It is a little shy of 18-months since field service management software supplier ServicePower Technologies (SVR:AIM) decided change was needed. Effectively firing then chief executive officer (CEO) Mark Duffin, after nearly six years in the top job, the Stockport-based company realised that it was struggling to put up the reliable growth rates that this large market opportunity implied it should.

As the data table shows, revenues had been in decline for years while profits were staggeringly unpredictable. New CEO, and former finance director, Marne Martin is apparently putting a stop to the rot, while analysts seem significantly more confident of their forecasts. At 7.43p ServicePower may at last start to punch its weight or more in the estimated $15 billion global field service management market.

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The Stockport-based company provides clever software that allows clients to manage large mobile workforces, plan scheduling and organise contractor networks, all in real-time. Martin’s business review concentrates on four key strategic areas. First, grow the ServiceScheduling and mobility licence sales. It’s already among the market leaders in the scheduling space but has previously failed to leverage its position into new markets, and that is starting to change.

New tools

The company is also focusing on new tools and products that can be sold separately or as part of a large package, such as its dispatch and claims contractor suite. This is cloud-based which means more predictable subscription revenues. Last year recurring revenues rose from £10 million to £12 million, baking in more certainty to future guidance, although the switch to cloud-based applications is not yet complete, and interims (27 Sep) show the effect of still lumpy licence income with several deals failing to close on time. This should improve in future as the company continues to invest in technology integration and development, and transition core products to a single platform.

The final leg of the strategic rethink is new markets. Management sees opportunities for geographic expansion either through partners or existing clients and is in the process of adding additional language functionality. New contracts have been won this year in social housing, financial markets and with Swedish electronics giant Electrolux (ELUXb:ST).

These are promising signs that Martin’s plans for ServicePower are working but there’s still work to do. Half-year revenues reversed from £7.3 million to £6.2 million and generated losses of £900.000, albeit, as expected. Importantly, the second half should return to profit and analysts at broker FinnCap remains confident of their full year forecasts.

‘We expect the group to move into profit during the second half and have introduced a 2015 forecast on which we see potential upside,’ spelled out FinnCap’s Mark Paddon in September.

That calls for £15 million of revenue in 2014, and £16.5 million in 2015. Operational gearing means that the effect on profits should be large, jumping from £0.1 million this year to £0.9 million next. Net cash of £1.6 million looks ample to fund ongoing development and growth and limits the risk of future share placings.

ServicePower has previously struggled for scale and missed opportunities to build on its core scheduling products. But this is slowly changing thanks to new broom leadership, fresh tools and a clearer growth strategy. Execution is now the challenge but investors have every right to feel encouraged. The 10p share price target that FinnCap has slapped on the stock looks realistic.