For some time, it seems everywhere you look, companies in or close to the field service software sector are on the acquisition trail. Microsoft's acquisition of field service software company Field One in June was followed in July by the sale of ClickSoftware Technologies to a private investment group, preceded by Oracle’s acquisition of TOA in 2014.
Why the scramble to acquire field service expertise? Well, there seem to be a number of drivers for this round of vendor consolidation, including a seismic shift in the corporate mindset that is seeing service operations transformed from cost centres where the focus is on greater internal efficiencies to one where the KPIs are all about delivering top-in-class customer experience to grow recurring revenue streams. Field service is no longer a silo, but an important cog in the growth of next-generation customer-focused business processes.
Another driver is the relentless advance of cloud computing and cloud platforms for both traditional business activities and mobile operations. The cloud is a great enabler of real-time communications with field workers. Currently, acceptance may be more advanced in North America, but European service organisations are catching up. Service, after all, is now a global business, and Cloud platforms can deliver much of the technology required to lift customer service to that higher level.
Large ERP vendors are seeking new revenue opportunities
Lewis likens consolidation in the field service marketplace to a few years ago when ERP vendors acquired companies with expertise in marketing and social media. "Now they are looking for companies with expertise in field service.”
For Rue Dilhe, Managing Director of Exel Computer Systems, consolidation in field service is inevitable. “There are restricted opportunities for the large ERP vendors to sell new systems in manufacturing. The maturing market has already led to consolidation among ERP vendors. Those that are left are now looking at integrating field service into their systems, a process Exel's development team achieved back in 2008. ”
Neither of these field service specialists view the entry of the large ERP vendors into field service as a threat, more of a recognition that the sector is both maturing and set for a period of high growth. Both are also confident that their experience and understanding of service organisations' processes and requirements and ability to offer end-to-end solutions is what matters to their customers.
For service operations to be a revenue earner requires easy integration between systems, points out Dilhe. “Having been in business for 30 years, first in ERP then in field service, at Exel we know how important integration of processes and the latest technology is if our customers are going to deliver the best possible service to their customers.”
Companies which have a manufacturing division and a service arm want them to work together in future, acknowledges Dilhe. “However, while the need for removal of data silos and real-time connection with field workers are driving demand for greater integration between ERP and field service systems, it is not necessarily as straightforward as might first appear for those vendors looking to integrate products through consolidation."
For Exel, ERP and field service can be provided as a truly "fully integrated" single solution as both have been developed together in-house," he points out. "Those looking to integrated two previously disparate solutions will certainly have their work cut out for them. It’s one reason some companies have run field service software outside of their ERP system, he points out. “Updating and integrating field service software into ERP may not be easy, and implementing on-premise ERP into a mobile field service environment can also be a fraught process. You have to a clear understanding of processes, data flows and so on.”
Large ERP vendors may not have a solution that meets the demands of field service organisations
"Large vendors have to manage multiple products and technical stacks,” points out Lewis, which may make them slower to respond to changing customer requirements, new technical developments and changing business landscapes and demands.
The latest consolidation is the acquisition by Microsoft of FieldOne. Some field service companies will already be familiar with Microsoft Dynamics CRM, but until now it has had little integrated field service support: software has had to be acquired from a Microsoft software partner, one of which was Field One.
Analysts at Gartner believe the deal as a shrewd acquisition choice, and will add add a strong set of integrated field service capabilities to Dynamics CRM, including work order management, scheduling and contract management. FieldOne’s Sky solution is already built on the Dynamics platform, it points out, easing potential integration issues.
Concerns flagged up by Gartner include whether Microsoft will continue to support multiple device OS including Android and iOS and potential channel conflict with independent field service software vendors who are already in the Microsoft ecosystem.
For Oracle, the appeal of its acquisition of TOA Technologies, the US-based provider of cloud-based field service solutions, would seem to be that it expands the ability to provide end-to-end customer service solutions into field service operations, providing visibility throughout the customer relationship lifecycle. TOA's field service suite has been incorporated in the Oracle’s Service Cloud online platform.
The future for ClickSoftware is also seen as part of a larger business suite, following its acquisition by Francisco Partners Management in July when it became a private company. Gartner believes that once is cloud platform is fully developed, ClickSoftware will be sold on to a company with a business application suite with weaknesses in field service management. "The business application suite vendor that ends up without a leading field service optimization capability will be the eventual loser in this scenario, as it will need to buy a second-tier product or develop its own."