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ServiceSource buys Scout Analytics to tap into $600bn market

23rd Jan 2014
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Predictive analytics is big, big business. Announcing the acquisition of Seattle-based Scout Analytics for $32m yesterday, revenue management software provider, ServiceSource stated that having a foothold in the industry would provide the Silicon Valley stalwarts with an addressable market of “over $600bn”.

The deal, which will move all of Scout Analytics’ employees over to their new employer’s offices in California, has been brokered with the Internet of Things looming large on the horizon.

A press release from ServiceSource stated that, in buying into an already successful predictive analytics provider, the company would be able to position its own software to the rising tide of subscription customers, expanding its “customer success management capabilities to include actionable analytics based on actual customer usage” and delivering potential financial benefits to both current and prospective customers.

Currently, Scout Analytics analyses usage from more than 25 million subscription users on more than 400 million devices daily for customers across the SaaS, information services and digital media industries. By expanding into these new areas, ServiceSource says it is doubling its addressable market.

“With $14 billion under management, ServiceSource is powering the Recurring Revenue Economy,” said Mike Smerklo, chairman and CEO of ServiceSource.

“From working with 7 of the top 10 SaaS companies, we know how difficult it is for customers to collect, analyse and leverage their usage data. Our acquisition of Scout Analytics addresses this challenge. Scout Analytics significantly expands our reach into the fast-growing SaaS market, while creating new opportunities in B2B subscriptions for information services and digital media. And, with the addition of sophisticated predictive analytics, we can give companies the required top-to-bottom view of their customers’ data to grow through recurring revenue.”

The company added that, as the Internet of Things connects businesses and people to a range of technology-enabled devices and Cloud-based services, the “recurring revenue” or subscription payment model was likely to become more and more pivotal within the software industry.

As such, understanding how customers are using products and services is expected to become even more vital to today’s businesses, not just for customer success and retention, but also for accelerating recurring revenue growth and profits.

A number of analytics companies have been hoovered up by IT providers in the last 12 months. IBM has so far made some of the biggest industry moves, spending over $16 billion in 35 acquisitions of companies that deal in big data or analytics, since 2005.   

Their most recent high-profile acquisition came in February last year, when the tech heavyweights purchased Star Analytics to align some of its own financial management software tools with a matchable data analytics solution;  a move akin to the ServiceSource – Scout Analytics announcement.

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