It’s finally here. The Forrester Market Overview: SaaS IT Service Management Tools covers: a little ITSM tool history and how we have moved on, the benefits and risks of the SaaS delivery model, key selection criteria for selecting a SaaS (or on-premises) tool, and overviews of 23 tools (from 21 vendors) and their functional capabilities across the enterprise and midmarket marketplaces.
“Why on earth did you write a SaaS-only ITSM report?” I hear some cry
It’s simple – Forrester client demand. In 2012, a good 25% of my 400ish a year client inquiries related to IT service management (ITSM) tool selection; and the SaaS-delivery model (and the key vendors) was covered in nigh on all of them. That’s not to say the client ultimately went SaaS though, inquiries are very much about rapid information exchange in helping clients make important decisions. It’s not about making the decision for the client.
What the SaaS ITSM market looks like
The following figure shows the 23 vendor tools split by average customer subscription (seat) count (described as Enterprise, Upper Midmarket, and Lower Midmarket) and their degree of customer success (the number of paying customers):
There are of course other ITSM tool vendors who declined to participate for a variety of reasons. One would be that they were not briefing Forrester analysts and thus not on our radar.
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:
OK, the second part of the title is probably untrue. But hopefully Forrester IS your favorite place for IT service management (ITSM) analysis and opinion.
My colleague Dave Johnson (who is well worth following from a Twitter and blog perspective BTW) wrote an immediate reaction to the BMC announcement yesterday. Of course as analysts we are pre-briefed on such things and having had time to think about the announcement I offer the following somewhat random thoughts and opinions:
BMC (and everyone else) is “suffering” at the hands of ServiceNow in the enterprise ITSM space (both new and existing business). Some might see the Numara purchase as a retreat to the mid-market or a tactical diversion to maintain revenue growth in light of shareholder expectations. However, I think it is most likely point 3 (below) – especially in light of the fact that BMC are nearly always in my discussions with Forrester clients on ITSM tool selection (albeit sometimes only from a replacement perspective). And let’s not forget that BMC has long been the dominant ITSM player in terms of customer base with its enterprise and mid-market plays – Remedy and Service Desk Express. BMC continues to win a lot of new business. This is an offensive rather than defensive move.
Yes, there I said it. I can see the “Cult of SaaS” snipers congregating on the rooftops. Oh well, it was fun while it lasted.
In all seriousness though, when ServiceNow was quick to achieve success with its “SaaS-delivered IT service management goodness” at the tail end of the noughties, it was all about the SaaS (and customer satisfaction of course). It differentiated them from the ITSM tool vendor pack.
The "SaaS for ITSM" evolution
In a previous life I wrote about the potential for SaaS-delivered ITSM capabilities: SaaS and ITSM – a Marriage Made in Acronym Heaven? Who would have known that Service-now.com, as was, would have done so well, so quickly? I trust that their own projections were somewhat exceeded.
Some on-premise ITSM tool vendors said “unpleasant things” in the early days, but nigh on all of the major and minor ITSM vendors have since followed suit with their own SaaS offerings. In the spirit of the BBC and product endorsement I have to say that “other ITSM tools are available.” Check out some of the newest SaaS ITSM tool additions from Hornbill, LANDesk, and Numara.
Why is SaaS for ITSM a red herring?
Anyway, cutting to the chase … what sells a SaaS ITSM tool (or platform) such as ServiceNow? Many would think it is the fact that it is SaaS. I disagree.