Rightsizing Your Spend with ServiceNow
Published on 08 Mar 2021
Purchasing the right license for ServiceNow
Servicenow has four user types: Requester, Approver, Fulfiller, and Unrestricted User. The type of users your organization needs will influence how the ServiceNow team will license your business. It is the most important factor to account for when you are making a deal with ServiceNow. User types are also tied to the functionality available to your business. Based on the number of licenses your business will purchase and the limits to the functionality you are to your cost will scale up or down. In this white paper, Clearedge highlights the differences between ServiceNow’s four user types and provides tips on planning which licensing model you should use to build your demand profile.
See Also: Rightsizing Your Spend with Salesforce
Key considerations when negotiating with ServiceNow
There some common mistakes that businesses make when making a deal with ServiceNow. We have listed below the four main points that businesses should consider when making a deal:
1. User Type Comparison Pros & Cons
Not all users of the software have the same requirements. Depending on their role, employees in an organization may need to use ServiceNow for different functionalities. Understanding this, ServiceNow gives businesses the option to choose between four user types and accordingly select a licensing model. Businesses should start by understanding who will need access to the software, what features will they use and how often will they use them. This will allow businesses to select the most appropriate licensing model for their requirements.
2. How to Forecast Accurately
Often licensing agreements span for a period of one or two years before renewal. It is important for businesses to purchase a license that will be able to meet not only their current requirements but also any needs that may come up before renewal. Trying to expand usage or purchase more licenses before renewal can be very expensive. In such a scenario the business will not have any leverage and ServiceNow sales representatives will be able to dictate the terms in such a scenario. Hence, when making a deal with ServiceNow businesses should create as accurate a demand forecast as possible. This will help them avoid costly expansions and additions before renewal.
3. Fear of under-purchasing
Often businesses are afraid of over-purchasing licenses and locking their capital. This causes them to only look at the short term and buy licenses as needed. The downside of this is that the business will lose its leverage. Instead of a single negotiation where a larger number of licenses are being purchased the business will end up with multiple small purchases that renew at different times. Often these types of deals are made at suboptimal pricing.
4. Be careful not to over-purchase
There are significant downsides to both over and under-purchasing. Hence, understanding demand and forecasting accurately is crucial. ServiceNow sales representatives are very good at inflating demand forecasts and convincing businesses to purchase more licenses than they need. Businesses should be on the lookout for such tactics and ensure they have a proper understanding of their current and future requirements.
Download this white paper by ClearEdge to learn about ServiceNow user types and how businesses can negotiate effectively in order to get the best deal.