It’s been a long time coming; I’ve been having conversations around ServiceNow’s IPO or their acquisition by another vendor for as long as I have been an IT analyst (and that’s late 2008). Last night its initial public offering price was set at $18 (above the previously expected $15-17 range – yes, even after what happened to Facebook) and I assume trading will have commenced by the time you are reading this blog.
But I’m not a market analyst, I’m an IT industry analyst … so bar there being a major hiccup with the valuation post-trading the real meat for me is what it all means for ServiceNow, its customers, and the IT service management tool market. And let’s not forget other software markets that it no doubt has its eyes set on. Build a platform and then exploit it – why not?
So let’s get you up to speed with ServiceNow
ServiceNow was started by Fred Luddy, the ex-CTO of Peregrine Sytems, in 2004 with the intention of making a better IT service management (ITSM) tool: "The IT industry deserves a tool that just works. We're going to give it to them." So much has happened since then: rapid growth in customer numbers and revenues (and market share), in employee numbers, and in the solution’s capabilities. In capability terms, today’s offering is a radically different beast to the initial offering – SaaS (or more specifically its PaaS) has allowed ServiceNow to grow the offering at a spectacular pace.
Where is ServiceNow now? Some quick facts and opinions
Without boring you with a ten page overview of the current ITSM tool market and ServiceNow’s capabilities, ServiceNow sits with the two previous heavyweights of the ITSM tool space (BMC and HP). BUT ServiceNow is more than just a SaaS ITSM tool:
Following the recent announcement of Forrester’s Voice of the Customer winners and while we wait for the release of a new Forrester book on Outside-In thinking, it seemed an opportune moment to look at the IT service desk from the perspective of its customers (or end users if you are still that way inclined). So the main body of this blog has been written by such a customer – they don’t work in IT they are just heavily dependent upon IT to do their job. This is how they feel …
Pre-service desk - old skool IT support seemed to work
It feels as though life was much easier before the service desk was introduced into my life. One “IT guy” supported circa 100 staff and was accessible via phone, email, IM, and by simply walking across the office floor. Times change, businesses grow, and technology becomes more complex and so we have to move on. The local (and friendly) “IT guy” gets replaced by a faceless IT team, usually locked-up in the basement floor, and suddenly we have to jump through a series of hoops to get our IT queries answered. There are incidents, requests, catalogs, and tickets, and all my colleagues and I want to know is “Why can’t I log into my email?” and “Can you fix it quickly, please?”
Thinking bigger picture
That said in reality does it really matter to a customer whether:
Their IT support is run by one “IT guy” or via a service desk?
A recent Forrester report helps IT infrastructure and operations (I&O) leaders understand the business and IT impact of service management and automation (SMA). While both IT service management (ITSM) and automation can be used effectively in isolation, I&O organizations should be seeking to use them in tandem for an "amplified" business impact.
The General Benefits Of Service Management And Automation
The general benefits of SMA can be divided between the I&O organization and the business, though these benefits often overlap:
While SMA is much more than the adoption of IT infrastructure library (ITIL), the ITSM best practice framework, thinking and processes — ITIL's benefits are quite reflective of the general benefits of broader SMA. In a survey of 491 members of the USA chapter of the IT Service Management Forum (itSMF), Forrester found that organizations which adopted ITIL experience the following benefits:
Improved staff productivity that allows the business to become more competitive (85%).
Heightened quality of service that improves business uptime and customer experience (83%).
Reduced operational costs to reinvest in new and innovative initiatives (41%).
Only a few months since I authored Forrester’s "Market Overview: Data Center Infrastructure Management Solutions," significant changes merit some additional commentary.
The major vendor drama of the “season” is the continued evolution of Schneider and Emerson’s DCIM product rollout. Since Schneider’s worldwide analyst conference in Paris last week, we now have pretty good visibility into both major vendors' strategy and products. In a nutshell, we have two very large players, both with large installed bases of data center customers, and both selling a vision of an integrated modular DCIM framework. More importantly it appears that both vendors can deliver on this promise. That is the good news. The bad news is that their offerings are highly overlapped, and for most potential customers the choice will be a difficult one. My working theory is that whoever has the largest footprint of equipment will have an advantage, and that a lot depends on the relative execution of their field marketing and sales organizations as both companies rush to turn 1000s of salespeople and partners loose on the world with these products. This will be a classic market share play, with the smart strategy being to sacrifice margin for market share, since DCIM solutions have a high probability of pulling through services, and usually involve some annuity revenue stream from support and update fees.
In a recent Forrester report — Develop Your Service Management And Automation Balanced Scorecard — I highlight some of the common mistakes made when designing and implementing infrastructure & operations (I&O) metrics. This metric “inappropriateness” is a common issue, but there are still many I&O organizations that don’t realize that they potentially have the wrong set of metrics. So, consider the following:
When it comes to metrics, I&O is not always entirely sure what it’s doing or why. We often create metrics because we feel that we “should” rather than because we have definite reasons to capture and analyze data and consider performance against targets. Ask yourself: “Why do we want or need metrics?” Do your metrics deliver against this? You won’t be alone if they don’t.
Metrics are commonly viewed as an output in their own right. Far too many I&O organizations see metrics as the final output rather than as an input into something else, such as business conversations about services or improvement activity. The metrics become a “corporate game” where all that matters is that you’ve met or exceeded your targets. Metrics reporting should see the bigger picture and drive improvement.