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ServiceSource Launches Service Share Index Measuring Technology Industry’s Maintenance Revenue Performance

Index indicates corporate technology users chose to extend service contracts in lieu of new IT investments to weather economic crisis

18 December 2008, San Francisco — ServiceSource, a San Francisco-based Service Performance Management leader for the high-tech industry, launched its inaugural Service Share Index, an industry benchmark for measuring the amount of revenue captured from a company’s Total Available Market (TAM) for service maintenance and contract renewals. With a wide range of high-tech customers and partners, ServiceSource has unique access into and insights on the industry, and as a result has published its findings to allow companies to measure the opportunity to grow their services businesses as a way to maintain cash flow in these economic times.

“The data from the Q3 2008 Service Share Index suggests that as companies have taken a cautious approach to spending in Q3 they have often delayed service renewals, causing On-Time Rates and overall In-Quarter Net Renewal Rates to drop from Q2 2008,” said Eric Hall, ServiceSource VP of Business Excellence. “However, close rates remain strong year over year, which we believe indicates positive movement for Q4 as more companies extend service contracts instead of making new IT investments as the economic crisis persists.”

“In a time of economic downturn, technology companies are turning to service revenue as a strategic way to maintain a constant annuity for their business and develop deeper, stickier customer relationships. By providing an industry-wide perspective on maintenance revenue performance, we anticipate companies will use the Index as a tool to focus their services business with the same intensity in which they pursue market share,” said Mike Smerklo, Chairman and CEO of ServiceSource.

The Service Share Index is based on the aggregate results of a representative set of clients and a compilation of eight critical metrics for evaluating service performance, such as:

  • Contract Renewal Rate – In Quarter, measures the rate at which contracts are closed on time within the quarter in both dollars and transactions
  • Annual Conversion Rates, measures the relative upsell or value retention of closed contracts
  • Closed On-Time Percentage, measures the percentage of contracts closed on or before their respective expiration date

While all indicators point to increased opportunity and strong performance in the service and maintenance renewal business, the current economic climate will continue to cause IT organizations to extend the life of their current infrastructure and investments.

Looking into 2009, technology providers should expect:

  • service contract close rates will continue to improve
  • customers may delay decisions causing a drop in contracts closed on time
  • customers may be more open to multi-year commitments which will drive multi-year conversion rates

To view the full Service Performance Management Industry Report and Service Share Index Q3 2008, please download at http://www.servicesource.com/how-we-can-help-you/vantage-library.php

About ServiceSource

ServiceSource is the service revenue performance company. We partner with technology, healthcare, and life sciences companies to maximize maintenance, support, and subscription revenue while optimizing customer loyalty. We increase contract renewal rates for clients on average by 10–25 percentage points — and in some cases by up to 40 points. These dramatic results are achieved via a purpose-built service revenue solution, including a suite of cloud applications and managed services built on a proprietary technology platform, which combines the industry's most robust data management engine and a unique service revenue master, leveraging our deep knowledgebase of benchmarks and best practices. Our solution delivers proven results through a 100% pay-for-performance business model that enables a success–driven, shared–risk partnership. Headquartered in San Francisco, ServiceSource has $5 billion in service revenue under management.

For more information on ServiceSource, visit www.servicesource.com or call: 415.901.6030.