ServiceNow Release May Spark Price Changes for Customers
  • Daniel Beyh

ServiceNow Release May Spark Price Changes for Customers

Updated: Apr 10

On March 13th, ServiceNow revealed details about “Orlando,” its latest product release. These releases update functionality, improve performance, and provide a vehicle to change pricing and enforce increases at renewal time.


The changes in "Orlando" include three newly released products:


1. Cloud Insights


Function:

  • Optimizes the cost of cloud assets

How it fits into ServiceNow offerings:

  • This product will fit within the IT Operations Management (ITOM) product family

  • It’s unclear which ITOM suite bundle this will apply to, but based on the name and function, it’s likely to fall into the Enterprise package


2. Now Intelligence


Function:

  • AI/Machine learning to reduce repetitive tasks

How it fits into ServiceNow offerings:

  • An add-on to the Now Platform

  • The Now Platform is provided when you buy any ServiceNow product

  • The platform sits underneath a ServiceNow product to provide additional functionality that spans across your entire environment

  • Customers must pay extra if they are need additional customization to their ServiceNow environment


3. Mobile Agent


Function:

  • Virtual agent (chat bot) that can be used via mobile devices

How it fits into ServiceNow offerings:

  • Mobile app should remain included with product purchases with no direct cost increase related to its change


In addition to the three new product offerings, enhancements were made to Integrated Risk Management (IRM), Customer Service Management (CSM), and HR Suites as expected, based on ServiceNow’s Q4 earnings announcement.


These new products and enhancements come as a direct result of the company’s January acquisitions of Passage AI and Loom Systems. This solidifies our prediction about recently appointed CEO Bill McDermott’s strategy of using acquisitions to expand ServiceNow’s product families and platform.


What does this mean for customers?


1. Any additional acquisitions made by ServiceNow may directly affect the products customers adopt, and at renewal time, result in price hikes as high as 30% (as seen in the ServiceNow renewal cases ClearEdge has recently inspected).


2. ServiceNow reps are typically compensated at a higher rate for newly released/updated products, so the following products sets will generate additional leverage for the buyer during negotiations:

  • ITOM Enterprise

  • IRM

  • HR

  • CSM


3. The price for additional customizations on the NowPlatform may increase:

  • Usage of the NowPlatform is based on the number of custom tables utilized by the customer

  • Custom tables are a popular use case for clients, so ServiceNow may look to monetize these


For more information on ServiceNow pricing and sales practices, please contact a ClearEdge representative, or download our e-Book on the Top ServiceNow Gotchas in a ServiceNow Contract.


Dan Beyh is an Analyst II at ClearEdge Partners.