SERVICENOW CONTRACT RISK OVERVIEW
ServiceNow’s growth strategy is dependent on preserving annual spend levels and deterring attrition of licenses. As a method to support their growth strategy, ServiceNow uses terms and conditions to eliminate the feasibility of switching solutions or reducing annual fees. In this ServiceNow report, we dive into the top ServiceNow contract ‘Gotchas’ used to lock in customers and continually drive cost increases. The ServiceNow contract language that is addressed in this report include:
1. ServiceNow Product Upgrades
Many ServiceNow customers rely on support services for daily business operations. ServiceNow restricts support coverage to only the most recent release, forcing many customers to continually upgrade their licenses. Depending on the size of your ServiceNow environment, upgrades could lead to millions of dollars in additional annual fees. This section details what ServiceNow contract language can be used to protect against constant upgrade fees.
2. ServiceNow Product Changes
ServiceNow commonly splits or rebrands main service offerings to create new product sets. Many of these “new” ServiceNow products offer the same level, or sometimes less functionality than their predecessor. For the customer to continue to access the same level of service, additional fees typically apply. Without specific language in your contract to lock in functionality, you could be at risk of additional ServiceNow costs whenever the vendor issues a new product change. This section provides detailed advice on how to avoid these ServiceNow cost increases and prevent ServiceNow from finding loopholes in your pricing through product changes.
3. ServiceNow Renewal Increases & Caps
ServiceNow renewal language is very aggressive, often locking customers into an ever-increasing annual fee and limited flexibility to feasibly decrease ServiceNow license counts. We detail what ServiceNow renewal cap ranges we’ve observed, what ServiceNow contract language and specific terms pose risks at renewal, and ways to achieve protective language from unforeseen ServiceNow price increases in this section.
ServiceNow contract terms and conditions are an integral part of their supplier strategy. ServiceNow will not concede to competitive terms without a strong negotiating position, because its success is tied to maintaining their standard contract language. To execute a successful ServiceNow deal, negotiators need to be wary of all ServiceNow contract risks and ways to protect their organization from future cost increases. For additional assistance on your ServiceNow purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.