PTC completed its $1.46 billion acquisition of ServiceMax early last month, in what marks the end of a turbulent few years of ownership for the Field Service Management (FSM) giant. ServiceMax has essentially been rebuilt as a business after private equity firm SilverLake Partners managed to spin the company out of GE Digital, which PTC CEO Jim Heppelmann recently said was a “very unhealthy” place for the organization to be.
Following the SilverLake purchase, ServiceMax had planned to go public via a SPAC deal, but this fell through after the IPO market collapsed last year. However, it seems the sequence of events has been serendipitous for the company, given PTC’s long-time interest in ServiceMax’s FSM capabilities. The two companies have had a partnership dating back to 2015 and Heppelmann has long seen the value in the vendor’s products, particularly in terms of how they could add value to PTC’s Product Lifecycle Management (PLM) customers.
Recently Heppelmann spoke about how under PTC, and the company’s recently created Service Lifecycle Management (SLM) division, ServiceMax will be the “anchor system of record” for products in the field. And just last week Heppelmann said that ServiceMax will become the ‘hub’ and PTC’s complementary products the ‘spokes’ for the company’s closed loop PLM offerings.
Given that the deal has now completed, it seems an opportune time to sit down with ServiceMax CEO Neil Barua to discuss what the future looks like for the vendor under its new PTC ownership. What will it mean for ServiceMax customers and the future of FSM?
Barua explains that he’d always been clear with employees that being owned by a private equity company meant ultimately being sold at some point – that there would be a changing of hands. But he’s pleased that the end result is with PTC, given the opportunity with what is possible. Barua says:
PTC has been hanging around the hoop for many years. Jim [Hepplemen, PTC CEO] was an initial investor way back in the day, in the early seed rounds. He was going to participate in the going public, putting some capital into it. It is the right permanent home for ServiceMax. It was a relationship that didn’t come overnight. It’s been happening for more than a decade now.
I spent a long time contemplating whether I would continue on with a new company – and I am now fully in. This is not just a ‘CEO stays on for a little bit and then I tails off to the next opportunity’.
Jim and Mike [DiTullio, PTC President of Digital Thread] have created a separate SLM business unit within PTC that includes ServiceMax, which I am running.
I’m President of that group, but it’s also a collection of the other elements of great PTC technologies, innovations. It’s like literally being a kid in a candy store – because all of the things we that we thought about at ServiceMax, independently, to go and build organically in our roadmap, or maybe even buy, are literally here now for us – AR technology, IoT technology, parts management optimization technology, technical documentation. It’s all here.
Barua reiterates the point that the last few years has been focused on rebuilding the company, having come out of GE, where he says that ServiceMax was not “optimized” in terms of how it thought about its customers, its relationship with Salesforce, or how it treated its employees. He adds:
So it has been four years of really driving forward, doubling the revenue of the business, taking it from very negative free cash flow to positive cash flow, and most importantly, taking our NPS from like zero to 60 as we exited this.
A new era
Barua didn’t want to give too much detail on the planned product announcements or strategy updates that will come in the following weeks and months (most likely at PTC’s LiveWorx event in Boston in May), but he did say that ServiceMax and PTC are thinking through the collective approach to the two companies’ joint customers, specifically what the value proposition is now that they’re one company and have the technologies under one roof.
But the synergy between the two companies’ products is significant. Barua says:
This will take this company into a whole different ball game and a whole new era. What I don’t think people understand, which they will very shortly, is that PTC is extremely prominent in PLM and CAD design. Almost all the Fortune 500 use PTC product software, independent of SLM, and have been designing products for decades. And that data, the 3D models around it, that is built on their software.
When you translate that to all the things that need to be serviced on that product that’s been designed, now underneath this umbrella…we’ve been talking about data and digital thread for a long time and one of the biggest issues of data is the consistency and the quality of that data. Think about it, this is now within our infrastructure, all those data components. And if there’s anyone to solve this for customers, it’s us. It’s really fascinating, which is why I’m continuing on. I think this is a game changer, on many fronts, for many years and decades to come.
Barua and PTC are currently working through the prioritization of all the different integration possibilities. For instance, how does ServiceMax connect into PTC’s AR capabilities, using a work order generated off of the ServiceMax platform? How does it, for example, show Philips Healthcare, a work order with the technical documentation and AR capabilities that actually allows a technician to fix things remotely? These are use cases that customers have been trying to solve on their own, with complex integrations and a number of disjointed products, but now will have the possibility to use under one roof.
However, Barua and the PTC leadership team are very focused on ensuring that they don’t do too much too soon and follow a path that will lead to generating quick value for customers. He says:
I like to say that the ‘say:do ratio’ is very important. So what we’re methodically doing is: what are the near term points of integration where customers gain value right out of the gates, right? And what does the future look like in terms of what we should be working on right now, for next year, three years, four years from now?
We are spending meaningful time with customers ideating on this. We are planning on announcing a lot of those ideas, as well as potential value points, at our LiveWorks event in Boston in May.
Laying the foundations
Barua, whilst excited about the opportunities under PTC, is also very keen to reiterate that there is still lots of work to be done in the field of FSM. This is a sector that includes companies and industries and a workforce that has long been ignored by the possibilities of digital tooling – and ServiceMax is still laying the foundations for future change. Barua says:
It’s really important to understand that most of the field service technicians worldwide that actually service, maintain and fix high value complex assets, still don’t have innovative technologies in their hands.
They don’t have a ServiceMax app that lets them see how to actually fix the asset, how it loops back to entitlements etc. You can’t really skip to the end state without doing the foundational work of getting ServiceMax in the hands of technicians. That’s foundational.
Because once you have that technology as a customer, then you actually have a linkage to: what is the work order that needs AR applied to it? What work order is being triggered by an IoT alarm? And IoT in itself is great, but if it doesn’t have a system of action, some technician gets triggered to actually fix the asset, it’s like useless technology.
So my strong point of view is that we have to make sure we keep deploying and showing the value prop of more field service technician licenses using ServiceMax broadly. Our mission is getting more of those licenses in people’s hands.
And then the Holy Grail, which I don’t want to lose sight of, is how does this now go back to your engineering room? How does all that collection of what’s happening to that asset in the field relate back to: how does the product get built differently by your engineers?
Barua continues the ‘kid in a candy store’ reference and says:
It is very easy to get distracted. I like the analogy of a kid in a candy store. You could get real excited, there’s a lot here, because there’s a lot of meat on the bone. But picking the right places that actually create value for customers; How do we articulate it? How do you show value towards it? Building that momentum is critical, right? So risk number one is: distraction. Too many things are going to overwhelm folks, and us, and our customers.
But the excitement is palpable and very real from Barua, despite his very sensible focus on not running before you can walk. He concludes:
If we get this right, we’ll be writing books about it. Jim [Heppelmann], I think, is one of the top strategists out there, bar none. I didn’t see it around the corner the way he’s seeing it, and if we can now execute behind that strategy, this turns PTC into something wholly different.
We needed PTC. And I think this helps them complete their strategy as well. And from a personal perspective, I needed this – to just allow us now to expand in a way that’s actually really exciting for us and gets me up in the morning in a meaningful way.
I respect ServiceMax’s desire to not go hard on the art of the possible just yet – while it and PTC focus on prioritizing what makes sense for customers now, in terms of integration, within the context of the industries that their customers are working in. But it’s undeniable that this new ‘era’ for ServiceMax and PTC is filled with a lot of possibilities, when you look at the product collection as a whole. And for ServiceMax, this will be a welcome period of focus, where it hasn’t got to worry about its ownership options in the short term. We look forward to LiveWorx in May, when more details of these initial integrations and offerings will be announced.