In this article you will learn how you can influence the costs of a ServiceNow implementation.
Based on best practices for purchasing and managing licenses for ServiceNow, you will receive helpful tips that can save you a lot of money.
ServiceNow is one of the fastest growing cloud companies in the world. In the US, 85% of Fortune 500 companies use one or more of the company’s products. To expand this success globally, ServiceNow hired former SAP CEO Bill McDermott. He set himself the goal of acquiring more customers in Europe.
The ServiceNow platform promises to simplify work processes within the company and thus save time and money.
One issue with ServiceNow, as with many other software providers, is not at all simple or intuitive. This issue is the licensing of the ServiceNow platform and the associated products. As is usual in the industry, there is no public information on this topic. When asked about the price of a software solution, ServiceNow always refers to the sales department.
So how is the price of a ServiceNow implementation calculated?
There are many factors that influence the price of a ServiceNow implementation. Some you cannot influence. For example, prices vary depending on your company’s location and industry. In markets that ServiceNow has not yet penetrated extensively, prices are set lower to achieve higher market penetration.
What do you need to know before implementing ServiceNow?
The most important factor that can best be controlled by the customer is the scope of the ServiceNow implementation. This depends on which products are to be used in the company and to what extent.
Tip 1: It is important to define exactly which business processes are to be mapped in ServiceNow.
The ServiceNow product catalogue is constantly growing. It can quickly happen that a customer loses the overview and buys products that the company does not need. To avoid this, there must be a clear plan of what is to be achieved with a ServiceNow implementation. Only then can the customer make a well-informed decision about which products to consider.
Once you have decided which products are required, you still need to determine the scope. ServiceNow products differ in the metrics by which they are licensed. It is important to be well prepared at this point:
Tip 2: Have the metrics that are relevant for your products explained to you in detail.
Only when you have understood exactly what the metrics mean can you assess how many licenses you will need. Some metrics sound simple at first glance, but it is worth clarifying specific individual cases, e.g.
Named user metric: What about service providers who work for you and use different people?
Turnover metric: What turnover counts if only one subsidiary uses the product?
Tip 3: Use historical data, create usage profiles that match the metrics and plan future development as well as possible.
Use usage reports to map historical growth and past activity.
Evaluate user profiles to determine which licence type your employees will need. Prices for licence types vary widely and significantly affect the overall price.
Create scenarios for future use of the ServiceNow platform. You can define subsequent purchase rights for licenses in the contract to fulfil these scenarios. Subsequent purchases within this framework are subject to a fixed price for the duration of your contract.
These steps will help you to determine the required scope of functions for your company and to achieve the best price for a ServiceNow implementation.
What do you need to consider after signing the contract?
Tip 4: Continuously monitor your use of the ServiceNow platform.
The use of the ServiceNow platform should be constantly monitored. As it is a cloud product, ServiceNow always has access to your usage data. This means that under-licensing can be detected at any time. If ServiceNow detects under-licensing, you have 30 days to rectify this. If this is not possible, you must purchase additional licenses.
To prevent under-licensing, it is important to regularly check the distribution of purchased licenses. The first step is to remove inactive users from the system to release the licenses. Licenses can also be reassigned if an employee’s role in the company changes. If an employee’s new position requires fewer authorizations, a cheaper license can be assigned to them.
Tip 5: Think about renewal when you sign the contract. Include rules that limit changes to contract renewals.
ServiceNow releases a new version of its platform twice a year. The product catalogue changes with each release. Old products are often split up to sell them separately. Functions that were previously included in one product package can be split across several products as a result. This can result in high additional costs when renewing the contract. Metrics for individual products can also change with each release.
These changes mean that the system landscape must be reassessed before each contract renewal. The same rules apply here as before a new introduction of ServiceNow.
Plan a ServiceNow implementation thoroughly. The more information you gather about the planned utilization, the better you can negotiate.
Monitor the use of the ServiceNow platform. A ServiceNow contract runs for up to 3 years. When renegotiating, it is important that you know exactly how you are using the platform. Here too, more information leads to a better negotiating position.
Using the ServiceNow platform is expensive, but with a good review of platform usage you can minimize costs and save a lot of money.
SAMtoa is happy to support you in contract negotiations with ServiceNow. We help you to monitor license usage and optimize license costs
License expert of SAMtoa GmbH