When GE Digital bought ServiceMax in 2016 for almost $1 billion, it appeared to herald a new era of integration for asset performance management and predictive analytics. GE was expected to fold ServiceMax's field service management products into its Predix industrial IoT platform to enable a predictive maintenance model, reducing costs and downtime.
However, the integration never took off as planned. Instead, in the wake of GE's current struggle, ServiceMax was sold to Silver Lake, a private equity firm that focuses on technology companies. The deal was announced in December 2018 and closed in February 2019 for undisclosed terms, with GE Digital retaining a 10% ownership stake.
After the deal closed, we spoke with Scott Berg, ServiceMax CEO. He talked about what the deal means for the future of ServiceMax, as well as its integration with GE's Predix and other industrial IoT (IIoT) platforms.
GE Digital is retaining a 10% stake in ServiceMax after the sale to Silver Lake. What will be the nature of its involvement going forward?
Scott Berg: [GE Digital] is still interested in the strategic opportunities for ServiceMax and wants to be part of the growth. We also established a formal reseller partnership as part of the deal so that GE Digital and the GE industrial business units will continue to be ServiceMax resellers.
ServiceMax's products were integrated into GE Digital's Predix IIoT platform, but it doesn't seem to have worked as well as intended. Will this integration continue?
Berg: In the two years ServiceMax was in GE Digital, there were some things that turned out like we thought, some better than we thought and some things that didn't play out. One of the things that played out strongly was the integration between GE's asset performance management [and] this whole notion of predictive maintenance and using IoT in a predictive form to drive service execution. That particular integration is one we're going to continue to invest in. Beyond that, there didn't prove to be a lot of other synergies for things like manufacturing automation. So, we have a digital portfolio, but the APM link is a big differentiator for us.
Does the move away from GE Digital free up ServiceMax to integrate with other IIoT platforms?
Berg: Yes, I think that the APM link, in particular, is still going to be unique in the market. I don't think anyone is really doing predictive service strategies, but we've had a good history going back three years with what we called a connected service platform, and we worked with platforms like PTC and Microsoft Azure and others.
How does ServiceMax fit into manufacturing trends like servitization or selling outcomes as a service?
Berg: It's still a strong play. One of the things that you'll see from us is a lot more focus on what we call a service execution platform. Field service has evolved quite a bit from a technician scheduling application to IoT and automation. And one other big thing we see is the way service is being delivered is changing rapidly. A growing number of manufacturers are working with third parties for service delivery and service execution, so that's an area that we're investing in. The product is a kind of service marketplace idea that embraces not only the automation of employed service technicians for a manufacturer, but also third-party networks and dealer and distributor systems out there that are part of the service delivery food chain.
How will being divested from GE Digital free ServiceMax to pursue other market opportunities?
Berg: There are a couple things. First, the best of the GE experience over the last two years is in the relationships we have, particularly in the power and utility and oil and gas spaces. We launched our asset service management product that works really well for asset operator industries like those two. So, that's one big thing. The other big thing for us is that we learned that our roots and strength and the growth opportunity in this market [are] around OEMs that offer service programs and that are going through that servitization transformation. That was a little bit of a departure from GE's broader industrial market mindset, so I think this move frees us up to go after that OEM market in a much stronger way.
GE invested pretty heavily in ServiceMax in the past two years; can you take advantage of those investments as you pursue new markets?
Berg: Absolutely. I often remind people internally that we basically doubled our R&D investments over the last two years. Those weren't things that we could have afforded to do as a stand-alone venture-funded startup. Out of that came the integration with our asset service management product, some new mobile application platform technology and some other things that will be coming out. So, that's been one of the benefits, and we'll continue that level of investment long term from Silver Lake to fund that business model.
How has your existing customer base reacted to the deal?
Berg: Relationships should continue as they have been. We talked to every customer that wanted to be spoken to, and I think, at first, they were a little anxious about what this means and what's going to happen. But many soon expressed their relief that we aren't owned by an industrial company that, in many cases, might have been a competitor.