Service-now.com Introduces SaaS Economics to the IT Management Software Market

SAN DIEGO ‑ Nov. 3, 2010 ‑‑ Service‑now.com, the creator of modern software‑as‑a‑service (SaaS) for IT service management (ITSM), today announced a comprehensive total cost of ownership (TCO) analysis comparing its modern SaaS ITSM solution and legacy on‑premise and hosted ITSM tools. Major findings of the analysis indicate that modern SaaS saves IT organizations up to 75 percent on the cost of the tool itself, eliminates infrastructure and upgrade‑related costs, and dramatically reduces consulting costs by 92 percent. Full details of the TCO analysis are available in the recently published Service‑now.com white paper, "SaaS Economics."

Based on work with enterprise IT organizations that have used legacy ITSM tools, Service‑now.com helped analyze tool TCO during a span of several years. While comparisons typically focus only on upfront licensing costs, legacy on‑premise and hosted software requires significant additional expenses that must be considered for accurate cost accounting during the life of a deployment, including:

  • Software licensing, maintenance and support – in addition to the upfront cost of the software, customers can expect to pay at least 15 percent of the list price in annual maintenance fees with incremental costs if they want to add new applications or upgrade support.
  • Consulting – a legacy ITSM tool implementation requires a significant consultant time – 47 weeks, on average – nearly tripling the cost of the initial purchase price. In addition, complex legacy software typically requires more consultant time to tune, upgrade and re‑implement the software about every three years.
  • IT staff – on‑premise enterprise ITSM deployments typically require several full‑time staff members, including system administrators, application and database server administrators, and developers.
  • Infrastructure – hardware and licenses for servers and databases are needed to run the applications as well as testing, QA and production environments. In addition, eventual hardware refreshes and redundant, off‑site equipment for business continuity planning.

"We were looking for ways to drive down our IT costs," said Susan Roy, Temple‐Inland manager technical customer services. "We looked at our technical services and support model from an entirely new perspective and came to the conclusion we needed to incent our service providers for quality not quantity. Also, we had to eliminate our legacy IT service management tool support and maintenance. In terms of hard dollar savings we were able to cut our costs in half and these savings do not take into account productivity and efficiency gains, which are substantial as well."

Matt French, Service‑now.com director of marketing, said, "In many ways, buying legacy enterprise software is akin to buying a car without regard to gas mileage, reliability ratings or other costly operational factors. What may have seemed like a good idea on the car lot, becomes a money pit in the driveway. Aside from providing the most efficient and intuitive solution for IT management, modern SaaS turns the tool TCO equation on its head while not compromising functionality, flexibility, or security."

The TCO analysis also investigates the delivery of legacy ITSM software on demand through an application service provider (ASP) hosted model as a potential cost saving alternative to on‑premise software. However, since the ASP is simply providing residency for the legacy ITSM tool, the same application maintenance and support costs remain and are magnified when customers attempt to customize their applications or configuration, often triggering additional fees from the hosting provider.

In contrast to legacy ITSM software hosted on premises or from an ASP, SaaS from Service‑now.com requires no infrastructure, maintenance or upgrade costs; a flat implementation fee avoids 92 percent of the typical consulting costs; the need for only one‑half of a full‑time employee's time for application administration; no‑cost application upgrades three times per year; and continuous monitoring, support and full redundancy.

More details of the TCO analysis, cost assumptions, specific calculations and customer anecdotes are included in the "SaaS Economics" white paper, which is available for download from http://www.servicenow.com/community/white‑papers/.

About Service‑now.com

The Service‑now.com enterprise IT service management platform combines ITIL v3 process support and SaaS delivery to provide a flexible, intuitive and self‑managing, cloud‑based application. Founded in 2004, Service‑now.com uses a new business model and modern technologies to disrupt the status quo. According to the 2010 Inc. 500 list, Service‑now.com is the fastest‑growing IT management software company. For more information, please visit http://www.service‑now.com/ or http://blog.service‑now.com.