Why did you decide to go with ServiceNow in the first place? How are you quantifying your instance and ROI? The two often go hand-in-hand, and today we'll discuss how you can make sure your investment has been worth while.
My name is John. I'm here to help you make better choices when implementing ServiceNow. Because when you plan for months, and reallocate your IT budget around a new ITSM cloud system - it better work.
This is the final chapter of a five-part series about making sure your ServiceNow instance fits your business model.
Not your implementation partner's model.
Not ServiceNow's (the company) model.
Not your CTO's or your IT department's model.
But your business model.
In part one, we discussed what I wish I knew from the start about implementing ServiceNow, framed around a question: How can we be certain that we're building the right instance for our business?
In part two, we emphasized the power of co-authorship, and aligning your instance to the business via CMDB.
Part three identified agenda champions to push your agenda forward, explaining how SMEs and a SPOC are important for your CAB and cultural agenda.
And part four discussed how to build a culture of "yes" within the department of "no."
If you don't want to read each post individually, you can access the entire series, with extra insights, in one guide by downloading it here.
Why Are You Using ServiceNow?
W. Edwards Deming said that "if you can't describe what you are doing as a process, you don't know what you're doing." That statement holds true for ServiceNow implementations, and often why people have trouble implementing the best system for their business.
ServiceNow is a platform as a service (PaaS). You can use it to build anything. ServiceNow, the company, elected to go with IT service management (ITSM) to introduce the platform as a service to customers. Every business using a computer is subject to IT service management.
ITSM is shared across millions of companies.
That’s a positive and a negative. It’s a great selling point for ServiceNow because IT is the door to most industries. ITSM is expandable and has a wide variety of integration types. You can move data in and out of it for just about anything. The control, however, can get away from you. I have seen all kinds of custom and wild applications created in ServiceNow. Most usability and support problems are caused by multiple factors including the following:
- There’s no strategic roadmap
- The service partner who implemented the tool is no longer accessible
- Applications are too custom
- Applications were built without considering industry best practices
- Applications were created by an employee who is no longer employed
Look inward to determine why you plan to use ServiceNow. Yes, operational agility and visibility into one integrated IT framework are important long-term benefits.
That covers the Service part, but what about Now?
The immediate gains will come via cost savings, and they are rather lucrative.
Most organizations begin their ServiceNow engagement for the purposes of a service desk tool, and then the expansion of IT service management capabilities.
The employment of request fulfillment, change management, and problem management will improve your processes, but operational cost savings can be difficult to quantify.
Capital costs, on the other hand, are highly scrutinized, and that’s where immediate gains are realized. They come when you replace legacy systems, which is perhaps the most critical point of your ServiceNow implementation because failure means not having any system in place.
It is imperative that your ServiceNow partner helps you bridge the gap between legacy systems and the new platform.
Candidates for Cost Reduction Include:
- Legacy software you can replace
- Support required for online databases
- Architecture support
- Personnel required to run legacy software
When you consolidate those functions into a single cloud-based framework, you see a reduction of capital costs. In addition, consider the loss of personnel that supported a specialized application or network more of a shift. You will still need people to maintain your ServiceNow instance.
Let's explore a personal example of the cost-saving benefits of ServiceNow.
Story: The Budget Meeting
A few years ago, I was working at a university’s IT department, and was about to enter the yearly budget meeting. I know – fun.
As we reluctantly dragged ourselves into the university’s IT conference room, we were greeted by a cold AC blast.
The meeting started like an interrogation. A single question was asked, and one by one, each department responded.
“What are your infrastructure budget projections?”
First was the data center architect, who said, “Well, we’re projecting about a $150,000 increase in spending.”
And then the application guy said, “We’re looking at about a $600,000 increase.”
And then the server guy said, “To support that, we’re looking at a $200,000 increase.”
The question finally got around to my boss, who wasn’t even addressed by his name, but by department, “IT service management, what is your cost projection for next year?”
“What is your increase?”
We had a $2,300 cost and we were fully integrated. It was the best feeling in the world to have my boss say that our annual predicted budget increase was four figures, and not six.
The six-figure infrastructure supported twenty systems, all which could be moved into ServiceNow without any increase in annual costs.
You can calculate the value of ServiceNow as part of your implementation plan. In their latest report, Delivering Enterprise Value with Service Management, IDC interviewed ServiceNow customers (large companies with over 20,000 employees) and found the following:
- Total discounted benefits of $36.8 million over five years
- An average return on investment (ROI) of 449%
- A 7.4-month breakeven average
If you’re unsure how to begin tracking costs, ask your implementation partner (or potential partner). Today, when a 4th Source customer asks us to implement a solution, we find that what they ask for is often not what they need. They need something completely different from the original vision – and so we lay out their options.
The Importance of Documentation
Documenting your processes is a key step towards building a successful ServiceNow instance. It’s fine if you do not have a documented process. It means that your partner needs to help you create one before discussing the tool.
Expect your partner to help you define your process, get your executive group to confirm it, sign it, stamp it, and communicate it.
An eight-billion-dollar customer of ours didn’t have a defined change management process. They did everything with spreadsheets and emails.
What did we do?
- Documented a policy
- Documented a process
- Branded it with their likeness
- Helped their executive committee sign off on it
- Used a communication plan to distribute it
Quantifying Your Instance
Baseline. Baseline a lot. Baseline reports. Baseline everything you can, because at some point, somebody is going to say, “show me a return on that investment.”
You’re setting a marker to meet requirements. Your partner should help facilitate the conversation, but it’s up to you to establish critical success factors (CSF).
For example, if one CSF is to reduce time from incident open to close, I would:
- Measure the baseline metric of mean time to resolution (MTTR)
- Create a dashboard with enterprise-wide MTTR averages
- Break those down by assignment groups to discover who takes longer to resolve incidents
- Focus on the groups that are understaffed or undereducated
- Employ new procedures, increase staffing, or provide education
- Measure the new MTTR compared to the baseline
You might even have to baseline your project down to a dollar figure. How much time and money does it cost to resolve an incident today, on average? How much money are you going to save by improving a service?
How Often Do Partners and Companies Actually Go through with Baselining?
From my experience, it’s not often. I’ve seen people baseline less than half the time.
The risk of not baselining is that, when you start implementing improvements, you may not be able to quantify your exact return on investment. You’ll be able to generalize it, but you won’t be able to get to the detail.
We set up baselines for all new customers – with all IT Service Management improvement – measuring time and resources required to deliver services as well as satisfaction.
The Power of People & Voice
One simple baselining method is to send out customer satisfaction surveys before any process improvements. Now we get the voice of the user. We see a low customer satisfaction in February, and then in June, after we’ve implemented fifteen or twenty process improvements, we see the satisfaction increasing.
Again, leadership involvement is a must. Without involvement of your executive team, and without their signatures on policies and process documents, people will not take it seriously, or view it as "just another tool."
They’re not going to understand the cultural change.
I'm sure you've discovered a theme with ServiceNow implementations. Of the classic people, process, and tool, it is ultimately people who will usher your ServiceNow instance into a successful platform, or prevent it from getting there.
Hire the right partner, prep the right team, and take a look inward at your culture. Only when these are aligned will your ServiceNow instance perform the way you expect it to.
Since you've taken the time to check out the articles from this series, we highly suggest downloading the full ServiceNow guide. It contains extras, like a summary section with a list of actionable advice you can use now. Grab your free copy here:
How to Build (or Fix) a ServiceNow Instance That's Right for Your Business