ServiceNow customers struggle with pricing policies because they feel they are being pushed into higher price ranges and not taking advantage of alleged discount packages, Gartner said.
A vendor rating paper from the ubiquitous research giant said ServiceNow — a company that promises easy-to-use workflow software that aggregates business applications — “continues to perform well, expand its offerings and drive execution around digital business transformation.”
But there were a few criticisms, including the pricing.
Gartner acknowledged that ServiceNow had made progress on pricing, but said some customers still face challenges.
They include a strategy that sometimes repackages functionality into a new product type (SKU) as a way to “sell customers into newer and more expensive feature-rich products.”
At the same time, ServiceNow would move customers from legacy bundles to individual solution pricing as features move from “MVP to mature” status. This also leads to unexpected price increases.
Finally, corporate licensing agreements — meal deals that are supposed to lower the prices of individual products — sometimes raised prices, Gartner found.
“Customers struggle to understand the value of enterprise licensing agreements (ELAs) as they expect enterprise pricing to be lower, but ELAs aren’t all focused on lower pricing (and can be higher than ‘à la carte’) , but are designed to allow for greater flexibility in terms,” according to the ServiceNow vendor review.
The register ServiceNow has provided the opportunity to respond.
Another point Gartner raises gives observers an opportunity to reflect on ServiceNow’s claims about its position in the software market.
The company grew out of the IT support function and mainly supplied ticketing and help desk software.
But CEO Bill McDermott has described ServiceNow as the “defining enterprise software company of the 21st century” while promoting its expansion into HR, supply chain and customer support.
Gartner said, “While ServiceNow’s product line continues to grow, technology workflows remain an important source of revenue. Gartner estimates they generate approximately 70 percent of ServiceNow’s total revenue.”
The research group also found that 57 percent of the net new average contract value for ServiceNow comes from technology workflows, which are still growing strongly.
However, Gartner found that ServiceNow had improved its ability to interact directly with business units and was the fastest growing provider in HR service delivery and customer service.
ServiceNow had worked closely with partner organizations “to combine the power and productivity of the platform with its domain expertise”, creating innovative industry solutions.
“Despite their broad innovation, these developments can sometimes seem unrelated, raising questions about long-term packaging and the cost of new capabilities,” noted Gartner. ®