ServiceMax, Managing Service Teams in the Cloud, Lands $71 Million
We’ve all been there. A household appliance — a refrigerator, say — breaks down, and when the repair guy shows up to diagnose the problem, he realizes he doesn’t have a needed replacement part.
It’s a textbook moment that goes straight to the heart of any industry where there’s equipment to maintain and repair, install or replace and legions of service technicians roaming the streets in white vans: Heating and air conditioning systems, cars and trucks, aircraft, or any kind of industrial gear.
Managing these crews and making sure they have the right information for every job is known as field service management. And most of the time the software that companies use to handle it is a mess of home-grown combinations that rarely work as expected. It’s no wonder a tech often shows up to the scene of a job with less-than-complete information, and therefore not all the parts he might need.
I had an interesting meeting last week with ServiceMax, a company that has built a cloud-based application that companies use to manage this complex but necessary bit of industrial ballet. Business is growing, and ServiceMax is headed in the direction of an IPO probably next year.
Today it announced a $71 million Series E round of venture capital funding. Meritech Capital led the round with Kleiner Perkins participating as a new investor. Three other new investors also contributed to the round: Cross Creek Advisors, QuestMark Partners and Sozo Ventures. Prior investors include Emergence Capital Partners, Mayfield Fund, Trinity Ventures, Crosslink Capital and Adams Street Partners.
The round brings ServiceMax’s total raised capital to $120 million.
Another existing investor is Salesforce.com, and the connections between the two companies are deeper than financial. ServiceMax is built entirely on Salesforce’s Force.com platform. ServiceMax CEO Dave Yarnold describes it as a “Force.com native app.”
That makes it easy for companies that manage fleets of service techs to tie that data closely with the data it stores on their customers. And chances are, they store that customer data in Salesforce.com, the cloud software company whose ticker symbol is CRM, as in “customer relationship management.”
Yarnold said that even though ServiceMax is built on the Saleforce platform, it works with other CRM software, including that from SAP and Oracle. And it also ties up easily with another major business application, Enterprise Resource Management, which in English is the software companies use to plan the operational side of their businesses.
ServiceMax has 300 customers including GE, Coca Cola, Tyco and Medtronic. It added 100 of those last year.
The market opportunity is surprisingly large. There are maybe 5 million field technicians in the U.S. alone, and many more than that around the world. Yarnold pegs the total market opportunity at $15 billion mainly because there are so many industries with equipment to maintain. ServiceMax has customers who take care of medical equipment, heavy equipment, oil and gas infrastructure, forklifts, elevators. You get the idea.
And here’s where this gets even more interesting. Companies are increasingly treating service calls not as a cost-creator but a revenue-generating relationship. Yes, there are ongoing service and maintenance fees. But sometimes service techs are the front line of a sales relationship.
“Who else but the guy who shows up to fix your air conditioner is going to have the opportunity to sell you a better one?” Yarnold told me. ServiceMax customers, on average, report a 22 percent boost in service-related revenue and a 14 percent reduction in their service-related costs, he says. The company also claims they increased their rates of fixing something on the first visit by 19 percent, and decreased the time it took to fix things by 19 percent.
Yarnold is a veteran cloud software executive. His last gig was as head of global sales at SuccessFactors, the cloud-based software company that specializes in human resources software, and which became part of the German giant SAP in a $3.4 billion acquisition in 2011.