ServiceNow Xanadu Release Family: What Customers Need to Know

After a strong Q2 earnings report, ServiceNow CEO, Bill McDermott said that his product and engineering teams remain focused on the upcoming Xanadu release family, set to go live in September 2024. ServiceNow’s Release Families like Xanadu impact customer renewals and upgrade schedules so it’s important to stay up to date on the latest releases.

Historically known for being an IT workflows provider, ServiceNow has worked hard to broaden the company identity over the last few years, making major investments in expanding the product portfolio to stand alongside other cloud giants like Salesforce and Microsoft.

Based on recent earnings, this tactic is paying off – Customer, Creator, and Employee Workflows secured 36 deals over $1M in Q2 2024 compared to 27 for Security & Risk, ITSM, and ITOM. There is no question that ServiceNow will lean into diversifying offerings and in turn, the company’s market presence under Xanadu.

Recent trends indicate that ServiceNow is tapping into the following spaces:

1. GenAI/Now Assist

ServiceNow made it abundantly clear that 2024 is the year of AI, with Bill McDermott going as far as saying that “the AI moment is the culmination of [ServiceNow’s] journey” during last month’s Q2 2024 earnings call.

Since the September 2023 Vancouver release, ServiceNow kicked up the ante, releasing the vendor’s most advanced GenAI offerings, Now Assist and Pro/Enterprise Plus add-on SKUs. This has proven to be highly profitable to the vendor with GenAI products seen in 11 deals over $1M in Q2.

Looking forward to Xanadu, we can expect that ServiceNow will continue to build on this momentum to establish itself as a leader in the GenAI space. This will occur in the form of expanding AI features to new product families and building upon existing capabilities in others. Recent activity suggests that ServiceNow’s industry-specific offerings are a particular point of interest for expansion with the release of GenAI SKUs for Government Community Cloud released in late June.

Also, we suspect that Xanadu will highlight ServiceNow’s recent strategic GenAI partnerships with vendors like Microsoft, Genesys, Infosys, and most recently, Boomi, through new product integrations. Though ServiceNow’s own GenAI offerings will take priority, these partnerships present an opportunity for the vendor to expand their reach and further embed themselves in customers’ technical architecture.

Now Platform customers exploring ServiceNow’s GenAI offerings are in a highly favorable leverage position with opportunity to secure a competitive deal if they know how to navigate these conversations strategically.

2. Developer Solutions

Alongside AI, Bill McDermott made a point of highlighting ServiceNow’s recent advancements in the developer solution space during the Q2 2024 earnings call, stating “we see a great opportunity for ServiceNow there.” 

While ServiceNow has always offered developer solutions, it has never been a business focus. Our suspicion is that this new interest is part of ServiceNow’s sales strategy pivot seen over the last few years, shifting focus from attracting new clientele to finding ways to secure a growing commit from existing customers.

With a 98% renewal rate in Q2 2024 (down from 99% in 2023), ServiceNow knows that customers depend on the Now Platform. The time and financial investment put towards maintaining a ServiceNow environment is enough to deter customers from seeking alternatives despite growing subscription costs. Since these customers aren’t going anywhere, ServiceNow needs to find new ways to keep them buying.

We predict that ServiceNow will continue to lean into the no/low-code development trend seen across the SaaS market under Xanadu. With the new Creator Studio released earlier this year, we can expect a wave of new features in Q3 to keep interest high.

How Can Customers Leverage These Interests?

As mentioned in our previous post on ServiceNow Release Families, ServiceNow does not “weigh” products equally within deals. New products that align with the business’s overall market initiatives tend to be higher motivation and are treated as a priority for the sales team. Customers with confirmed interest in “hot ticket” products can lean into this urgency and press for aggressive concessions in exchange for adoption.

The bottom line: Keeping a pulse on ServiceNow’s motives as a business can shed light on potential sources of leverage for customers before any sales conversations take place.

To learn how UpperEdge can help your enterprise navigate ServiceNow’s latest release and negotiate optimal contract terms, contact us today for tailored advisory services.