Bill McDermott (Service Today)
Credits: ServiceNow
ServiceNow is very high, with increased subscription revenue of 30 percent year-on-year and renewal rates of approximately 99 percent, CEO Bill McDermott recently boasted-so why does the vendor see the need for Impact, a new tool designed to help customers get more value from their subscription?
Because ServiceNow is cloud-based, the renewal rate is “a unique measure” to be proud of, says Adam Mansfield, a practice leader at UpperEdge, a consultancy that advises IT sourcing businesses: “If you start using it, it’s very difficult. . in renewal to stay away. “
Renewal is almost a given: What CIOs are debating is whether they need the amount they’ve made to spend, or whether they’ll add it to their portfolio-and those decisions are based on the apparent cost of the subscription, he says.
Impact’s goal, he believes, is primarily to encourage ServiceNow customers to expand their consumption of the company’s offerings.
McDermott said on Jan. 26, in the same conference call where he discussed renewal rates: “As this experience accelerates user usage, we expect a significant impact of the mix with the wider consumption of our growing portfolio of solutions. “
Another challenge for ServiceNow is determining what it is used for, at a time when Microsoft, Salesforce.com and a host of other companies are offering workflow automation as part of their portfolios of software, said Daniel Newman, chief analyst at Futurum Research.
“This overlap is becoming increasingly difficult for CIOs to bypass,” he said. “Everybody’s trying to be everyone.”
Paul Fipps, senior vice president of customer and partner excellence at ServiceNow, recognizes that getting more out of technology investments is a recurring theme in the company’s conversations with its customers.
“It’s not always an issue with ServiceNow, but in a broader way, how do we know value more quickly from the technology we’re investing in?” he says.
Businesses have spent trillions on digital transformation, but in just between a quarter and a half are realizing the return on investment they expect – a “value gap” that ServiceNow doesn’t want its customers to suffer, he said.
Impact is one way to bridge the value gap, says Fipps, a former CIO at Under Armor who estimates he spent more than a billion dollars on enterprise software in his career.
ServiceNow Impact explained
The impact is accessible through a new app built on ServiceNow’s own Now Platform and available in four tiers-a simplification compared to the previous 14 different customer success offers available as point solutions , says Fipps.
The first, “Base,” provided little more than access to online support and tutorials and was included for all new ServiceNow customers at no additional cost. Ultimately, Fipps says, it will be offered to all customers.
The other three are priced as a percentage of the contract value. “Guided” includes 24/7 technical support with access to an “Impact Squad” customer success manager and additional training; “Advanced” adds more training, technical support, tools, and access to “Impact Squad,” and “Total” includes a dedicated “Impact Squad” and additional developer support and recommendations.
ServiceNow will put customers on Impact by sitting down with them to assess the potential value it can offer them. For some that will be complicated, but “Some are new to the platform and may just need three fairly straightforward KPIs that we can measure on them,” Fipps said.
The result will be an indicator, accessible in the Impact app, to chart progress and the next steps needed, he said: “As I roll out one of our solutions, am I getting the gains in productivity, experience gains, whatever my strategic needs are? You can see that in a very visual way with ServiceNow Impact. “
Helping companies meet those strategic imperatives is where higher levels of Impact come in and includes things like faster response times if something goes wrong, Fipps says. There’s also developer support provided by “Impact Squad”, “So if you want to make some custom application on top of ServiceNow, we’ll review the blocks of code to make sure that when your team puts it in, it stays the system is working. ”
The Advanced and Total packages will include a software performance management tool: “Instance Observer gives you a view, no matter how many instances of ServiceNow you have, of how your system is performing,” Fipps says.
And then there’s all the personalized training content that the Impact app will deliver to users, selected using the Now Platform’s AI capabilities.
Members of the “Impact Squads” who communicate through the Impact app, Fipps insisted, will be fully human.
Newman of Futurum said that with the newly curated content the Impact app will provide, one way it can help businesses is by becoming a learning management system for the organization. “When you have a lot of knowledge scattered throughout the organization, the streamlining and centralization that has become the challenge that people are trying to accept in Teams, in Slack, using real learning management systems, it depends in the organization: there are many different approaches. “
Consequences
ServiceNow tested Impact with a subset of customers before launching worldwide on January 27, 2022, but UpperEdge’s Mansfield has yet to see the Impact crop in any of the contract negotiations it advises – although, he says, many of his clients are invited to meetings to discuss it, even though their contract with ServiceNow is not for renewal.
Although Impact involves members of ServiceNow’s “Impact Squads” doing things for customers, Fipps insists it’s a product, not a service.
That framing may be because, despite the stated goal of closing the value gap, ServiceNow offers no guaranteed result: Customers pay for the means, not the end. If Impact does not deliver the expected amount, Fipps says, “They may not renew Impact at the end of the cycle. That’s the ultimate consequence: Customers vote with their wallets. ”
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