Traditionally, business processes have been automated and embedded across enterprise technology systems from finance, human resources (“HR”), sales, customer support, and beyond. Over time, these systems have become disconnected, siloed, and complex. They offer limited flexibility and adaptability and lack the intuition and empowerment users expect from consumer-grade internet applications and sites.
ServiceNow reduces these limitations. ServiceNow offers the capability to quickly change how work is done to keep pace with a rapidly changing environment. The Now Platform delivers a simple, user-friendly experience, making work easier, faster, and more productive.
ServiceNow, founded in 2003, is an American software company based in Santa Clara, California, that develops a cloud computing platform to help companies manage digital workflows for enterprise operations.
In 2018, Forbes magazine named it number one on its list of the world’s most innovative companies. In this strategy story, we analyzed the business model of ServiceNow and learned what does ServiceNow do. How does ServiceNow work?
What does ServiceNow do?
ServiceNow was founded on a simple premise: a better technology platform will help workflow better. ServiceNow helps global enterprises across industries, universities, and governments to digitize their workflows—the individual tasks that need to be executed to get a job done.
ServiceNow’s technology platform, Now Platform, connects workflows across siloed organizations and systems to unlock productivity, improve employee and customer experiences, and deliver real business outcomes.
ServiceNow organizes its workflow applications along four primary areas: Technology, Customer and Industry, Employee, and Creator.
- ServiceNow’s Technology Workflows give Information Technology (“IT”) departments the ability to plan, build, operate, and service across the entire technology lifecycle.
- ServiceNow’s Customer and Industry Workflows help organizations reimagine the customer experience and increase customer loyalty.
- ServiceNow’s Employee Workflows help customers simplify how their employees get the services they need, creating a familiar, consumer-like way to get work done from wherever an employee may be—at home, in the workplace, or in the field.
- ServiceNow’s Creator Workflows enable ServiceNow’s customers to quickly create, test and deploy their applications on the Now Platform.
The Now Platform’s task-based orientation allows work to be done with a single, aligned view of every service experience. For example, a new employee uses ServiceNow to complete onboarding tasks with their new employer.
The new employee interfaces through an integrated ServiceNow platform that guides the employee through tasks originating from ServiceNow or other systems. Similarly, customer service can be executed in a way that solves problems without creating frustration.
The Now Platform
The Now Platform is a single platform with one data model, code base, and architecture, enabling speed, productivity, and innovation and offering a one-stop shop for automation and simplifying manual processes. It is highly flexible, scalable, and extensible.
The Now Platform delivers workflows across siloed organizations and systems by connecting them to unlock productivity and improve employee and customer experiences. The Now Platform integrates with ServiceNow’s customers’ cloud platforms and systems of choice, allowing ServiceNow’s customers to deliver workflows across their current and future preferred systems of record and collaboration platforms.
The automation of workflows on ServiceNow’s platform can be enhanced by additional functionality, such as artificial intelligence (“AI”), machine learning, robotic process automation, process mining, performance analytics, electronic service catalogs and portals, configuration management systems, data benchmarking, encryption and collaboration and low-code/no-code development tools.
The Now Platform also powers three native mobile experiences for everyday work across the enterprise: Virtual Agent, Now Mobile, and Mobile Onboarding. Enterprises can leverage ServiceNow’s platform’s consumer-like, mobile experiences to help them deliver services such as HR information and tools or order a computer.
ServiceNow’s Products
The product portfolio in the business model of ServiceNow spans Technology, Customer and Industry, Employee, and Creator Workflows and is delivered on the Now Platform. The products under each of ServiceNow’s workflows help customers connect, automate and empower work across systems and silos to enable great business outcomes and experiences for people.
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Technology Workflows: ServiceNow’s Technology Workflows help companies unite IT, risk management, and security operations on a single platform to deliver modern, resilient digital services aligned with ServiceNow’s customers’ priorities.
ServiceNow’s Technology products assist IT departments in serving their customers, managing their networks, identifying and remediating security vulnerabilities and threats, gaining visibility across their IT resources and asset lifecycles, optimizing IT costs, and reducing time spent on administrative tasks.
Customer and Industry Workflows: Customer and Industry Workflows help drive customer loyalty with connected digital workflows that deliver modern customer experiences. Customer and Industry Workflows help customers elevate their customer service with enhanced resolution efficiency and improved service quality made possible with workflows, automation, and location-based work tasks management.
Integrating front-end customer service capabilities with operations and field service resources, ServiceNow’s Customer and Industry Workflows products help create a seamless customer experience from issue to resolution through connected digital workflows that deliver fast support on a customer’s channel of choice.
Employee Workflows: ServiceNow’s Employee Workflows can transform the employee experience and make work better for ServiceNow’s customers’ employees by letting their employees work and collaborate where and how they want, improving productivity and agility.
Creator Workflows: Creator Workflows help customers build and manage cross-enterprise digital workflow applications fast with a low-code platform that safely delivers agile services at scale and with enterprise-wide platform features such as those that allow customers to manage security and privacy instances and storage. With Creator Workflows, citizen developers have access to pre-built templates, low-code tools, and modular building blocks created by professional developers.
What is the business model of ServiceNow?
Customers
ServiceNow service sells under a Software-as-a-Service, or SaaS, business model. ServiceNow primarily sells its services to large enterprise customers and hosts and supports large, enterprise-wide deployments for ServiceNow’s customers. As of December 2022, ServiceNow had approximately 7,700 enterprise customers.
ServiceNow’s customers operate in various industries, including government, financial services, healthcare, manufacturing, IT services, technology, oil and gas, telecommunications, education, and consumer products. The portion of ServiceNow’s revenues generated by sales to government customers has also increased over time.
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Sales and Marketing Strategy of ServiceNow
ServiceNow sells its product offerings and services through subscription services primarily through its global direct sales organization. ServiceNow also sells services through managed services providers and resale partners.
ServiceNow’s marketing strategy and lead generation activities consist primarily of customer referrals, digital advertising, trade shows, industry events, brand campaigns, and press releases. ServiceNow also hosts its annual Knowledge user conference, webinars, and other user forums, including regional forums, where customers and partners participate in and present on various programs designed to educate them on industry best practices and help accelerate their success.
ServiceNow continues to expand its sales capabilities in new geographies, including through investments in direct and indirect sales channels, professional services capabilities, customer support resources, post-sales customer support resources, strategic alliances and partnerships, implementation partners, and advisory councils.
Partner Ecosystem
In addition to a global direct sales organization, ServiceNow also has a strong and growing ecosystem of partners that helps accelerate ServiceNow’s customers’ digital transformation initiatives and deliver customer value at scale.
ServiceNow’s industry and workflow capabilities, paired with ServiceNow’s partners’ industry and functional domain experience, help customers of all sizes. With its partners, ServiceNow offers industry and domain-focused solutions at scale and accelerates digital transformation as ServiceNow helps companies drive new approaches in engaging their end users and employees.
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Revenue Model
ServiceNow made $7.2 billion in 2022. ServiceNow has a SaaS business model that derives its revenues predominately (95%) from subscription revenues, which are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support, and updates, if any, to the subscribed service during the subscription term.
ServiceNow also derives revenue from professional services. Professional Services include process design, implementation, configuration, architecture, and optimization services.
Subscription revenues increased by $1.3 billion for 2022 compared to the prior year, primarily driven by increased purchases by new and existing customers. Professional services and other revenues increased by $31 million for 2022, compared to the prior year, due to increased services and training provided to new and existing customers.
Results of Operations
As per ServiceNow’s 2022 Annual report,
