PTC's Servigistics Deal Addresses Service Life Cycle Management Needs

G00238310

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Summary

PTC’s plan to acquire Servigistics could give manufacturers true end-to-end product and service support and access to service data from a single source. In the short term, expect tactical, separate sales to continue.

News Analysis

Event

On 8 August 2012, product life cycle management (PLM) and design software provider PTC announced that it has signed an agreement to acquire Servigistics, a software vendor focused on service life cycle management (SLM), for $220 million in cash.

Analysis

The combination of PTC and Servigistics applications and services could benefit manufacturers that need more support during the service life cycle, and could assist them with making continuous product improvements. For example, aerospace companies must align the fulfillment of their design and supply chain needs to properly execute on performance-based contracts. The Servigistics acquisition will help PTC improve its support for service parts optimization, field service, knowledge management, and returns, repair, and reverse logistics and parts pricing.

PTC offers current Servigistics customers expanded resources and the assurance of greater corporate viability. Before year-end 2012, Gartner expects PTC to provide an integration road map between its SLM software portfolio (which includes 4CS, Service Information Manager and Service Center) and Servigistics software. While PTC has not officially announced its plans for individual products, we expect PTC will:

  • Continue Servigistics's convergence strategy for its service parts management platform and MCA Solutions offerings.

  • Migrate any Servigistics's warranty customers to the products that PTC recently acquired from 4CS, a warranty management vendor.

  • Sunset or sell its warehouse management product. PTC has not made an official statement or given any indication of its plans, but Gartner believes this module is not an immediate fit.

PTC faces several integration and marketing challenges:

  • Servigistics applications bring PTC into a new area of supply chain planning. PTC will need to retain Servigistics staff who know how to communicate with and appeal to buyers in that market. Leading companies that have placed senior supply chain executives in charge of both products and services constitute the exception, not the rule. Consequently, PTC likely will continue selling Servigistics applications tactically to buyers of services until PTC's marketing can convince supply chain leaders of the value of a combined solution.

  • PTC risks underestimating the amount of time, resources and money required to fully address the needs of SLM. PTC will need to assign sufficient resources to Servigistics products without adversely affecting its core businesses; however, PTC has stated that SLM is one of its core businesses, along with PLM, supply chain management, application life cycle management and computer-aided design (CAD).

  • PTC will face the same competition from ERP vendors that Servigistics did as a best-of-breed company. Some companies are implementing the vision proposed by PTC through their ERP providers.

  • This deal could prompt other PLM vendors to invest more in SLM.

Recommendations

  • Servigistics customers: Accelerate purchases and maintenance renewals under current pricing. Post-acquisition, seek assurances that the terms, conditions and period of continued support stay at or exceed current levels. Ask for product road maps for Servigistics offerings.

  • PTC customers: Evaluate the suitability of Servigistics applications for your service business.

  • All other manufacturers: Consider PTC if your company seeks holistic SLM support, including extensive product service support.

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© 2012 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartners research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

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