggests, with service management becoming a top line boardroom issue:

The world is changing really, really quickly. There are so many things going on in this world that are making our heads spin around.  What could happen with all the geopolitical issues that we laugh about? But they're real. What this means for our business is that there will be a continued need, particularly in service. As you think about recessions, economies, all the trade issues that are popping up, we're seeing cracks  in a lot of places  But then [that means there is] the need for services, recurring revenue, customer experience to be differentiated.

The service piece of companies' business needs a recurring base of revenue profitability, he goes on:

I assure you that every board right now in the world is thinking about what to do on that front. When the board sits in front of the CEO, it  says, ‘How could you during an economic downturn make sure we are buffered by current revenue profitability?’. In almost all cases that is gonna come through service revenue. I will tell you that we are just at the epicentre of this. It is just the beginning of the tsunami coming our way. Your jobs are not going to be [being] the sixth person reporting to an executive committee meeting around how service revenue is going. Service revenue, profitability, customer experience will probably be the next conversation after the CEO gets an update from the CFO - not from the head of sales,  it's going to come through the head of service.

Against that backdrop, Barua had a firm commitment to emphasize to customers - a 100% focus on Field Service Management and no distractions:

We call it maniacal, but it’s a 100%  focus on field service. What does this mean? We as a company don't have a strategic view that we need to do other things. I don't need to go and be an ERP vendor. I don't need to go and do things outside the core of what allows you to get better at serving  your customers.

There's no other software solutions provider in the world that is 100% live, breathe, die and live by the success of field service. We continue to double and triple down in this space. We are going to stay focused on this and we believe that as others diversify their interests, diversify their revenue channels, meaning competitors, the view to stay focused here in doing things the right way, continue to aggressively innovate, is the correct strategy of the business. Don't expect us to introduce a whole new different part of the business. We believe focus is highly important.

Salesforce 

This ‘no changes here’ mantra also applies to another aspect of the ServiceMax strategy in the form of its relationship with Salesforce. The core ServiceMax tech was built on Salesforce’s Force.com platform, but since that happened, the CRM market leader has introduced its own field service offering and most recently purchased ClickSoftware for a hefty $1.35 billion. That would appear to indicate an ambition to take a major share of the field service space for itself to the extent of stretching ‘co-opetition’ to breaking point.

It’s clear that there is scuttlebutt out there about the future of the relationship between the two vendors as Barua took time out to reassure delegates that there’s nothing to see here in terms of competitive tension:

I see  Salesforce as our partner, a deep partner of ours and we'll continue to be a partner. I believe our differentiation is around the experience of feature functionality with complex services, complex equipment.  That will continue to be our focus, that will continue to be where we are today. And their platform is the basis of that. I'd rather spend the time doing things that are higher value to customers than think through how do I make sure I change the platform out or bring you to another company that is not going to be relevant to all of you. It doesn't create value to you.

So I'm going reiterate one thing. First and foremost, Salesforce is a partner I speak to almost every week.  We're excited about the things we're doing… leveraging their platform and the things that we do for their customers that they can't do....there are things they can't do that ServiceMax can do and us working together is the best thing for all of you. So that's our point of view at this current time.  It's a very important relationship for us.I just want to make sure I clear up that noise. It’s sometimes driven by silly sales reps that need to make their quarterly quota. But if you talk about leadership team at Salesforce, they'll reiterate exactly what I said.

Drill down 

Following the keynote, I sat down with Barua to drill down on some of the points he made. We were joined by Chief Marketing Officer Stacey Epstein, who in contrast to ‘new boy’ Barua is now on her second time around with ServiceMax, having been employee 15 when the firm was founded. It was interesting therefore to get her perspective on the Salesforce relationship given that she saw its formation in the first instance. Epstein says:

There's still huge value in having your CRM and your field service or your assets centric service execution management on the same platform. For a  lot of our customers, part of the value proposition to them is that they are a Salesforce CRM customer and we are built on the Force.com platform. Salesforce has built out a field service solution, which is pretty different from what we do. I mean, we don't see them that much. If we stay focused where we're strong and they are where they're strong, we don't see them that much.

She adds:

We almost never saw Click. There is scheduling and Click is high volume scheduling. Some of the verticals where that's a big requirement is where Click has always been strong.Click is FSL (field service logistics). It's [Salesforce’s]  scheduling engine. We're manufacturing, med device, oil and gas, some of these industries where it's big heavy equipment. It's complex process. That's where we're strong.

That said, she does understand where the speculation about the relationship comes from:

But I do think that, when you are seen as competitors then that fear might come into  play. Someone says, ‘Oh, are they going to do to ServiceMax what they've done to Apptus?’. We don't feel that from them. We feel that they're committed to us as we're committed to them. So we want to make sure the customers know that. 

Expanding on his comments about senior management awareness of the importance of service management, Barua points to a big new win with Valmet, a 220 year old Finnish firm which services the pulp, paper and energy sectors, as a case in point:

They've got to deliver $400 billion from zero today in five years of service revenue. It's the second priority of the CEO. That's a big deal, right? I mean, it's a paper, pulp and middle kind of company and they're saying,’We're going to drive $400 billion of service revenue in five years’. And guess what - the underpinning is the ServiceMax platform to actually be able to do that. One of the things I'm actually very pleased and candidly surprised  about after taking this role is the importance of [service]. I think it is becoming more and more recognized. I’m glad to see that because these are the real people that actually do all the hard work and they should be elevated.

The Valmet announcement actually pitches what the firm is buying into as Service Execution Management rather than field service management. It’s a branding thing that CMO Epstein reckons is reflective of how the space has moved on since her first stint at ServiceMax:

Service Execution Management is expanding upon what Field Service Management was. But I definitely think it is a much more known area of the business to focus on today and that's for a few reasons. One is that there is now cloud, there is now mobile, things that in 2009 were non-existent or nascent, that allow you to not have field service be a back office function of scheduling and work orders. Back then, there was no automation happening actually in the field; cloud and mobile brought technology to the field. And that's when Field Service Management really became a thing.

Now we have IOT and we have AR and we have AI. There are so many new technologies where not only is it now in the hands of the technician, but it's in the devices. As you look at Assets-as-a-Service or Uptime-as-a-Service, you can't be successful selling Uptime-as-a-Service if you can't keep the product up and running. And that's so different from ‘I sold you this, see, ya!’. Now it’s,  ‘I sold you something that you can continually drink and that takes service’. So it becomes that a part of their entire strategy as a company.  Technology has been the enabler to allow them to do that.

Barua concurs, citing another end user example to support the notion of how big a role field service now has to play:

There is a very large life science company that's one of our customers. Part of their testing was with their best sales rep in EMEA. The average guy sells about a million dollars of product; this guy sells $4.5 million. They're changing his comp plan to have more service-related items in his numbers.  One comment he made was, ‘Yeah, I'll use this because it allows compliance for the solution, the company. But the thing that I really liked about it was it gave the whole view of the installed base at that customer’. So the uploading of that asset information, where it got maintained, who repaired that and now he's able to sell the service piece of it. He's like, ‘I can charge more maintenance on this one. Look at how many times our guys have been going up to. So I love this, get it deployed quickly’. That allows for the actual business logic of how do you resource service increases within the company.

My take

I first encountered ServiceMax back in 2010 when Epstein and then-CEO Dave Yarnold pitched the firm to me in San Francisco. It’s a company I’ve tracked since then and the ServiceMax on show in London this week is one that bristles with confidence in its purpose. Customers attending the event were happy and enthused and the ‘corporate importance of service’ message is one that resonates. There’s a clear party line on the Salesforce relationship which is articulated without equivocation for now. Things may change over time, depending on the scale of Salesforce’s ambitions here I suspect, but at the moment everyone knows where they are, which is important for customers to share in the vendor’s confidence. With the first six months of Silver Lake ownership complete, we’ll be keeping a close eye on what 2020 holds.