The (Big) Mid-Market
Let me introduce you to Ascent Hospitality Management. This firm operates and franchises 598 family restaurants across 39 US states under its two US brands Huddle House and Perkins. They have 63 locations in the State of Georgia alone. Across the Ascent network, ~25,000 employees prepare and serve customers everything from “Maple Bacon Pancake Platters” to “Butterball Turkey & Stuffing”.
We had the good fortune to meet Ascent’s CIO in November 2022 as part of our customer calls in due diligence for our recent investment in Servicely. The CIO described Ascent as a “smallish mid-market operation.” He explained the firm’s prior IT software setup, relying on a custom developed solution written 20 years prior and unable to justify the hefty expense of enterprise-focused ServiceNow.
Perkins and Huddle House represent two of the ~200,000 firms in the US that make up the “mid-market”. This segment, somewhat foreign to the Australian business landscape, is characterized by firms generating $10m to $1b in revenue. Collectively these firms generate US$10 trillion in annual revenue. If the US mid-market was its own country, it would have the third-largest GDP of any country in the world.
Despite the scale and importance of the mid-market segment, it is sorely lagging the wider market in technology adoption. Grouped together with the broader enterprise market, only ~25% of IT workloads at these businesses take place in cloud environments. While some of this delayed cloud adoption is due to typical corporate inertia, responsibility also lies with cloud software vendors who have failed to adequately cater to mid-market firms. These businesses require a solution with enough depth and configurability to meet their individual needs, while avoiding the cost and complexity of the large enterprise side of the market. Instead, recent IT innovation has been focused on out-of-the-box SMB products and niche product tweaks for very large enterprises. In the absence of fit-for-purpose solutions, mid-market firms are clinging onto decades old products with nowhere to go.
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History Repeating
ServiceNow files for an IPO in June 2012. The industry section of its prospectus began as follows:
Legacy IT Management Products Fall Short
Organizations have invested heavily in legacy software products to manage the inventory, cost and performance of IT resources. These traditional software products were originally architected in the 1980s and 1990s before the introduction of many of today’s modern computing technologies. Shortcomings of these legacy products include:
Disparate and redundant solutions. Many legacy IT management products were developed and widely deployed decades ago. Vendors of these products have in many cases relied upon acquisitions and partnerships to extend their offerings and have not re-architected their solutions to provide the seamless, integrated platform that customers desire…
Fast forward 11 years (and a tidy 2,247% increase in ServiceNow’s share price), and shockingly this description still applied to large swathes of the IT Service Management industry when we met Dion Williams, founder and CEO at Servicely.
Dion rode the wave of ServiceNow’s rapid rise to industry dominance, responsible for introducing the “upstart” solution into the Australian market on its way to becoming the $100B juggernaut it is today. Having completed hundreds of ServiceNow implementations, he saw increasingly common pain points for customers. Sticker shock was inevitable. As were the all consuming implementation efforts, as ServiceNow gradually drifted upmarket and its solution expanded to meet the niche requirements of large corporates. In a case study Clayton Christensen would have been proud of, Dion saw an opportunity to wedge into the market with a fit-for-purpose solution for the abandoned mid-tier segment of the market.
While the likes of Jira Service Desk and FreshService now provide out-of-the-box, simple solutions for the smaller end of town, the mid-market is faced with a lose-lose decision. Either take on a prohibitively expensive and difficult to digest ServiceNow solution, or choose from the same 20 to 30-year old solutions described in ServiceNow’s S1. The extract below from our Servicely DD report puts it in numbers.
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Dion’s answer to this opportunity is Servicely
Using his depth of customer understanding, Dion architected Servicely as an enterprise service management solution with the deep capabilities needed for a complex enterprise, the low-code configurability to meet a business’ individual needs and the ease of implementation needed to drive rapid time to value. Underpinning this platform is an AI-first architecture, enabling service teams to increase productivity and improve customer service with rapid intelligent incident resolution.
We had the benefit of tracking Servicely’s progress over 2 years as Dion brought the solution to market. Over this time, Dion continually validated his thesis as the business onboarded customers across telecommunications, hospitality, media and manufacturing, and expanded beyond Australia into the US, Africa and the Pacific. Perhaps more importantly, Servicely repeatedly beat out legacy incumbents as prospects sought a modern solution that balances sophistication and flexibility with reasonable costs and implementation requirements.
In Servicely we found an incredibly experienced founder tackling a truly vast market opportunity with a globally leading disruptive product. As a genuine expert in his space and multi-exited founder, Dion epitomises the industry insiders we seek out at EVP. Watching customers, partners and experienced hires commit to the business in its early stages, it is pleasing to know we are not alone in our assessment.
Overall, the founder, product, and industry make for a compelling combination. This ultimately is why we are so excited to partner up with Dion and the Servicely team as they look to reshape the enterprise service management industry.
The (Big) Mid-Market
Let me introduce you to Ascent Hospitality Management. This firm operates and franchises 598 family restaurants across 39 US states under its two US brands Huddle House and Perkins. They have 63 locations in the State of Georgia alone. Across the Ascent network, ~25,000 employees prepare and serve customers everything from “Maple Bacon Pancake Platters” to “Butterball Turkey & Stuffing”.
We had the good fortune to meet Ascent’s CIO in November 2022 as part of our customer calls in due diligence for our recent investment in Servicely. The CIO described Ascent as a “smallish mid-market operation.” He explained the firm’s prior IT software setup, relying on a custom developed solution written 20 years prior and unable to justify the hefty expense of enterprise-focused ServiceNow.
Perkins and Huddle House represent two of the ~200,000 firms in the US that make up the “mid-market”. This segment, somewhat foreign to the Australian business landscape, is characterized by firms generating $10m to $1b in revenue. Collectively these firms generate US$10 trillion in annual revenue. If the US mid-market was its own country, it would have the third-largest GDP of any country in the world.
Despite the scale and importance of the mid-market segment, it is sorely lagging the wider market in technology adoption. Grouped together with the broader enterprise market, only ~25% of IT workloads at these businesses take place in cloud environments. While some of this delayed cloud adoption is due to typical corporate inertia, responsibility also lies with cloud software vendors who have failed to adequately cater to mid-market firms. These businesses require a solution with enough depth and configurability to meet their individual needs, while avoiding the cost and complexity of the large enterprise side of the market. Instead, recent IT innovation has been focused on out-of-the-box SMB products and niche product tweaks for very large enterprises. In the absence of fit-for-purpose solutions, mid-market firms are clinging onto decades old products with nowhere to go.
History Repeating
ServiceNow files for an IPO in June 2012. The industry section of its prospectus began as follows:
Legacy IT Management Products Fall Short
Organizations have invested heavily in legacy software products to manage the inventory, cost and performance of IT resources. These traditional software products were originally architected in the 1980s and 1990s before the introduction of many of today’s modern computing technologies. Shortcomings of these legacy products include:
Disparate and redundant solutions. Many legacy IT management products were developed and widely deployed decades ago. Vendors of these products have in many cases relied upon acquisitions and partnerships to extend their offerings and have not re-architected their solutions to provide the seamless, integrated platform that customers desire…
Fast forward 11 years (and a tidy 2,247% increase in ServiceNow’s share price), and shockingly this description still applied to large swathes of the IT Service Management industry when we met Dion Williams, founder and CEO at Servicely.
Dion rode the wave of ServiceNow’s rapid rise to industry dominance, responsible for introducing the “upstart” solution into the Australian market on its way to becoming the $100B juggernaut it is today. Having completed hundreds of ServiceNow implementations, he saw increasingly common pain points for customers. Sticker shock was inevitable. As were the all consuming implementation efforts, as ServiceNow gradually drifted upmarket and its solution expanded to meet the niche requirements of large corporates. In a case study Clayton Christensen would have been proud of, Dion saw an opportunity to wedge into the market with a fit-for-purpose solution for the abandoned mid-tier segment of the market.
While the likes of Jira Service Desk and FreshService now provide out-of-the-box, simple solutions for the smaller end of town, the mid-market is faced with a lose-lose decision. Either take on a prohibitively expensive and difficult to digest ServiceNow solution, or choose from the same 20 to 30-year old solutions described in ServiceNow’s S1. The extract below from our Servicely DD report puts it in numbers.
Dion’s answer to this opportunity is Servicely
Using his depth of customer understanding, Dion architected Servicely as an enterprise service management solution with the deep capabilities needed for a complex enterprise, the low-code configurability to meet a business’ individual needs and the ease of implementation needed to drive rapid time to value. Underpinning this platform is an AI-first architecture, enabling service teams to increase productivity and improve customer service with rapid intelligent incident resolution.
We had the benefit of tracking Servicely’s progress over 2 years as Dion brought the solution to market. Over this time, Dion continually validated his thesis as the business onboarded customers across telecommunications, hospitality, media and manufacturing, and expanded beyond Australia into the US, Africa and the Pacific. Perhaps more importantly, Servicely repeatedly beat out legacy incumbents as prospects sought a modern solution that balances sophistication and flexibility with reasonable costs and implementation requirements.
In Servicely we found an incredibly experienced founder tackling a truly vast market opportunity with a globally leading disruptive product. As a genuine expert in his space and multi-exited founder, Dion epitomises the industry insiders we seek out at EVP. Watching customers, partners and experienced hires commit to the business in its early stages, it is pleasing to know we are not alone in our assessment.
Overall, the founder, product, and industry make for a compelling combination. This ultimately is why we are so excited to partner up with Dion and the Servicely team as they look to reshape the enterprise service management industry.