A FORRESTER TOTAL ECONOMIC IMPACT™ STUDY COMMISSIONED BY SERVICENOW The Total Economic Impact™ Of ServiceNow Strategic Portfolio Management Cost Savings and Business Benefits Enabled By SPM JUNE 2023 THE TOTAL ECONOMIC IMPACT™ OF SERVICENOW SPM Table Of Contents Executive Summary ................................................. 1 The ServiceNow SPM Customer Journey ............. 6 Key Challenges ...................................................... 6 Composite Organization ......................................... 8 Analysis Of Benefits ................................................ 9 Reduction In Nonproductive Investment Spending 9 Faster Time To Value ........................................... 11 Improved Efficiency For Senior Management Review And Approval Of Initiatives ...................... 13 Improved Efficiency For Planning And Reporting 15 Improved Efficiency For Optimizing Resource Management ........................................................ 17 Improved Efficiency For Documenting Agile Sprint Cycles ................................................................... 19 Imporved Efficiency For Business Relationship Manager Data Gathering ...................................... 21 Avoided Costs Of Prior Solution ........................... 23 Unquantified Benefits ........................................... 24 Flexibility ............................................................... 26 Analysis Of Costs .................................................. 28 ServiceNow Fees ................................................. 28 Third-Party Professional Services Fees ............... 29 Internal Effort For Implementation And Ongoing Management And Support ................................... 30 Financial Summary ................................................ 32 Appendix A: Total Economic Impact ................... 33 Appendix B: Endnotes .......................................... 34 Consultant: Mary Anne North ABOUT FORRESTER CONSULTING Forrester provides independent and objective research-based consulting to help leaders deliver key transformation outcomes. 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THE TOTAL ECONOMIC IMPACT™ OF SERVICENOW SPM 1 Executive Summary By providing interviewees’ organizations with greater transparency and visibility around their IT and business investment initiatives, SPM enabled them to reduce nonproductive investment spending and improve the efficiency of staff members involved with those initiatives. Because using SPM helped organizations get an initiative underway faster, the organizations realized incremental cost savings or revenue/operating income from those initiatives. ServiceNow Strategic Portfolio Management (SPM) enables organizations to consolidate their project and portfolio management on a single comprehensive platform to better align strategy with work efforts across different methodologies. ServiceNow commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying SPM.1 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of SPM on their organizations. To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives at five companies with experience using SPM. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global company with revenue of $8 billion per year. Prior to using SPM, the interviewees’ organizations addressed their product, portfolio, project, demand, and resource management needs with disparate software applications from several vendors, supplemented with manual spreadsheets. Their prior approach produced challenges that included poor visibility and credibility of data about their investment initiatives despite time-consuming attempts to capture that data; lack of alignment between project and portfolio activities and the organization’s overall strategy; and limited ability to optimize resource management. After the investment in SPM, the interviewees’ organizations could consolidate data about their IT and business investment initiatives to a single platform, which saved substantial effort for staff members involved with those investment initiatives and decreased the time to value for those initiatives. SPM also helped their organizations make informed decisions and reduce nonproductive investment Decrease in time to value: 8 weeks Return on investment (ROI) 365% Net present value (NPV) $22.68M KEY STATISTICS THE TOTAL ECONOMIC IMPACT™ OF SERVICENOW SPM 2 EXECUTIVE SUMMARY spending by providing better insight on those initiatives. KEY FINDINGS Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include: • Reduction in nonproductive investment spending, valued at $10.2 million. Using SPM decreases the organization’s nonproductive investment spending (i.e., initiatives that do not return business value) via greater visibility across investment initiatives, tighter linkage between those initiatives and overall strategy, and a better ability to identify emerging problems and pivot or make midcourse corrections. • Faster time to value, valued at $9.7 million. After deploying SPM, the composite organization decreases the elapsed time required to review and approve demands and convert them into projects, as well as to allocate resources to those projects. This reduces the total elapsed time needed to complete an investment initiative and have that initiative deliver value. The organization’s initiatives intended to reduce operating costs begin paring costs sooner, while its initiatives meant to generate revenue produce that incremental revenue (and the associated operating income) earlier. • Improved efficiency for senior management review and approval of projects, valued at $1.6 million. With SPM, the organization’s senior managers spend less time reviewing and approving projects because SPM provides quick access and visibility to the information they need to decide whether to fund a project, consolidated on one interface. • Improved efficiency for planning and reporting, valued at $1.1 million. SPM enables the organization’s strategic planners to spend less time developing strategy and aligning plans, and its project managers to save time on their project-level reporting around the execution of those investment plans because of automated status reports. • Improved efficiency for optimizing resource management, valued at $776,000. SPM enables the organization to decrease the time its IT resource managers spend managing resource utilization, as well as the time payroll administrators spend identifying individuals who did not enter timecards, by providing a single source of the data required for that management and reporting. • Improved efficiency for documenting Agile sprint cycles, valued at $4.5 million. SPM’s dashboards and consolidated reporting enable the organization’s scrum masters to spend significantly less time per sprint capturing information and releasing the sprint because that information is readily available within SPM. • Improved efficiency for business relationship manager data gathering, valued at $382,000. SPM saves time that business relationship managers (BRMs) previously spent gathering data about the business units they support, so they can report to the leaders of those units about what’s happening with IT specific to each business unit’s investment initiatives. • Avoided costs of prior solution, valued at $620,000. After deploying SPM, the interviewees’ organizations were able to retire their prior solution for project management and strategic portfolio management. This eliminated not only the ongoing costs for software and infrastructure but also the costs of IT staff time needed to manage and support the prior solution. Unquantified benefits. Benefits that provide value for the composite organization but are not quantified in this study include: THE TOTAL ECONOMIC IMPACT™ OF SERVICENOW SPM 3 EXECUTIVE SUMMARY • Better visibility into, and confidence in, data about investment initiatives. SPM improves the organization’s visibility to data about its investment initiatives and confidence in the quality of that data. • Increased effectiveness of the organization’s strategic planning and portfolio prioritization, via higher-level insights. By enhancing the organization’s understanding of the status and impact of its investment initiatives beyond a project-by-project basis, SPM increases the effectiveness of its strategic planning and portfolio prioritization. • More timely and better-informed decision- making. That greater visibility at multiple levels improves the organization’s ability to decide where to invest time, money, and people, as well as when to pivot or pause those investments later. • Better resource management. With SPM, interviewees’ organizations more adeptly managed their resource utilization. • Increased consistency and control around how the organization works. SPM improved the organizations’ control over their operations. • Improved ability to scale. That consistency and control simplified organizations’ efforts to scale their operations.