Let’s take a legacy system, disable key functionality, give it a new name and a cheaper price tag, and offer it to a different target market. That is exactly what ServiceNow has done with ServiceNow Express.
The Strategy Behind ServiceNow Express
When you’re growing as quickly as ServiceNow and reach the vicinity of $1B in annual revenues, you do not move the needle with small introductory level sales. The math simply does not add up. What you need is the ability to cater to a new market and offer them an entry level, cost effective proposition that can quickly evolve into a more expensive proposition. For example, intelligently restricting functionality and scope to entice customers down a migration path to a much larger, more expensive product with greater capabilities and a heavy professional services requirement. Some may think of this as a bait and switch tactic.
With stringent borders around functionality, ServiceNow Express is an entry level solution positioned for customers that have basic service desk requirements. However, once users move past “entry level” and look to scale the solution to fit their needs, they are faced with the limitations of the Express tool and are offered a migration path to the full ServiceNow suite. Such a migration path includes a much higher price tag with a lengthy and costly implementation of a full ServiceNow solution.
ServiceNow Express – How Quickly Will You Outgrow it?
The answer to that question depends on the company’s needs and goals. Maturity of IT service organizations is an evolutionary process and making sure its tools can scale in a cost effective manner is part of that journey. With ServiceNow Express, it is clear that the strategy is land and expand, moving as many Express customers to the full ServiceNow suite as quickly as possible. This will happen for only one reason — the customer requires more functionality and flexibility that can not be delivered with ServiceNow Express. ServiceNow is betting that Express customers will quickly run into product limitations and move up to the full solution, along with a more expensive license fee and professional services commitment.
What Does ServiceNow Say?
Here is an excerpt from the ServiceNow Q2 2015 quarterly call and the comments from the CEO about upgrading ServiceNow Express customers to the full suite.
When customers get into that, then they all of a sudden are starting to develop all kinds of requirements that don’t fit that highly standardized model,” said Frank Slootman, President, CEO and Director at ServiceNow. “Now we’re going into the enterprise model, it costs more money and it’s a much more powerful product. That’s typically what happens. People often think going into the process that that product will suit their needs very, very well. And then they get into the process and they develop requirements that they did not originally envision.
So, it’s not a bait and switch,” said Slootman. “It’s just that as people learn what it is that they really want to do, sometimes that triggers an upgrade.
Life lesson #529 – When a vendor promotes “excellent service”, it may be because service in that past has been particularly bad. The same could apply to taking the time to explain that something isn’t bait and switch, right?
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About Doron Gordon
Doron Gordon is a successful entrepreneur and the founder and CEO of Samanage. Prior to founding Samanage, Doron was a co-founder and VP of sales and marketing at Continuity Software, a leading provider of disaster recovery and high-availability management solutions. Earlier, Doron was a senior manager at BMC Software, a global leader in IT management software. He was also the founder and CEO at Always-On Software, an innovative application service provider.
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