Your company got acquired. What happens to your ServiceNow platform? part 1

Let's try ourselves at a syllogism:

• During the COVID, companies merger and acquisition (M&A) were at a all-time high since 1980. The volume is still 9% above pre-pandemic (1).
• ServiceNow has 80% of the Fortune 500 companies as customers (7,400 in total) (2), many of which have been using the platform for years.

Conclusion: More and more ServiceNow customers will undergo M&A. Instance consolidation initiatives can be expected.

Unfortunately, per studies, about 60% of M&A fail to reach integration targets, and to create shareholder value (3).

Aligning companies’ cultures, operating models, systems, and teams cannot be easy. It's litterally a Transformation.

Let’s discuss how we undergo this transformation from the ServiceNow perspective.

• This article is about the typical ServiceNow consolidation journey and early considerations.
• Stay tuned for a follow-up article on consolidation project execution.

There is no "One Best Way" to consolidate, but there is a typical Journey.

The story is always a bit the same.

• In the first 6 months after M&A, there is no ServiceNow consolidation at all. It takes time to unfold the M&A strategy into practical actions.

The benefit? Peace! Platform teams keep their role, the UX doesn't change, ServiceNow local sales keep their business

• In the next 6 months, one or both the organisations adopt some services from the other (e.g. IaaS, time tracking).

A swivel seat process is agreed upon to sync tickets between the 2 instances. Process is an emboldened term for “manual copy paste”. It's OK for a small number of tickets, but swivel seating becomes annoying (and nauseous) as the volume inevitably increases.

• Swivel seating: Repetitive + Low value + Resource intensive ? think automation!

Naturally, the idea to Integrate the 2 ServiceNow platforms comes up to auto-sync tickets.

-??????Technically, it is not a big deal and ServiceNow offers capabilities to do so (Service Bridge, eBonding, store apps, custom REST API).

-??????In terms of organization, it avoids disturbances and heated arguments. "Good fences make good neighbors", but you can still say "we are working together!".

The caveat about integrating 2 instances, is that it maintains the statu quo. It is often presented as a temporary “tactical” move (low cost/effort) on the way towards the vision of a single instance.

It is OK if there is a fixed date/plan for full integration. Otherwise, the “tactical” solution will remain the definitive de facto solution (still low cost/value).

?If the ServiceNow processes and data don't evolve following the M&A, it can be a symptom that the synergy is not happening.

• The ultimate consolidation level is to merge in ONE single instance, ONE set of process, ONE Center of Excellence. Now we are talking!

In such case, the discussion is reframed from tooling to a full-blown Digital transformation.

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Procurement consolidation

License procurement is a topic of attention in the context of consolidation.

• The M&A roll-out agenda may not match the license subscription timeline. Some decide to wait for license renewal to undertake consolidation. Others go into negotiation with the principal.
• At time of license subscription renewal, Procurement teams will probably intend to consolidate the license purchase for more leverage in negotiation.
• If the 2 companies involved in M&A operate in different regions, it will lead to a 6-party discussion involving the 2 platform owners, 2 procurement teams and 2 Principal account managers (one will lose business). It takes time and effort.

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Business case

?Just like every project, there must be a positive business case to support the decision to consolidate on one instance.

The scenarios which are often compared in a business case are:

• Swivel seat process VS Integration
• One single platform VS integration

The BC exercise becomes tricky and overwhelming when:

• the products are not the same on the 2 instances: one has HRSD, the other has IRM.
• the license models/metrics are not the same: unrestricted user or fulfiller user.
• the scale and cost of the COE, integrated tools platform is (always) different.

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What I have seen working, is to start with VERY broad assumptions and launch a Discovery phase. The Discovery mixes the collection of gaps/requirements (useful for the actual project) along with inputs that will feed in the business case.

Incorporate Gates every 1 to 3 months to adjust the BC and Go-No Go.

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Compliance and data residency.

Consolidation can be refrained by data residency issues. That’s serious stuff!

I’m no expert on the matter, and few of us are.

Regularly, I have seen non-SMEs discouraging the idea of consolidation on the account of data residency. And regularly they have other reasons to oppose to the consolidation.

But guess what? There are serious global companies in regulated industries that achieved to converge on a single instance. And they satisfy the compliance and data residency requirements. Just know it is possible.

My recommendation are:

• to admit it is a complex topic and most of us don’t know the details.
• to question the actual drivers for non-SMEs raising it as a showstopper.
• to involving real experts. It is the job of your compliance and law team.
• It doesn’t have to be all or nothing. There are technical mitigations and internal agreements you can implement to address compliance requirements.

Key takeaways

In this ServiceNow consolidation article, we focused on the typical journey and early considerations of such initiative:

• It is a multi-steps journey that reflects the company’s integration progress.
• Consolidation could be addressed from the sole procurement perspective.
• Comparing 2 ServiceNow environments apple-to-apple is a challenge when products, licensing models, and support model are different. Start broad and adjust.
• Compliance and data residency are commonly raised as showstoppers. Know only the experts are experts.

I’ll be glad to read your feedbacks and additions to this article.

Next up will be about the actual consolidation project.

‘til next time!

Sources:

1. https://fortune.com/2021/04/02/ma-activity-has-spiked-93-and-this-investment-bank-ceo-sees-a-big-back-half-of-2021/

2.https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/Grabngo/20190926%20-%20GNG%20Presentation%20M&A%20_Mikkel%20Boe_Handout_v2.pdf

3.https://www2.deloitte.com/content/dam/Deloitte/dk/Documents/Grabngo/20190926%20-%20GNG%20Presentation%20M&A%20_Mikkel%20Boe_Handout_v2.pdf