2009 Articles
July 07, 2009
Merger Shakes Up Service Management Space
Managing Automation
A complicated but calculated series of mergers and acquisitions resulted today in a significant shakeup in the post-sales service market, as pioneer software providers Servigistics and Click Commerce are now a single entity operating under the Servigistics name.
Behind the maneuvering is the private equity firm Marlin Capital, which announced in mid-May that it had bought three business divisions of Click Commerce. Marlin quickly nested Click's Contract Service and Management unit within Emptoris, another Marlin property. Marlin then stealthily acquired Servigistics, and today announced that it had joined the service pioneer with Click's Service Networks Solutions business, forming a technology provider covering "all aspects of the post-sale service process," according to a statement. Marlin did not disclose dollar amounts for any of the transactions.
Officials who briefed Managing Automation on the deal painted the tie-up as a merger of equals and said the respective product sets are highly complementary.
"I think the expectation of [our] product folks was that there would be a lot of overlap" between the two portfolios, said Gary Brooks, Servigistics' EVP of worldwide marketing and alliances. "But they came back at the end of the day ... and we were pleased to find that overlap was much less than we anticipated."
He attributed that to the companies' divergent development efforts early on. As Servigistics built out applications for service parts management, workforce management, parts pricing, and knowledge management, Click focused on execution, including returns & repairs, parts sourcing, and contract & warranty management.
"When you look at all of the solutions together, it really enables us to solve about 85% of the solution problems you typically see in a post-sales service business, with the exception of asset and MRO," Brooks said. He added that the company would "head in that direction over time," but he was mum on whether such a buildout would be fueled by another acquisition or internal development efforts.
Bruce Richardson, chief research officer at AMR Research, weighed in on the merger in a statement, saying, "The combination of Click Commerce SNS and Servigistics brings together the pioneer in service parts planning with the leader in strategic service management ... Together the two will be a strong force in the emerging opportunities in life sciences, consumer goods, retail, and logistics."
The combined company is now focused on creating a merged suite of products. Brooks said officials are showing clients a high-level roadmap, but that the goal over the coming weeks and months is to create a best-of-both-worlds platform that rationalizes any overlapping functionality and offers a single user interface.
The newly combined customer base stands at 240 customers, most of them manufacturers. Brooks said Click's extensive footprint in aerospace and defense and Servigistics' strong presence in motor vehicles - a catchall for anything made with an internal combustion engine - should play well off each other.
Asked whether the providers had ever considered each other as M&A prospects in the past, Brooks said they had. "To be honest, Click ... was always on the list. But I think both companies needed an aggressive financial partner to really make this merger take place."
Enter Marlin Equity, which is no stranger to managing technology companies, having amassed a portfolio of investments that includes mid-tier ERP provider Solarsoft, supplier contract management specialist Emptoris, and ERP purveyor VantagePoint Systems, focused in the packaging industry. In 2006, Marlin sold its stakes in Intuitive and Relevant, both niche ERP providers, to ERP provider Made2Manage.
Jamie Natti, Click's vice president of business development and alliances, said the Marlin team was growth-minded in its pitch. "When they presented themselves to us, they talked about not being a rollup and that they really do look at themselves and position themselves [for] the growth market."
Brooks added, "I don't think they're the typical ‘buy them, chop them up, milk the maintenance stream' " investment company.
This latest consolidation leaves a fragmented market of service management providers, from specialists such as Astea International, ClickSoftware Technologies, Metrix, ServiceBench, and ServicePower, to enterprise software juggernauts such as Infor, Oracle, and SAP.
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