ServiceNow, Inc. provides enterprise information technology (IT) management software. The Company designs, develops, and markets a cloud computing platform to help companies manage digital workflows for enterprise operations. ServiceNow was founded in 2004 by Fred Luddy and is headquartered in Santa Clara. Bill McDermott currently serves as the company’s Chairman & CEO.
ServiceNow is a cloud-based platform that started out as an expensive Help Desk solution. In recent years, ServiceNow has attempted climb out of IT specific niche into a broader low code provider for workflows ServiceNow now provides a wide range of IT service management (ITSM) and business process automation solutions. It offers a comprehensive suite of applications designed to help its customers streamline their workflows, improve productivity, and enhance service delivery. Here are some key functionalities and capabilities of ServiceNow:
- IT Service Management (ITSM): ServiceNow enables organizations to manage IT services and processes effectively. It includes features such as incident management, problem management, change management, configuration management, and service catalog, allowing IT teams to handle service requests, troubleshoot issues, and implement changes efficiently.
- IT Operations Management (ITOM): This module focuses on managing the infrastructure and operational aspects of IT services. It provides capabilities like event management, performance analytics, service mapping, and cloud management, helping IT teams monitor and maintain the health and performance of their IT infrastructure.
- IT Business Management (ITBM): ServiceNow's ITBM suite supports the planning, prioritization, and execution of IT projects and portfolios. It includes project management, resource management, demand management, and financial management capabilities, enabling organizations to optimize their IT investments and align IT initiatives with business objectives.
- Customer Service Management (CSM): CSM helps organizations deliver exceptional customer service experiences by managing customer interactions and support processes. It includes features like case management, self-service portals, knowledge management, and omni-channel support, allowing businesses to engage with customers efficiently and resolve issues effectively.
- Human Resources Service Delivery (HRSD): ServiceNow's HRSD module streamlines HR processes and provides self-service capabilities for employees. It includes functionalities like employee onboarding, case management, knowledge base, and HR analytics, enabling HR departments to deliver better employee experiences and improve HR service delivery.
- Security Operations (SecOps): This module focuses on security incident response and vulnerability management. It helps organizations detect, prioritize, and respond to security incidents, while also providing capabilities for managing vulnerabilities and assessing risk.
With customers such as Alphabet, Amazon, Apple, Costco, CVS, McKesson, and Walmart, it is clear that ServiceNow has gained significant market acceptance due in part to its comprehensive functionality, scalability, flexibility, and focus on continuous innovation – and from serving a wide range of industries, including finance, healthcare, technology, government, and more. The company does have a good reputation for its focus on delivering value, customer success, and driving digital transformation, but it is also widely recognized as having an extremely assertive sales force committed to promoting and expanding the adoption of their products and services, and this reputation has only increased since Bill McDermott’s arrival as CEO in November of 2019 after leaving SAP as its CEO in October of 2019.
ServiceNow promotes its ability to help its customers reduce costs by (wait for it), yes – by spending more money on ServiceNow so that you can spend less in other areas [[how very SAP of them]]. However, after extensive research, we have found no evidence that ServiceNow contributes as much (or even any) energy in helping you figure out how to lower your ServiceNow bill. In fact, most client organizations who call us asking for our help are calling after ServiceNow has just presented them with a significant cost increase with very little to no discernable increase in value. In other cases, client CFOs have begun questioning …'the outrageously high costs of what is essentially a ticketing system’.
- Editorial Note: While it is true that ITSM workflows and automation subscriptions constitute a significant portion of ServiceNow's revenue; giving some validity to the notion that the ITSM solution is ‘essentially a ticketing system’, it is important to note that the platform's broader functionalities and modules, such as ITOM, ITBM, CSM, HRSD, and SecOps, provide additional value and enable those interested and capable client organizations to extend service management beyond IT.
Cost Increases (hold the value please)
At scale, ServiceNow deployments have become shockingly expensive. As clients continue to struggle with the market realities of 2023, ServiceNow is continually among the most predatory of suppliers; often jacking up customer rates by 30-40% using the auspices of changes to the products that were previously purchased as the reason. As a result, ServiceNow costs have emerged as one of the top 10 suppliers that client organizations are increasingly inspecting for ways to reduce, but ServiceNow has been extremely disruptive to any client-led savings initiative and is increasingly implementing its own wildly aggressive cost-increase agendas, and that short-term and transactional view of customer relationships has caused significant turmoil.
As a result, we are seeing significantly more interest in ServiceNow as a cost take-out target and offer this Top 5 list on the best ways to save money on ServiceNow in 2023; a time when client organizations seem to need it most.
It is clear that McDermott sees ServiceNow as the “Platform of Platforms”, and as a King Maker of his partner ecosystem; and with such a grand vision and supreme view of his own company, it’s no wonder his customers are seeing 30-40% annual price increases in their renewals even if nothing has changed about how they use the tools, and they are not getting any additional business value from their investments.
ServiceNow costs have gone up on many of its products, but what makes matters worse is if you’re not using them the way ServiceNow envisions, you end up paying a lot more for no additional value.
For the 70% or so of the client organizations out there who do not fully embrace ServiceNow’s view of their future, it’s good to know that ServiceNow faces stiff competition from several companies offering similar IT service management and workflow automation solutions. Here are some of ServiceNow's top competitors in all categories:
- Atlassian: Atlassian's Jira Service Management is a widely used ITSM solution that integrates with its popular project management tool, Jira. It offers incident management, problem management, change management, and self-service capabilities but it is also aggressively raising its customer’s cost by forcing customers to a cloud version. Organizations such as Bosch, Citibank, Fiat Chrysler, The Home Depot, and T-Mobile run Jira Service Desk for ITSM.
- BMC Software: BMC offers a suite of IT service management solutions, including the popular BMC Remedy platform. It provides ITSM, ITOM, and ITBM capabilities and focuses on digital service management and automation. Organizations such as Bank of America, Exxon Mobil, Ford Motor Company, JPMorgan Chase, and Wells Fargo run Remedy ITSM Suite.
- Broadcom (CA): CA Technologies (formerly known as Computer Associates) offers IT Service Management (ITSM) solutions. CA Technologies, which is now a part of Broadcom, provides a range of software solutions for enterprise IT management, including ITSM. CA ITSM features include incident management, problem management, change management, service catalog, asset management, and service level management. Organizations such as GEODIS, HSBC, The National Center for Space Studies (CNES), Oceana Group, and Orano SA run CA Service Desk Manager.
- GoTo: LogMeIn, the company that owns remote collaboration software like GoTo Meeting and password management company LastPass is changing its name to GoTo. Along with the name change comes a new software product called GoTo Resolve: an IT ticketing platform that will integrate support tools and include a freemium tier. Organizations such as Booking.com, Care-Mark, Koch Industries, Sempra Energy, Universal Health Services, and WestRock run GoToMyPC for ITSM.
- Ivanti: Ivanti provides IT service management and IT asset management solutions, including Ivanti Service Manager. It offers features like incident management, problem management, change management, and IT asset discovery. Ivanti also acquired Cherwell Software a firm that focuses on delivering flexible and configurable IT service management solutions, offering ITSM, ITOM, and self-service capabilities, along with features like codeless customization and integration options. If your use of ServiceNow is exclusively for ITSM in a global or multi-shift environment, Cherwell’s licensing model offers substantial cost advantages over ServiceNow. Organizations such as Commerzbank, Denton ISD, The University of North Carolina, and unosquare run Ivanti ITSM.
These are just some of the key competitors in the IT service management and workflow automation space (there are many others). However, it's important to note that the competitive landscape is dynamic, and depending on the client organization’s business objectives, and specific requirements, other solution providers not listed here could be extremely viable.
Here are 5 ways to save money on ServiceNow that you should consider this year:
- Get Rid of Unused Subscription Access Licenses. The first step to reducing your ServiceNow costs is to stop paying for users that don’t use the tool. Client organizations are encouraged to closely monitor and manage unused licenses and either re-provision them to new users that are coming onto the system (to avoid paying for a new license) or simply shut them off.
- Pro Tip: User Surveys can be helpful for anyone who knows they don’t want / don’t need an access license, but you can also use Usage Analytics (for things such as login frequency) to further validate who might not need a license. It is not uncommon for a user to say they need access only to find out they have never even logged in.
- Rationalize (and Optimize) Subscription Access Licenses. It’s important to understand ServiceNow’s subscription model and the various access licenses in comparison to your user demographics and business use cases. For example, your ITSM subscription access license includes features for incident, problem, and change management, while the ITOM subscription access license includes features for discovery, service mapping, and event management. Knowing what each user needs and only giving them access to the features they need to do their jobs is key to ensuring you’re not over-paying for features you don’t use.
- Pro Tip: Beyond User Surveys (not very reliable) and even Usage Analytics (such as login frequency), look to exploit the auditing features available within ServiceNow or by leveraging third-party monitoring tools to evaluate user activity (such as ticket creation, updates, and interactions) to gain real insights on who might be using what features. About 80% of a client organization’s users only use ITSM, and very few of those (less than 20% on average) exploit the so-called advanced features.
- Avoid the Enterprise License Agreement (ELA): The ServiceNow ELA departs from a long-held industry tradition, which was if you made an enterprise commitment to a particular technology platform and signed an ELA, the supplier would reduce your costs. In the case of ServiceNow, the #1 complaint we hear from client organizations is the pricing and total cost, and many of those complaints originate from ELA customers who express confusion or dismay when we demonstrate that a conventional metric aligned against current consumption levels (even at list price) is often significantly less expensive than the so-called discounts on the ELA. This is generally caused by high amounts of ‘subscriptions on the shelf’, low utilization of various modules, and/or low use of so-called ‘enhanced’ features.
- Consider a Competitive Alternative. If you use ServiceNow for ITSM (only), which is the case for about 70% of ServiceNow’s customers, then consider a competitive offering from say Jira is about $20/user/month and ServiceNow is about $100/user/month, making Jira a fifth of the cost of ServiceNow, and depending on your needs, it is likely functionally equivalent. In fact, many of the technology (and peer) review sites rate Jira favorably to ServiceNow on a feature-by-feature comparison.
- Work with NET(net) to (Re)Negotiate. The market in 2023 is a challenge, but there is also a great opportunity. Technology suppliers like ServiceNow are openly disruptive to any client-led savings initiative, and at the same time, they will push through their own aggressive cost-increase agenda, and clients that are ill-prepared to face that, or those that do not have viable alternatives, may suffer from the considerable pressure and leverage a critical supplier like ServiceNow can bring to bear. However, for those clients that take this challenge seriously, and those who get prepared, there is also a great market opportunity as market conditions do exist that can help client organizations bring about significant cost reductions.
NET(net) Can Help:
NET(net) has extensive experience doing ServiceNow deals for clients of every size in virtually every industry and every geography. Contact us today to learn more about how we can help you save 13-53% on all your technology investments, including those with ServiceNow.
- Quick Client Case Study:
NET(net) worked with a client who was facing a huge increase in their renewal proposal, and we were able to help them not only optimize their consumption but also restructure their agreement to better align costs to the business value they are receiving. The result was not only was the client able to avoid the huge cost increase, but they were also able to benefit from a 38% REDUCTION of costs. What’s more, the new modernized approach to doing business with ServiceNow will yield additional significant business value over the years as the client continues their digital transformation efforts. ServiceNow is a core area of focus for clients, and Our Value team has been having excellent results.
Call to Action
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To successfully negotiate with ServiceNow, you need (i) a federated view of the market to understand the art of the possible, (ii) substantial buy-side knowledge and subject matter expertise to develop a plan of action that overlays the potential opportunities for value capture onto your specific environment and use cases, including, but not limited to, your business requirements, your use cases, your user demographics, and your consumption patterns among other considerations, and (iii) deep supply-side commercial expertise to model the various deal permutations to demonstrate what actions offer the highest yield of savings and benefits. The technology cartel is motivated to maximize your costs and minimize the value you receive in exchange, so you also need a fierce client advocate who shares your values to help you pay the lowest amount total to get the most amount of value. With NET(net), you get the right blend of technical, commercial, solutioning, and contractual knowledge in a partner that is exclusively committed to you.
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