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ServiceMax unfazed by Oracle's TOA buy – doesn't expect a call from Benioff

Derek du Preez Profile picture for user ddpreez August 4, 2014
Summary:
ServiceMax's CMO Stacey Epstein says that Oracle's TOA acquisition may disrupt existing relationships between Salesforce and TOA, leaving more room for ServiceMax to grow.

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Warning shots are being fired

Last week we saw Oracle make a strong move to get into the cloud-based field service management space by announcing that it will acquire TOA Technologies for an undisclosed sum.

Stuart Lauchlan said this is likely an attempt to catch up with its best frenemy Salesforce.com, which has successfully used partners building natively on the Salesforce1 platform to expand the capabilities of its Service Cloud.

One of Salesforce's key partners doing exactly this is service field management company ServiceMax. It has been around since 2007 and is built 100% on Salesforce's platform. ServiceMax describes itself as a highly automated, end-to-end application that allows customers to enhance their often shoddy field service management capabilities to contract entitlement, scheduling and optimisation, parts and logistics, social (built on Chatter) and most importantly mobile.

ServiceMax has some big client names that include Coca-Cola and GE, it has been experiencing triple digit growth since it launched and recently raised $71 million in funding to further fuel its expansion plans. But now that Larry Ellison has taken a direct shot at Salesforce with the acquisition of TOA, what does this mean for ServiceMax as a Salesforce partner? Should we expect Marc Benioff to retaliate with a similar acquisition?

The media has certainly suggested that this may be the case. But rather than speculate we thought it best to speak to ServiceMax to get its reaction to the news and what it expects the following months will hold for its customers and the market in general. We spoke to ServiceMax's CMO, Stacey Epstein, who has been with the company since the early days and has extensive knowledge of the industry, having previously headed up SuccessFactor's marketing function.

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Epstein is upbeat about the acquisition news. She told me this will cement the partnership between ServiceMax and Salesforce.com and may have implications for how some of the larger vendors in the CRM space view their dealings with TOA. She said:

For us, it's great. TOA had been making some moves to try and get into the Salesforce eco-system. But I think this will undoubtedly make Salesforce more wary to work with them. You pretty much have to integrate your field service solution to your CRM for case handling, so I also think that it makes any SAP customer more wary to work with them.

I'm sure Oracle will spin that differently, but the fact is that it certainly makes SAP and Salesforce less inclined to want to partner with TOA, which is good for us.

Stacey Epstein, ServiceMax
Stacey Epstein, ServiceMax

Epstein said she views the acquisition as Oracle playing catch up in a market that is increasingly being viewed as up for grabs, with Salesforce/ServiceMax having already made good headway. However, she doesn't think this means that Marc Benioff will feel compelled to come knocking at ServiceMax's doors, as she believes that the company already views ServiceMax as part of its capabilities. She said:

I don't know that [the Oracle buy] signals further consolidation. There's been some articles asking, will Salesforce buy ServiceMax? I certainly can't predict the future and it may be that Salesforce does say, 'yeah we want this as part of our solution'. But the truth is that from the customer viewpoint, we really are part of the solution - we are built on one platform.

If I try to get into Marc Benioff's head, I'd be thinking I don't need this because it's already built on my platform. In some ways I don't know if they need it, they already have it, they have a very strong partner in ServiceMax – the solution is inherently integrated. I don't know what owning us buys them?

It could happen, but I think they already think they have us as part of their suite.

If ServiceMax doesn't necessarily envisage its future as being bought up by Salesforce, what then are its plans? Epstein said that at a conservative estimate, the field service management space (thanks to the proliferation of mobile) is worth upwards of $15 billion. For example, there are at least 5 million field service agents in the US alone that would benefit from enhanced management tools. Epstein said:

I think people have absolutely thought of this as a niche space, but that is because field service solutions, traditionally, were not mobile. The field service technicians were never really using the technology. But now that mobile has arrived and this industry has opened up, I think this is big business.

Our plan is to continue scaling the company, continue to make sure customers are getting live and getting successful as we are growing – growing a company super fast is not always an easy thing to do.

So what about an IPO? Is that in ServiceMax's sights?

That question is always hard to answer, it's certainly not something we are working on in the near term. I would say that we are 18 months to two years out from even starting to think about that process, it's not imminent. I would not say that it's never something that we think about, it certainly is, but right now we are focusing on continuing to grow.

Epstein added that the $71 million in funding that the company raised earlier this year will be largely put towards fuelling sales sand marketing activity, as well as expanding its presence in Asia (ServiceMax recently opened an office in Japan).

On a final note, Epstein highlighted that ServiceMax's customers (and we can only assume Oracle/SAP etc) are recognising that field service management

Cloud service management
isn't necessarily just a play to get customers introducing further efficiencies into their field service processes. Instead, it is increasingly becoming obvious that when field service agents are given the right tools and information, this can also mean boosting revenues. Epstein said:

Interestingly, our customers don't buy from us because they are trying to solve challenges, but more because they see opportunities to grow where they never have before. There's certainly an efficiency and productivity component to this, but I think the growth and revenue opportunities outweigh that.

I think a field-service technician equipped with an iPad can do all kinds of up-selling and cross-selling that they never had the opportunity to do before, because they didn't have the information at their fingertips. It also allows companies to be very sophisticated in how they price their service, because they can track it better.

Coca-Cola, for example, has opened a whole new line of business because of the success that they've had with their ServiceMax implementation. For instance, if you're going to a customer that has a machine that is more than 10 years old, which has broken three times in the last year, with the right tools you can highlight that it has cost them X amount of money and potentially issue them a discount in real-time for a brand new machine - field technicians never had that ability before.

Verdict

It will be interesting to see if the Oracle acquisition does have an impact on the relationships between Salesforce/SAP and TOA, and whether or not this benefits ServiceMax. My instinct says this is very likely for all the reasons Epstein outlines. Equally, there's a host of Oracle buyers there that may have begun looking at Salesforce/ServiceMax and will now find it easier to stick with what they know.

But with the cloud-based field service management market still in the early stages of maturity, there's a lot to play for.

Let the fun begin.

Disclosure: at time of writing, Oracle, Salesforce.com and SAP are premium partners of diginomica. 

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