IFS acquires Astea in bid for FSM market consolidation

BOSTON -- IFS is making a bid for service management leadership with the acquisition of Astea International Inc.

The deal was announced yesterday at the IFS World conference. The terms of the deal were not disclosed.

Astea is a field service management (FSM) provider that focuses on industry verticals such as medical device manufacturing, scientific instruments, telecommunications and point-of-sale equipment. The company is based in Horsham, Pa.

IFS, an enterprise applications vendor based in London, also has field service and asset management applications, including IFS FSM, IFS Enterprise Asset Management (EAM) and IFS Planning and Scheduling Optimization (PSO).

The deal marks a consolidation in the FSM market, where IFS already has a leading portfolio of products, said Michael Ouissi, IFS chief customer officer.

"It's an act of consolidation in the market which is growing fast. We looked at Astea both from a customer perspective and a stakeholder perspective, and we liked what we saw," Ouissi said. "With such assets that have a good revenue stream and good customer base, it was a very good fit for us."

Astea plays in a different segment and has generally not competed with IFS for customers, so the acquisition provides IFS with a broader range of applications and services.

"In combination, we now cover all sorts of segments for service management," Ouissi said. "We have our WorkWave business, which is for very small and medium-sized enterprises. We will have Astea covering their segment, and we have our original solutions IFS FSM, PSO and EAM coming together for various use cases and scenarios, so I think we're now well-covered for all sorts of scenarios that come up in the field service market."

The acquisition may help position IFS to compete better with ServiceMax, which also focuses on asset-heavy industries. And it comes at a time when there's been movement from FSM providers, including SAP and ServiceMax, to push into new markets and solve new business problems, said Aly Pinder, IDC Manufacturing Insights program director for service innovation and connected products.

Companies not known to compete in this area are also adding to the mix. Salesforce made a big splash in the FSM market with the acquisition of ClickSoftware in August for $1.35 billion.

Acquiring Astea should help IFS compete well in the FSM market by providing a solid customer base in verticals beyond IFS's strong points in aerospace and defense (A&D) and industrial manufacturing, Pinder said.

Astea is adding a view into some new industries that IFS hasn't focused on before.

"Astea is adding a view into some new industries that IFS hasn't focused on before," he said. "It has a new set of customers that provides inroads into some new industries, like medical device manufacturing, telcos -- industries beyond A&D and heavy industrial manufacturing. It fills in some gaps where IFS hasn't positioned themselves in the past."

Chris Devault, manager of software selection at Panorama Consulting Group, based in Greenwood Village, Colo., echoed Pinder's comments. He described IFS as having a strong FSM product portfolio, and said the Astea acquisition could bring in new customers for IFS's ERP and other enterprise applications offerings.

"IFS's field service out-of-the box capability was superior to some of the competitors before they bought Astea," Devault said. "It's going to bring a whole new client base as well. So now they're right in the door as a back-end ERP for those companies. This can be a real differentiator for them."

With the addition of the Astea base, IFS claims that it now has more than 8,000 FSM customers worldwide. It anticipates FSM license revenues to grow at more than 40% by 2020, with 80% expected to be recurring revenues, according to the company.

IFS's acquisition has been approved by Astea International's board of directors, and is subject to the approval of Astea's shareholders. Astea's CEO and controlling shareholder Zack Bergreen and CFO Fredric Etskovitz have signed a voting agreement that supports the transaction, which is expected to close before the end of 2019, according to a press release.