Should You Build or Buy ServiceNow: Why a Hosted ServiceNow Solution Might Be Better for You

In the ever-evolving IT landscape, the decision to build or buy software solutions has been a constant challenge. With most organizations looking to optimize their cost/benefit ratio inevitably the question arises, “…how can I get the benefits of a solution without taking on unnecessary costs or additional overhead?”

This dilemma is particularly important when considering a powerful platform such as ServiceNow. As companies strive to enhance efficiency, streamline processes, and stay competitive, the choice between building a dedicated “in-house” instance of ServiceNow or opting for a hosted ServiceNow solution is critically important. In this article, we delve into the merits of both options and why more and more organizations are opting for a hosted solution.

Hosted vs Dedicated

When most people think of ServiceNow they think of the dedicated instance model. This is the most common method in use today and consists of a cloud instance provided by ServiceNow entirely dedicated to the client. This method has several benefits including unlimited customization, administrative access, and access to all modules within the NOW platform® that are not typically offered in a hosted model, such as Human Resources Management (HRM). There are drawbacks of this method, however, including time to value, cost to deploy, ongoing maintenance, and sourcing of talent.

Time to Value

Most dedicated instance deployments begin with an organization selecting their consulting and implementation partner. This partner will often begin with a discovery exercise to identify the specific objectives of the organization and help to align the licensing and modules they need to achieve these desired outcomes. Once the necessary licenses are purchased from ServiceNow the partner will begin their implementation project, these can range from just a few months to multiple years depending on the complexity of the deployment and specific business objectives of the organization.

The downside of this model is that an organization is paying for the ServiceNow licenses and Professional Services project for many months. During this time, they are unable to leverage the platform or achieve any Return On Investment (ROI). It is only when the implementation is complete, the end users are trained, and the Organizational Change Management (OCM) around the new platform is underway that they can begin to realize value.

Alternatively, in a hosted model the time to value can be achieved more quickly. In this model the organization is given a dedicated “tenant” within an existing in instance of ServiceNow, this means that the tenant can inherit structure and best practices. This enables the implementation timeline to be reduced dramatically to as little as 45 days and has the added benefit of providing industry best practices around Incident Management, Knowledge Management, etc.

Customers do not need to waste cycles determining standard incident categories or how to structure knowledge-bases, instead they benefit from the combined experience of the customers before them and best practices built into a hosted model. This model ensures a higher success rate for IT leaders migrating to a new platform and it enables them to focus on the organization change management and platform adoption. Overall, this means a faster time to value for a hosted solution and with industry best practices already in place.

Cost to Deploy

The reduced time to deploy a hosted solution as compared to standing up a dedicated instance obviously translates to significant cost savings; often 1/10 the implementation cost of deploying a dedicated instance. This allows organizations to focus more of their spend on enhancing the platform through integrations, automation or expanded self-service capabilities.

Too often organizations tend to get stuck after their initial deployment. They realize basic ticketing or ITSM functionality within ServiceNow but are unable to utilize the full potential of what the powerful platform can offer. After the expense of licenses, professional services to deploy and post go-live support customers are anxious to begin using the platform even if it is only the basics of Incident and Request. Additionally, once on the platform end-users begin requesting additional enhancements or features that detract from further development in order to maintain existing functionality. Unfortunately, many organizations do not progress beyond this phase to truly make the NOW platform® the single pane of glass for their organization.

By leveraging a hosted solution organizations can realize the basics much more quickly and focus more of their efforts on the efforts that will truly transform their business including: CMDB, Asset Management, Enhanced Self-Service, Automated Workflows, integration with other platforms as well as integration with 3rd parties for device procurement.

Ongoing Maintenance

The pace of technological change within the NOW platform® is swift. New features, modules and even licensing changes occur with each version release. With major version releases occurring twice per year, developers and product owners need to be constantly learning to stay current. It is vital that these resources keep up with the latest and greatest that the platform can offer to ensure they are developing the platform in the most efficient and effective way to achieve the desired business outcomes. ServiceNow also requires all instances to maintain version currency of (N-1), meaning all instances will require at least one major version upgrade on their platform each year.

A hosted solution shifts the burden of maintenance to the service provider, offering a more predictable cost structure by avoiding professional services engagements to upgrade the platform. Another key benefit of the hosted model is that it prevents customers from pursuing customization that would take them outside of platform compliance or require significant effort to maintain version currency.

Many organizations with dedicated instances find themselves in this situation where they either need to take on significant expense to undue platform customization to maintain compliance or worst case having to purchase and deploy an entirely new instance of ServiceNow without the customization. There are some well-known examples of this including Shell plc who deployed ServiceNow ITSM and ITBM only to have to redeploy within a few short years due to customization. This demonstrates that even when organizations rely on partners to deploy and implement a dedicated instance, they can find themselves in hot water in terms of overly customizing the platform.

Challenges Sourcing Talent

ServiceNow is in demand and as more organizations adopt the platform or expand their use the need for capable, talented, and experienced ServiceNow resources continues to rise. Sourcing, developing, and maintaining ServiceNow talent is a challenge for every organization that leverages the platform. It is not only sourcing the right talent but building a team that has the depth to balance ongoing feature requests, version upgrades, and platform enhancements; all while staying current with the latest features and ongoing training for ServiceNow.

Opting for a hosted solution allows businesses to leverage the expertise of a dedicated service provider, ensuring optimal performance and efficient support. This allows businesses to stay focused on their core objectives without the distraction of managing the intricate details of the NOW platform®. This freedom allows their resources to focus on driving organization adoption of the platform and thinking strategically about additional ways to integrate it into their business operations.

Conclusion

The decision to build or buy is not new…it was back in 2008 that Jeff Bezos famously outlined his philosophy for Amazon Web Services (AWS), emphasizing the importance of organizations concentrating on their core strengths. He shared a story of visiting a historic brewery and learning that 100 years ago they used to produce their own electrical power to make beer. However, because generating their own power did not make their beer taste better as soon as the option of a modern power grid came along the brewery’s stopped producing their own power and simply purchased it from the power company.

This analogy holds true for ServiceNow – why go through the effort of building and maintaining your own instance when you can purchase a hosted solution. This approach, much like AWS, allows organizations to reap the benefits of the NOW platform® without the costs and additional overhead of developing their own ServiceNow practice. Letting the service provider handle the intricacies of the ServiceNow platform, companies can ensure their processes run seamlessly, freeing up valuable time and resources for innovation and growth.

Choosing a hosted solution allows organizations to spend more time focusing on making their products and services better.