Businessmodel of ServiceNow

Customer Segments

ServiceNow has a niche market business model, with a specialized customer segment. The company targets its offerings at large enterprise organizations that need an IT services management solution. Its customers include those in the financial services, IT services, consumer products, technology, and healthcare industries.

Value Proposition

ServiceNow offers four primary value propositions: convenience, performance, risk reduction, and brand/status.

The company’s solution offers convenience by providing a single system of record. It reports infrastructure and service events across numerous IT systems and monitoring tools, making it easier for users to identify and fix problems and restore services more rapidly. Also, the solution is delivered via a cloud platform, allowing customers to quickly deploy and easily configure applications.

The company has demonstrated strong performance. Its solution can process billions of transactions on a monthly basis and manage several petabytes of data while optimizing processing time for transactions. It has also produced many positive outcomes for individual clients. High-profile examples include the following:

• Cars.com used the solution to save its HR department more than 300 hours a year in onboarding processes and enable its IT department to handle 60% more service request tickets a month
• H&R Block Canada used the solution to manage customer service more effectively, improving its Net Promoter Score (NPS) by 12 points
• Swiss Re used the solution to replace 20 separate legacy applications – streamlining its operations and improving service delivery across the organization
• Gatwick Airport used the solution to optimize service delivery, reducing operating costs by 15%
• Zillow used the solution to solve problems quicker, reducing thousands of events to less than 100 The company reduces risk by operating a single-instance architecture (most cloud providers operate multi-tenant environments on shared infrastructure databases and servers). Customers have their own database and application processes, which lessens the likelihood of infrastructure outages.

The company has established a strong brand due to its performance. It has over 3,000 enterprise clients, including over 30% of the Forbes Global 2000. It is also listed on the Russell 3000 index.

Channels

ServiceNow’s main channel is its direct sales team, which was responsible for 89% of its revenues in 2015. It also sells its offerings through resale partners, managed service providers, and systems integrators, especially in less developed regions. The company promotes its solution through its website, social media pages, online advertising, webinars, seminars, attendance of trade shows/other industry events, and the annual “Knowledge” user conference that it hosts.

Customer Relationships

ServiceNow’s customer relationship is primarily of a personal assistance nature. It provides customer support through phone and e-mail 24/7, 365 days a year. It also offers:

• Training solutions consisting of virtual and instructor-led classrooms; they are provided either by the company or one of its authorized training partners
• Certification exams for customers who want to demonstrate mastery of its products
• Consulting services to assists customers with implementation and optimization Despite this orientation, there is a self-service component. The company’s website features a Customer Service Support Portal where clients can manage their users, upgrades, and instances. It also provides a “Resources“ section with various self-help tools, including white papers, eBooks, data sheets, videos, webinars, and product documentation. Further, it presents self-paced online courses as part of the training progra. ServiceNow also provides a community element in the form of “ServiceNow Community“, a forum where users can interact with peers.

Key Activities

ServiceNow’s business model entails maintaining a robust software platform for its customers.

Key Partners

ServiceNow maintains the following partnership programs:

Sales Partner Program – Companies that resell ServiceNow offerings, offer managed and outsourcing services, and submit customer referrals. Specific partners include Aeritae Consulting and Inergex.

Services Partner Program – Companies that establish ServiceNow practices in subcontracting, outsourcing, application development, and consulting. Specific partners include Cognizant Technology Solutions, Infosys Technologies, L&T Infotech, Unisys, Arrow S3, and CBTS.

Technology Partner Program – Companies that develop and certify their integrations or apps on the ServiceNow platform. Specific partners include BDNA Corporation, Flexera Software, and Bomgar.

Benefits for partners in these programs include the following:

• Access to ServiceNow’s Partner Portal, which has exclusive content
• Receipt of enablement and training materials
• Opportunity to participate in and sponsor events ### Key Resources

ServiceNow’s main resource is its proprietary software platform, which serves over 3,000 customers.  It also depends on its research and development employees to maintain and update the platform, training and consulting staff to provide learning and advisory services, respectively, and customer service staff to provide support.  The company maintains data centers in the U.S., Canada, and several countries in Europe, Asia, and Australia. Lastly, as a startup it has relied heavily on funding from outside parties, raising $83.7 million from three investors as of March 2012.

Cost Structure

ServiceNow has a value-driven structure, aiming to provide a premium proposition through significant personal service and regular product improvements. Its biggest cost driver is cost of revenues, a variable expense. Other major drivers are in the areas of sales/marketing and research and development, both fixed costs.

Revenue Streams

ServiceNow has two revenue streams:

Subscription Revenues – Revenues generated from fees charged for access to ServiceNow’s platform, as well as associated support (e.g., data backup, disaster recovery services) and upgrades

Professional Services and Other Revenues - Consist of the following:

• Professional Services - Revenues generated from fees charged for deployment and configuration of ServiceNow’s subscription service
• Other Revenues – Revenues generated from fees for customer training and sponsorship/attendance fees for the Knowledge user conference