July is normally a quiet period in the world of supply chain technology as vendors and employees wind down from the Q2 quarter-end revenue push, as well as the need to take some summer vacation time. This has not been the case in the service parts planning domain.
In case you missed the July 9th announcement, Marlin Equity Partners acquired Servigistics, a prominent service parts planning and management software provider. This acquisition is an obvious strategic follow-on to Marlin’s previous acquisitions related to Click Commerce.
In May, Marlin announced the acquisition of three operating units of Click Coomerce, which included the Service Network Solutions (SNS) business and Contract Service and Management (CSM) business. The Click SNS business consisted of the aggregation of many former service parts planning providers, the most notable being the former Xelus. Other former names included World Chain and Optum. Marlin also communicated that the CSM business would be integrated with Emptoris, a new equity partnership that Marlin established back in December. Supply Chain Matters has previously commented on the implications of the CSM assimilation within Emptoris.
If your brain is spinning trying to understand all of this, you may not be alone. There has been some interesting commentary being generated in the blogsphere and among industry analysts, and I will add my perspective as well. Bruce Richardson of AMR Research noted in his The Future of Enterprise Software blog that this combination of Servigistics and SNS will bring a stronger vertical industry presence and provides this market with a clear leader. On the other hand, competitor MCA Solutions penned on its Service Matters blog (no relation whatever to Supply Chain Matters) some very thought provoking comments that urge existing customers and prospects to exercise caution. While MCA is obviously protecting its own market interests, it does provide some pragmatic arguments.
There is no doubt in my mind that Marlin’s recent acquisition moves are opportunistic, taking advantage of strategic market opportunities to potentially consolidate the service management planning, services and management software segment. Both Servigistics and SNS have been challenged of late in profitability and sales growth, in a market that provides a rather strong value proposition for investment. Both had initiated staff reductions and expense controls.
A significant evidence point for me supporting opportunism was the fact that in the May announcement, Marlin indicated that Dave Barboro will continue as President of the SNS group, yet in the recent announcement, Eric Hinkle, CEO of Servigistics, will assume the role of CEO, with Barboro assuming the role of Executive Vice-President. One could speculate that these two existing or former chiefs may not necessarily have the same views on future integration of customers, technology platforms, and strategic direction, and this new management team has to “flush out” direction. The presence of Bill Atkinson of marlin in the role of Chairmen of the newly formed company is a critical one to watch.
My view for customers and prospective buyers tends towards caution as well. If you are an existing Servigistics or Click SNS customer, you should be seeking clarity in the overall product integration and development strategy, and what that means to your existing investment This is especially important since the web-native Servigistics platform is different than existing SNS software components, and decisions will have to be made regarding what scope of integration will be supported by the combined group. Since profitability remains an objective, some structural decisions will be forthcoming. I would also recommend you probe on levels of customer maintenance and service support, since its unclear whether this consolidation move is about purely consolidating customer maintenance revenues.
If you are contemplating a near-term investment in service parts planning software, you should step-back and take a second look. The market landscape has clearly changed, and there is a bit more fuzziness related to composition of longer-term players. If you are seeking more specific assistance or counsel, let us know. You can email bferrari at blog1 dot com.