Cost Implications of ServiceNow Orlando Release – Enterprises Need to Approach Renewals with Caution


May 04, 2020

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ServiceNow recently rolled out its Orlando release – a healthy update of new features including new predictive intelligence and reporting capabilities, smarter CSM and HR Service Delivery features, enhancements to DevOps, GRC, ITBM and ITSM, and an updated mobile platform. The ServiceNow Orlando Release speaks to the vendor’s responsiveness to market demand. Its ability to methodically keep pace with customers’ changing business requirements is just one reason the company continues to successfully expand its footprint within the enterprise.

For the most part, the Orlando release focuses on new features and enhancements that will serve users well. There are some structural changes worth noting from a cost perspective, including (1) the introduction of a new, more expensive Operator license for Integrated Risk Management, and (2) a higher price point for Security Operations subscriptions that include both SIR Standard and VR Standard.

But the reality for many ServiceNow customers is they are still navigating the cost impact of structural changes to licensing and pricing introduced in previous releases. This includes the long-tail implications of ServiceNow’s decision to break up its core offering, ITSA Unlimited, into separate solutions – each of which are now licensed/priced by different metrics. Examples include:

  • ITBM: User types have been changed to worker, planner and analyst – each with different price points and corresponding usage rights and functionality.
  • CSM: Introduction of a two-tier user type subscription model (Standard and Pro).
  • GRC: Subscriptions and fees are tied to employee count – not direct user count. This means a sharp increase in subscription volume and, therefore, cost.
  • HR Service Delivery: Similar to GRC, the pricing and subscription model is no longer based on direct users (or fulfiller users), but the number of overall HR staff including part-time workers and contract/contingent labor.
  • ITOM: In the New York release, the pricing model for ITOM changed as the solution was broken into three individual applications. Previously priced by node (server), the applications are now priced according to which types of servers can interact with each instance – now categorized as configuration items. This translates into highly customized pricing and subscriptions based on customers’ unique functionality requirements and infrastructure.

ServiceNow Orlando and Beyond – How to Keep Costs in Check Amid Constant Change

As customers encounter these changes, it’s important they have visibility into ServiceNow’s flexibility during renewals. It’s possible for some customers to stay on ITSA Unlimited with a justifiable business case. Others may be able to retain functionality rights to certain products carved out of the ITSA Unlimited SKU at zero cost. Bundling is also evolving at ServiceNow and presents a leverage opportunity or an overspend pitfall, depending on current and future-state business and user requirements. And, renewal timing is also a point of leverage worth exploring. ServiceNow is aggressive in its push for early renewals and may be willing to provide past functionality for free or reduced cost in exchange for a renewal completed early.

ServiceNow’s offerings and pricing/subscription metrics will continue to evolve at a regular, but speedy cadence. In some ways, it’s good news for customers. For others, the pace and scale of these changes will be hard to digest. As you approach a renewal, it is important to conduct a formal analysis of how these changes impact your ServiceNow estate and spend, and map them against where ServiceNow is willing to be flexible to accommodate your business requirements. This mapping, combined with price benchmark analysis, is the key to optimizing cost and licensing flexibility for this increasingly entrenched enterprise solution.