ServiceNow’s GenAI Push: What Customers Need to Know About the Costly “Pro Plus” Add-On

Like the other cloud software vendors on the market, ServiceNow is focusing their 2024 strategy on expanding their Generative AI (GenAI) capabilities and offerings, specifically through ServiceNow Now Assist. In their most recent earnings call, ServiceNow CEO Bill McDermott stated that “artificial intelligence is injecting new fuel into our already high-performing growth engine… there is a real appetite to invest in GenAI, and there is no price sensitivity around it because the business cases are so unbelievable, it just sells itself.”

GenAI is already shaping ServiceNow’s 2024 strategy with their focus on Now Assist and, more specifically, their costly add-on Pro Plus and Enterprise Plus SKUs.

Here, I will outline ServiceNow’s pitch for their GenAI capabilities, how these add-on SKUs are priced, and what customers should keep in mind if they are considering adopting ServiceNow’s GenAI offerings.

What is ServiceNow Now Assist and How is it Priced?

As part of the September 2023 Vancouver release, ServiceNow “infused native generative AI capabilities in all workflows on the Now Platform®.” ServiceNow’s pitch is that “customers can deliver value quickly by applying Generative AI where the work get done.” Specifically, they have called out the following expected benefits as they apply to their ITSM, CSM and HRSD offerings:

• ITSM: Allows users to summarize incident history and Virtual Agent interactions, deliver complete answers instead of search results, and provide resolution notes to resolve issues and requests faster.
• CSM: Allows users to summarize cases and chats to allow agents to resolve customers’ issues and requests faster.
• HRSD: Enables HR teams to review instant summaries of case topics and previous history from live chat and Virtual Agent interactions in addition to previous resolutions and actions taken.

ServiceNow is able to do this through a domain-specific large language model (LLM) that is designed to be more accurate and based on existing customers’ enterprise data.

Now Assist will be available as an add-on for several products. Customers that currently have ITSM, CSM or HRSD Pro or Enterprise subscriptions in place can subscribe to the Professional Plus (Pro Plus) or Enterprise Plus add-ons. These add-ons are also available for customers with industry solutions subscriptions in place, including Telecommunications, Technology Providers, Financial Services, Public Sector, and Healthcare. Developers can get access to Now Assist by subscribing to Creator Plus. No underlying base subscription is required.

It is also worth mentioning that these add-ons are subscribed to by the seat and each seat enables the particular user to execute a certain amount of Generative AI “assists.” An example of an “assist” would be incident or case summarizations. ServiceNow points out that “higher-value, more complex interactions” require more assists, whereas “simpler, frequently used interactions” require fewer.

As part of ServiceNow’s pitch, they are also telling customers not to worry about running out of assists as the initial entitlement should be all that is needed. If it is not and more GenAI capacity is needed, customers can purchase additional assist packs.

ServiceNow has not publicly released the list pricing for the Pro Plus and Enterprise Plus add-ons, but it is estimated that the pricing premiums are upwards of 60%. Perhaps they don’t want to get any backlash or cause “sticker shock” by making the list prices public. Afterall, when Microsoft announced Copilot for Microsoft 365 was going to have an add-on price of $30 per user per month, there was certainly “sticker shock” across their customer base.

Why is ServiceNow Focused on Getting GenAI Adoption of ServiceNow Now Assist?

There is no question that ServiceNow’s sales reps will be pushing hard to get customers to adopt the Pro Plus and Enterprise Plus add-on SKUs in 2024, both at renewal and as part of in-term purchases. This was made clear by the amount of times “GenAI” and “Pro Plus” were mentioned during ServiceNow’s recent Q4 FY23 earnings call.

ServiceNow needs to show customer adoption and use of Now Assist and their GenAI add-on SKUs to:

• Establish themselves as a leader in GenAI space
• Increase their ARPU (Average Revenue Per User)
• Increase their customers’ Annual Contract Value (ACV)

ServiceNow CFO Gina Mastantuono, during the recent Q4 FY23 earnings call, made a few points that further support just how important it is to ServiceNow and ServiceNow’s account executives to get customers to adopt these GenAI offerings and subscribe to the Pro Plus add on, including:

“Gen AI products drove the largest net new ACV contribution for our first full quarter of any of our new product family releases ever, including our original Pro SKU.”

“We are raising our 2024 outlook to reflect the strong momentum with which we exited 2023. This partially reflects the early success we’ve seen with our GenAI products as those investments are accelerating the build of our already robust pipeline with customers lining up to be first movers in this next wave of business transformation.”

“We remain as confident as ever in our guide of $15 billion+ in ’26. And GenAI and the innovation in all of our product portfolio is going to help drive that growth.”

What ServiceNow Customers Should Push For From ServiceNow

Customers that are considering adopting Now Assist through subscribing to the Pro Plus add-on, whether it be for ITSM, CSM or HRSD, need to achieve the appropriate discounting to drive down the price. If ServiceNow customers orchestrate their negotiation strategy properly, they should be able to achieve the appropriate discounting and pricing for the Pro Plus or Enterprise Plus add-on.

Along with ensuring the right pricing is provided by ServiceNow, customers should also push for the following concessions from ServiceNow as part of their negotiation, whether they are adding Pro Plus or Enterprise Plus in-term or at a renewal:

1. Lower the ITSM, CSM, and HRSD Price

Position an expectation that if ServiceNow wants adoption of Pro Plus and accelerated use of Now Assist, there is an expectation that the underlying ITSM, CSM, or HRSD subscription costs must also be improved.

In order for ServiceNow to earn this significant win, an expectation needs to be clearly set that ServiceNow needs to look at the entire cost profile increase that comes with giving this commitment to them. It would simply not be enough to only lower the add-on and “new” Pro Plus price itself. If ServiceNow is planning to impose a price increase at renewal to your current ITSM, CSM or HRSD price that the Pro Plus offering is attached to, ServiceNow needs to understand that decision will prohibit adding Pro Plus.

Customers should also point to other ServiceNow products in use outside of ITSM, CSM or HRSD.  Is there a significant spend tied to SAM or HAM? What about SecOps or IRM? If there is, mention to ServiceNow that it would go a long way if the cost of one of these other, “unattached” products can be addressed as well.

Also, when pushing for additional discounting and price improvement tied to the underlying ServiceNow core product subscription costs, it will be incredibly helpful to have a granular understanding of how much of ITSM, CSM, or HRSD features are currently being utilized to present to ServiceNow. If you are not using all the features in the bundle (or a good portion of them), that gives you additional leverage to ask for the necessary additional discounting before you consider adding Pro Plus at an additional cost.

2. Price Protections

In addition to cost improvement, an expectation should be set that future price protections need to be provided to prevent the underlying ITSM, CSM or HRSD pricing as well as the Pro Plus pricing from going up at your next renewal. ServiceNow may not commit to no increase, but communicate an expectation that there will need to be a cap on the increase that can be imposed. Make sure none of the common conditions that limit the protection are removed as well, like having to maintain or increase a particular volume or spend profile.

3. Investment Dollars

Enterprise customers should also ask for investment dollars or funding to help roll out the GenAI solution and features. There will also need to be training to ensure the GenAI features are being utilized properly. ServiceNow should be pushed to step up and provide meaningful funding to help unlock the full expected value from the add-on SKUs you’re paying for to get access.

When asking for investments and funding beyond the improved pricing, it will be impactful to call upon this statement made by McDermott during the Q4 FY23 earnings call: “If you’re improving productivity by 40%, 50%, it just sells itself. So, I think we’re in a really, really good place. The GenAI investments are coming.” Likely, the sales deck presented by ServiceNow to drive adoption will also include similar references to expected productivity benefits and ROI.

You can tell your ServiceNow account executive that funding to add Pro Plus is predicated on these expected benefits. It would be in ServiceNow’s interest to provide funding to help with the rollout and training.

The bottom line is that ServiceNow needs customers to adopt and use their GenAI Now Assist offering and they need customers to add Pro Plus or Enterprise Plus to achieve their publicly stated goals. By properly preparing and executing your negotiation strategy, you can ensure nothing is left on the table pricing-wise while also getting the right level of commitments and concessions from ServiceNow.

UpperEdge’s team of ServiceNow experts are staying at the forefront of new products and add-ons like Pro Plus while working with customers to ensure they negotiate the right deal with ServiceNow whether in-term or at renewal. Learn more about how we can help you achieve a Best-In-Class deal by exploring our ServiceNow Advisory Services.