Will Servigistics Click on More Service Cylinders? - Part 1




The old adage “he who lives by the sword will die by the sword” might have been best witnessed in the life and demise of erstwhile public software company Click Commerce based in Chicago, Illinois (US). With its roots in the partner relationship management (PRM) or demand channel (chain) management (DCM) space, the company had first gobbled up a number of struggling PRM/DCM peers in the early 2000s. These mergers coincided with a time when there was a growing realization that the niche PRM market was not sustainable on its own.

Namely, the pundits saw the possible PRM future only as a part of a broader customer relationship management (CRM) suite or an even broader enterprise resource planning (ERP) suite. Following up on these PRM acquisitions and some internal development of the quote-to-order (Q2O), content management, and master data management (MDM)/product information management (PIM) capabilities, Click Commerce eventually rounded out its Channel Management division sometime in 2005.  

But then, still somewhat puzzling to many, the company decided to aggressively break out of the channel management niche and address a broader problem set that would, presumably, also result in more revenue. While I could see some synergies in integrating, say, the original e-commerce sell-side suite with acquired supply chain fulfillment solutions to build a supply chain process platform for distributed order management (DOM) in a multi-channel manner (something similar has been successfully achieved by Sterling Commerce), for the life of me, I could never figure out Click Commerce’s overall strategy.

The company presented to me once in 2005 and even showed a busy slide that contained about 60 boxes on it representing what the vendor offered at the time. Needless to say, I was totally confused and lost trying to make sense out of how, e.g., healthcare and research solutions or contracting service workforce might dovetail into the above supply chain selling and fulfillment solutions (that had also meanwhile added spare parts planning and optimization, sourcing, and reverse logistics capabilities). The overall strategy lacked coherency, and did not have many common threads.

I did not necessarily think that the company was dead in the water, and Click Commerce has indeed managed to scrape out an existence. Click Commerce was a combination (à la shopping mall) of a plethora of disparate applications with at least some decent maintenance revenue from an impressive roster of blue chip customers. I’d liken the company to another erstwhile fellow Chicago vendor, SSA Global – a collector vendor with no clear heritage, vertical focus, and so on.

For instance, Click Commerce’s Service Network Solutions (SNS) division provided software solutions to help service professionals manage the complexity of aftermarket service and logistics networks. Customers include Fortune 1000 companies in manufacturing, high technology, and aerospace and defense (A&D) industries. For its part, the Research and Healthcare Solutions (RHS) divisions provided automated research administration and compliance software to leading academic medical centers and research institutions in North America.

"Retooling" Has Not Worked Either

In any case, as the bottom line, Click Commerce was not a growth company in my opinion. Making matters worse, in 2006 the company was acquired by the large tool manufacturer Illinois Tool Works, Inc. (NYSE:ITW). At the time, I voiced my concerns in the fourth and fifth parts of my five-part series on the company. Not surprisingly, the honeymoon did not last long, since about 18 months from the acquisition, ITW started publicly shopping Click Commerce around for sale.

As usual, there's no simple, or single, answer to what might have gone wrong there. From my perspective, though, I think that widget manufacturing-oriented ITW didn't really anticipate or ever understand how a software business operates. ITW is a strong company with excellent business practices across manufacturing sectors and geographies.

But the executives that the manufacturer had assigned for Click Commerce to report to, and the executives that it hired to run Click, weren't willing to make the hard choices and investments necessary to grow the business. In the end, it was a mismatch; ITW likes to hold businesses and make them more efficient, whereas business software is more of a grow (profitably)-or-die industry that doesn't fit ITW’s business model.

Caught (and Carved) by a “Fish” VC

Consequently, the end of Click Commerce as we once knew took place in early May of 2009 when private equity firm Marlin Equity Partners announced that it had acquired three software operating units from Requisite Technology, Inc. (formerly doing business as Click Commerce, Inc.), a subsidiary of ITW. The transaction included the abovementioned SNS and RHS businesses, the Contract Service and Management (CSM) business, and the rights to the Click Commerce, Inc. name.

The SNS and RHS businesses were initially meant to become standalone platforms, whereas the CSM business has been integrated with Emptoris, another Marlin portfolio company. Dave Barboro, formerly General Manager of SNS, initially continued as President of SNS, while Nick Stier, formerly Senior Vice President of RHS, was named President of RHS. Ironically, Click Commerce has now been stripped of its name and pruned down to its original channel management business, under a new brand name (Requisite Technology, a name of the MDM/PIM provider that Click Commerce acquired in 2005) and with an uncertain business outlook and owner.

For its part, CSM provides one of the market's most widely used contingent and professional services procurement solutions. Emptoris, a notable provider of supply and contract management solutions, has acquired substantially all of the assets of the CSM group. I was recently briefed by Emptoris on its recent acquisition and future moves, and those will be reported in a separate article.

For now, it suffices to say that Emptoris could possibly exist by itself, although it is in a market in which it is hard to drive consistently high gross margins. In the meantime, you can read Emptoris’ repartee to Jason Busch’s skeptical blog entry immediately after the acquisition announcement.

Servigistics Was “Hooked” Too

In early July, after the CSM spin-off, Click Commerce asked me for a briefing on the eve of another major announcement. Somewhat unsuspecting, I expected the discussion to be about the future moves of the remaining parts under Marlin. To my surprise, an executive and acquaintance from Servigistics, a provider of strategic service management (SSM) software, greeted me too during the usual pleasantries and introductions.

Lo and behold, Servigistics and Click Commerce's SNS division, both recently acquired by Marlin Equity, have been merged to form a new company to solve the planning, optimization, execution, and analytics challenges associated with delivering post-sale service. The new company, with combined revenues of nearly US$100 million, will be headquartered in Atlanta, Georgia (US) and will retain the Servigistics name.

One question that struck my mind at once was why Marlin had bought the rights to the Click Commerce name and assigned Barboro as president of SNS in May 2009, only to change course a few weeks later. Namely, Eric Hinkle, chief executive officer (CEO) of Servigistics, will continue as CEO of the new combined company.

Part 2 of this blog series will present two blog entries with opposing views on the event and its prospects. In the meantime, please send us your comments, opinions, etc. We would certainly be interested in your experiences with any of the abovementioned software categories (if you are an existing user) or in your general interest in evaluating these solutions as prospective customers.
 
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