Today marks a significant announcement concerning service management and service parts planning software technology. Service Lifecycle Management provider Servigistics today announced that it has completed a merger with MCA Solutions, a provider of service parts optimization technology.  Some readers may argue whether this is a merger or a takeover, but regardless, the deal is done.

Both companies are private and obviously no financial details have been disclosed regarding this merger. Obviously, the investors behind MCA were looking to execute an exit strategy.

The other headline related to this news is that it was no secret that both of these vendors were previously fierce competitors in the market, with different cultures.

According to statements in the press release and a Q&A document provided on both companies’ web sites, Servigistics plans to integrate various existing MCA’s software offerings into the existing Service Lifecycle Management portfolio provided by Servigistics.  The original founders of MCA, both Dr. Morris Cohen, a member of the faculty at The Wharton School at the University of Pennsylvania, And Dr. Vipul Agrawal will remain with the combined company.

MCA Solutions, which was founded in 1999, is best described by its concentration on aftermarket service parts planning and optimization. MCA’s software is primary directed at durable manufacturing industry sectors that included aerospace and defense, automotive, high tech, consumer electronics, medical equipment and others.  Existing named customers include among others, Airbus Military, Boeing, Bombardier, Briggs and Stratton, KLA Tencor, Lockheed Martin, Panasonic Avionics, Pratt and Whitney, Rockwell Collins and Tellabs. The software itself originated from the concepts, algorithms and methodologies advocated by its original founders, Dr. Cohen and Agrawal, and are currently offered in both a traditional behind-the-firewall and one-demand platforms.

For one of the most comprehensive overviews of MCA’s capabilities, readers can review the March 2011 profile analysis penned by fellow industry analyst colleague and friend, P.J.Jakovljevic published by Technology Evaluation Centers.

Supply Chain Matters had the opportunity to speak with Mark Vigoroso, Senior Vice President, Global Marketing and Alliances at Servigistics and we were able to ascertain some further background.  General conversations regarding the bringing together of both companies began about 90 days prior but accelerated in the last 30 days.  The intent of this merger is to capitalize on the best of both companies in terms of intellectual property, people and services for customers.

In July of 2009, Supply Chain Matters commented on potential market consolidation within the service parts planning software area.  The catalyst at that time was Marlin’s acquisition of both Servigistics, and three operating units of Click Commerce, which included Service Network Solutions (SNS) and Contract Service and Management (CSM).   The Click SNS business consisted of the aggregation of many former service parts planning providers, the most notable being the former Xelus. Other former names included World Chain and Optum. At the time, Marlin noted that the CSM business would be integrated with Emptoris, a strategic sourcing and procurement vendor that Marlin acquired in December 2008. Emptoris has since been acquired from Marlin by IBM.   Marlin has also orchestrated for Servigistics an acquisition of post-sales service knowledge management vendor Kaidara in April of 2010, and a strategic partnership with Genpact In April 2011, a major business process services provider. That partnership was targeted to combine Servigistics technology with Genpact’s aftermarket services operations expertise.  Our 2009 commentary was premature in timing but that is more of a reflection of the tenaciousness and attractiveness of MCA Solutions in the current market.

This newly announced merger has the potential to add deeper and broader industry coverage and establishes Servigistics as a formidable competitor to existing service parts and management technology offerings being provided by major ERP providers such as SAP and Oracle, or other best of breed vendor Baxter Planning Systems.

As with many of these announced acquisitions, existing MCA customers will have to wait and observe how the two companies actually come together, especially since original buying choices may have opted to not select the Servigistics platform for various considerations.  A concerted outreach communications effort was initiated yesterday by Servigistics senior management to assure existing MCA customers that their existing software will be supported for as long as necessary. For its part, Servigistics is acknowledging an obvious overlap in solution areas and is further communicating that it will combine the strengths of each platform in a future offering.  Over the longer horizon, MCA customers will eventually be offered the option to move toward a broader, more comprehensive Servigistics service management platform. Also being communicated is that existing MCA customers have the opportunity to complement their existing software with other Servigistics offerings if they so choose.

MCA customers can also anticipate an upcoming town hall session, where Servigistics management will address longer-term strategy. This session to be held in conjunction with the annual Servigistics customer conference at the end of April.

These latest developments should also prompt firms who are still seeking or evaluating future implementation of service management and decision support software to evaluate Servigistics capabilities in the context of executing a broader market vision related to comprehensive service management needs.

Regarding the longer term outlook for both of these combined companies, Supply Chain Matters speculates that other future announcements related to Servigistics are still yet to come, given Marlin’s previous history with supply chain technology vendors such as Emptoris.  Marlin and Servigistics are obviously assembling comprehensive software, service management intelligence and business process services capabilities with powerful market leverage and this will capture the interest of many of the existing enterprise IT market players.

Manufacturing and service firms have long discovered the increasing critical importance that aftermarket services contributes to revenue, product and profitability business objectives. The bottom line takeaway from this announcement related to MCA Solutions is that your potential list of technology choices and associated bargaining power has just been narrowed.

Bob Ferrari

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