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Does PTC Acquisition of Servigistics Signal a new Direction for PLM Acquisitions?

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I have been giving a lot of thought to PTC’s entrance into the Service Lifecycle Management (SLM) industry. PTC acquiring Servigistics is not your ordinary PLM company acquisition. Why? Because PTC is not just extending their PLM and engineering software capabilities into the service department, PTC is now supporting the business of service management. Game on!

NOTE: I realize I am not breaking the news on this acquisition, the news has been out for a while. But other than mentioning it on twitter I hadn’t really taken the time to process what this means. Now that I have, I am sharing it here.

The Facts

First, here the facts about the acquisition from the PTC press release. This happened over a month ago, on August 8th. The deal should be closing shortly (I looked and didn’t see an announcement on either site saying it had).

PTC was already serving the service industry, although not as directly as they will be now. In fact, PTC has been talking about “Product and Service Advantage” as the value they offer for some time. Their primary role in supporting service has been helping manufacturers develop service documentation and communicate product details to service techs. That is a valuable function, as I discussed in Better Service Requires Better Product and Service Information. So PTC is not new to the service industry. But as you will here shortly, this is different.

Some SLM Background

For my PLM and engineering friends, here is a bit of background. If you have a solid understanding of SLM, please skip over this. First, let me define what I believe SLM is, and then you can read more in The Service Lifecycle Management Approach: Strong Customer Relationships Result in Profit in the Service Industry, SLM Goes Mobile, or some older reports I wrote on SLM considerations for Medical Devices, HVAC & Controls, Point of Sales, or IT Equipment. To me, SLM is a strategic approach for service-oriented companies to better serve their customers in a holistic way for enhanced profitability.

Another good resource in this area is my old colleague John Carroll and his organization The Service Council.

Why is this Different?

So with that background, why do I think this acquisition is so different than the others that PTC and the other PLM suite vendors have been making over the last several years? This acquisition is not (just) about extending PLM into the service industry. What? Heresy! It doesn’t even appear to be strongly focused on the potential integration points between PLM and SLM, of which there are quite a few. Want an interesting fact? The press release on the acquisition mentions “SLM” 8 times. How many times does it mention PLM? How about none? Surprised? That can’t be an accident, and I believe it is an intentional way of saying “PTC is now a SLM vendor in addition to their other offerings.”

Don’t get me wrong, there are plenty of ways that PLM and SLM can work together. Just think about all of the important synergies around product configuration management over the product lifecycle. In fact, I discussed this topic with Servigistics exec Mark Vigoroso while we were both analysts at Aberdeen Group (he was covering service management and I was covering PLM). And PLM vendors have always had an eye on service. PTC had already started developing solutions for service, as had Siemens PLM. It’s not that there aren’t opportunities there, and I believe PTC will address them over time. But the point is that PTC’s strategy appears to be about expanding to solve adjacent problems for manufacturing companies as opposed to taking existing solutions into new processes. This is not about extensions, these are brand new capabilities.

Implications for the PLM Industry?

Does this signal a change? Is more of the same not enough? I have to believe there is still a lot of growth left in the PLM market, with major vendors growing PLM revenue in double-digits. But is this a way to outgrow the PLM market? Clearly Dassault Systemes has expanded their view toward broader markets with their “3DExperience” and verticalization strategy. At the same time, Siemens PLM promised “more of the same” at their recent analyst event. It will be interesting to see how (and if) the other major vendors respond to this move by PTC. This clearly puts PTC in a market that the other PLM suite providers aren’t in.

Is this a good idea for PTC? On one hand, it breaks from my frequent advice to PLM vendors to stay out of transactional business. Truth be told, though, my point has always been not to take PLM there if you don’t have experience and capabilities, and don’t go there lightly. PTC just bought that experience by acquiring a big enough company with capable enough products to lead the market. In this case, PTC got into SLM by buying a business and not just a product or product blueprint. I expect that will prove to be a successful move. They are not dipping their toes in the water, they are diving in full force.

Implications for Manufacturers

Perhaps this has the biggest implications for Servigistics and PTC customers than other manufacturing and service companies. If you are a PTC customer that can benefit from SLM, you can now purchase SLM from someone you already know. If you are a Servigistics customer that can benefit from PLM, you now have more of a reason to check into PTC. If you just want to continue to run PLM or SLM as you have, no action is required by either customer base. If you want the synergies of PLM and SLM integration, look for PTC to explore and develop those over time. Or better yet, get involved and help them determine where you can get the most value. This is a different kind of acquisition, and we will see based on what happens next if this signals a big change in the industry or just a strategic move by PTC to enter a new, adjacent market to continue to grow.

 

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