News and Events
ServiceSource Announces Results of Service Share Index for Q4 2008
Steady growth in North America Shows Value of Maintenance
and Renewal Contracts despite Economic Downturn
1 April 2009, San Francisco, CA: ServiceSource, a San Francisco-based Service Performance Management leader for the high-tech industry, today announced the results of its latest 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 renewals. With a broad range of high-tech customers and partners, ServiceSource has unique access into and insights on the trends shaping the services industry.
The Service Share Index for Q4 2008 (October – December) showed overall Service Share in North America was steady quarter on quarter at 112%, improving 1% over Q3 2008 indicating that the impact of the economy on IT companies may have been absorbed, partly due to businesses increasing services based revenue streams to offset pressure from declining product sales.
“As we get deeper into the economic downturn, organizations will continue to look for ways in which to maximize predictable revenue streams, reduce costs and lessen IT expenditure,” said Mike Smerklo, Chairman and CEO of ServiceSource. “While tech companies typically focus on the performance of their product and license side of the business, there is less scrutiny on the maintenance and renewals side of the business.’
‘Being strategic about your company’s Service Share has never been so critical to increase bottom line profits. We’ve seen services annuity streams that can account for up to 50% of our client’s revenue. Companies that strategically focus on services and maintenance perform better than those who don’t’ added Smerklo.
In spite of the current economic pressures, a number of companies are experiencing positive results with regards to their services and maintenance renewal strategies, and recognize the importance in maintaining this investment throughout the downturn. MJ Shutte, Director of Inside Sales at Riverbed commented, “As a result of working with ServiceSource we realize what can be achieved with our contract renewals business. We believe that keeping maintenance contracts current is a smart investment for our customers, especially at a time when companies are under increasing pressure to maximize existing assets. Our services and support capabilities will remain a key business focus moving forward.”
The results also showed that there was significant variation in the performance for services and maintenance by region. The Total Service Share Index was significantly impacted by a sharp decline in EMEA, which recorded a 9% drop from 103% in Q3 2008 to 94% in Q4 2008 due in part to some currency fluctuations.
By industry, the Hardware segment dropped by 2% in Q4 2008, while the Software segment remained flat versus Q3 2008. Services on Hardware showed strength in the fourth quarter indicating that declines may be leveling off.
Eric Hall, Vice President of Business Excellence stated that “Close Rates have remained strong for our hardware clients indicating a net improvement in their willingness to retain support contracts. This is a clear demonstration of the importance hardware businesses are beginning to place on service, support and contract renewal as a critical function to keep their technology up and running, but also to help them carve out critical competitive advantage.”
To view the full Service Performance Management Industry Report and Service Share Index Q4 2008, please download at: http://www.servicesource.com/company/resources.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.