Let's try ourselves at a syllogism:
- During the pandemic, merger and acquisition (M&A) were at a all-time high since 1980, and the volume is still 9% above pre-pandemic (1).
- ServiceNow has 80% of the Fortune 500 companies as customers (7,400 in total), many of which have been using the platform for years (2).
==> We'll face more and more ServiceNow customers undergoing M&A, and more opportunities for instance consolidation
Unfortunately, per studies, about 60% of M&A fail to reach integration targets, and to create shareholder value (3).
There are obvious difficulties in aligning companies culture, operating models, systems, and teams,... It's literally a Transformation.
In this first post, I'll share some insights I learnt from ServiceNow consolidation programs.
There is no "One Best Way" to consolidate, but there is a typical Journey.
In the first 6 months post-M&A, there is usually no consolidation at all. It takes time to unfold the acquisition strategy into practical actions. On the ServiceNow end, it has benefits. Platform teams keep their role, the UX doesn't change, ServiceNow local sales doesn't lose business to another region.
Within the next 6 months, we commonly see adoption of some global services by the acquired company (e.g. IaaS, time tracking,...) . A "swivel seat process" is used to sync ServiceNow tickets between the 2 companies' instances. It's OK for a few tickets, but swivel seating becomes annoying (and nauseous) as the volume increases.
Swivel seat = Repetitive + Low value + Resource intensive ==> think automation! The idea comes up to Integrate the 2 ServiceNow platforms and auto-sync tickets.
Technically, it is not a such a big deal. In terms of organization, it avoids disturbances and heated arguments. As a bonus, you can say "We are working together!".
However, that encourages to maintain the statu quo in the 2 organizations. On long term, if ServiceNow process and master data don't evolve, it is probably a symptom that the operating model does not evolve. There is less rationalization/limited savings.
The ultimate consolidation level is to merge in ONE single instance. Now we are talking!
Procurement consolidation
At time of ServiceNow license renewal, Procurement teams may want to centralize the license purchase, to have more leverage in negotiation. If the 2 companies operate in different regions, it may mean that a local ServiceNow sales loses business for the benefit of another.
Business case
Just like every project, there must be a positive business case to support the GO decision for a consolidation. A business case has a clear baseline to compare against. E.g., One single platform VS swivel seat, One single platform VS integration.
When the license cost model (unrestricted VS fulfiller), products (ITOM, IRM), and the charging model are different in the 2 entities, it adds a lot of complexity to do the Business case. It is advised to go with very bold assumptions at the beginning and have at least 2 Go/No Go Gate reviews along an initial Discovery phase.
Compliance and data residency.
Consolidation can be refrained by data residency issues. It is a serious matter. But often, I've seen data residency raised by non-specialists to cut short in the idea of consolidation. It’s worth involving real experts on the matter, and assess the data residency requirement for each kind of data.
Part 1 key takeaways
I have too much to say on instance consolidation for a single article, so I decided to split it in 2 more digestible parts (I hope). This first part was more focused on the Decision and early considerations:
- ServiceNow consolidation is often a multi-steps journey, from swivel seat, to integration, to procurement consolidation.
- Consolidation could be addressed from the sole procurement perspective.
- You need a positive business case to get started, and gates/BC reviews every 3-6 months.
- Compliance and data residency can be raised to stop the project. Sometimes true, sometimes not.
Next article will be about the actual consolidation project. By then, I’ll be glad to read your feedbacks and to know if you can relate to that topic.
Til next time !
Sources:
- https://fortune.com/2021/04/02/ma-activity-has-spiked-93-and-this-investment-bank-ceo-sees-a-big-bac...
- .https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/Grabngo/20190926%20-%20GNG%20Presentatio...
- https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/Grabngo/20190926%20-%20GNG%20Presentatio...
My previous blog article:
