It has been a year of rapid change in the systems market for the service industry and some of the effects of this have shown up in the Service Management survey.

This web-based survey was conducted in August among Service Management readers and visitors to Service Management 365.  It sought to look at people's attitudes and buying intentions over the coming months.  And what it revealed seems to say a good deal about the way the service operation is regarded by its organisation.  We put some of the findings to leading vendors of these systems and asked for their experienced observations. 

It is perhaps one of the most persistently surprising features of the field service industry that, despite their experience and domain expertise, the vendors of the many purpose built specialist service management software systems are eschewed by the industry.   According to our research only 24% of the respondents used best of breed software.  Most of the others either use mainly a home-developed system or a bespoke development although some service departments used a module from a larger suite.

As a seasoned campaigner in the industry, Mike Rand, sales and marketing director of Hamilton Hall observes these figures 'have stayed about the same for all the time I have been selling systems'.   But that doesn't address the underlying point - why?  Why don't service companies turn to the specialists more often - is it because they are failing to deliver what the industry needs?

'Many companies having developed solutions prefer the control they have in being able to do their own changes,' he says.  He thinks it is a matter of specialisation. 'Where service is key to the business, most of those companies have gone for Best of Breed and are not prepared to accept second best.'

The unusual feature of the Service Management reader base that made up this sample is the breadth of industries from which they come.   So perhaps it is unreasonable to lump it together and expect software suppliers as a group to match the special needs and features of different service businesses.  James Rogers marketing manager at Vixensoft says: 'It is a misnomer to describe field services as an “industry”. There are common threads of operation, but the diversity of businesses employing operatives who work in the field renders any generic classification inappropriate.   For many companies it is essential that the solution they adopt addresses the individual needs of their industry and their business practices. To avoid disappointment, those shopping for a solution need to think more Saville Row than M&S, if they are to find a suitable fit.'

This reflects the purchasing habits of companies that do not put service high up the priority agenda says Derek Crumpton at scheduling software specialist ServicePower.  'IT led solution selections often focus on company wide requirements rather than the specific needs of the service operation,’ he says. ‘As a result ERP (enterprise resource planning) solutions have often been selected to satisfy the requirements of sales, accounting and corporate consistency. Few ERP systems are bought because of their service modules and hence these are not the most functionally rich elements within an ERP solution.'

Simon Hallam, sales and marketing director for ERP and service software company Geac, believes it is the lack of consideration of service as a business that has held back investment in best of breed systems.  He observes there are two main groups of IT system buyers: large systems where field service is essentially an afterthought or specialist tools which usually leave out important business tools such as the financials and supply chain management.  'The result is that the majority of service businesses are unable to select a system that meets the requirement of both financial and operational needs, and settle for continuing with existing ledger solutions with the bolt-on of in-house or custom service function.'

The irony, of course, is that it is the special needs of individual requirements that have created the conditions in which niche players have been allowed to grow. So, despite the supposed lack of tailored solutions, there are still numerous providers.  In fact, when asked to name their supplier, respondents generated almost as many different names as they did answers. There is no clear market leader at the moment but recently companies such CS Group and Astea (See News) have been acquiring competitive suppliers.  Some commentators have seen this as a long overdue consolidation.  

Israel Beniaminy, the vice president of product technologies at ClickSoftware, thinks that while consolidation is happening it is not necessarily needed.  'Service operations that see the value of commercial service management solutions are not deterred by the lack of a "gorilla" in this market.   Those solution providers that can leverage their knowledge and experience to deliver real operational and strategic improvements will win more customers, which will give those providers the unfair advantage of ever-growing knowledge and experience.

Hallam observes that the niche nature of the market will limit the suppliers: 'whilst increasing their chance of success within that niche, it will almost certainly will preclude them from wider market success. This, in turn, limits their overall revenues from which they can derive the R&D expenditure to drive their expansion.'

He sees their options as limited – being bought, consolidating under a group umbrella or failing.   ’Market leadership will undoubtedly come from vendors that can deliver breadth and depth in service business applicability combined with the financial and corporate stability that every right-minded IT director looks for in a critical business systems partner’ he says.

However, the major software application companies such as SAP and Oracle do not have a great presence in the space and have not yet moved to acquire one of the best of breed players.  This surprises Mike Rand.  This would enable them ‘to become a market leader and offer a decent service module and, therefore, a full integrated solution which meets the service side’s requirements.’ The fact that they haven’t done so is because they don’t see service as important, he adds.  ‘Nobody has seen this market as big enough to invest in and none of the major players are that big.’

It may not be big but it is still growing.  The survey asked respondents about their IT investment and budget plans for the coming year and 17% said their IT investment next year would either rise or rise considerably. This was mainly among the organisations with 50+ engineers - is this a sign that better times for the vendors are just around the corner?  Mike Ward looks at the glass as being mainly empty.  ‘I doubt it means better times because that means 83% of budgets will either remain the same or fall’.

But Beniaminy takes a more positive view and thinks he knows what is driving it.  ‘This fits indicators that we have been tracking’ he says. ‘Engineer time is the key determiner of service costs - not to mention the rising cost of gasoline. Engineer time is a resource with very low "shelf life" - it you don't use it, or use it inefficiently, it's gone. Organisations are challenged with making each cent of these costs count towards more service and towards better service. There are enough ROI proofs out there (incidentally, better proofs than for most customer relationship management deployments) so that the extra IT expense is seen as small and safe relative to the alternative of doing nothing.’

But the survey revealed a surprising level of isolation in terms of service IT systems.  Integration with systems such as sales, marketing and ERP were all in single figures.  This is blamed on a number of factors.

‘The isolation that is experienced or apparently demonstrated by many service organisations within larger enterprises is often an unintended result of the IT pecking order that is or has been in place in many businesses’ says Hallam. 

‘Departmental autonomy is one,’ says Rogers. ‘With service and maintenance departments driving market interest in service solutions, a stand-alone solution which can be paid directly from the department budget and signed off by the department head is an attractive option. More a case of "splendid" than "determined" isolation.

Mike Rand blames companies failing to put in the right level of investment to get the systems implemented properly.  ‘Unless the service system is installed and running correctly, integration can’t take place. In most cases before the sale the emphasis is on a solution which everybody in the company can get data from i.e. sales can see if any service issues which could affect new business. Once the order is placed everybody forgets what was discussed and every department goes off and does their own thing. Why?’

‘In some organisations, this isolation results from top management's focus,’ says Beniaminy echoing Rand’s frustrations. ‘Corporate executives are extremely alert to revenues, so they look at sales processes; and to costs of goods, so they look at procurement. In some cases, there is no corresponding alertness towards the effect of service effectiveness on revenues, and towards the effect of service efficiency on costs.

Our survey showed though that where investment will be being made, the key areas were automating business processes (26%), engineer communications (15%) and integrating with the enterprise (13%).

‘This tell us that many service businesses are experiencing a heavy dose of reality,’ says Hallam. ‘Modern, forward thinking companies have recognised that a departmental approach to service management is not an acceptable option in today’s highly competitive market.’

Rand thinks that automating business processes means something very specific. ‘Return on investment is easier to measure on automating processes. It also probably shows that the accountants are in charge.’