State of the ITSM Market, Release 7
State of the ITSM Market Release 10 is the latest. You can access that here:
State of the IT Service Management Market, 2013, R7
As usual, let’s begin with the major events (Ordered by Market Share):
*** BMC ***
* Acquisition rumors – Most of the rumors seemed to focus on an Oracle acquisition. It seems that recent board activity within BMC has quelled discussion around this topic, but we’ll keep our eye on the situation as always.
* Remedyforce is the fastest growing product line in BMC’s portfolio with over 300 customers. While 95% of the customer base is in the SMB space, we believe that this offering will become a primary focal point of development efforts alongside Remedy. Our belief is that BMC Remedy will remain the flagship on-premise offering in the market and Remedyforce will be BMC’s primary SaaS offering. Remedy is still a vastly superior product functionality and architecture-wise when compared to Remedyforce, but force.com is a development platform that is good enough for simple requirements… and their SaaS operations are a competitive differentiator (world-class). As an FYI… Track.IT and Footprints probably won’t go anywhere either, but the reason those products have remained viable is due to price/functionality ratio, not architecture, customizability or total cost of ownership (as is widely believed for some reason).
* Remedy ITSM 8.0 was released in November, 2012. There have been some significant enhancements in Email Integration, Self-Service and Service Catalog (SRMS). For in-depth information on Change Management functionality, please check out ITSMU’s showdown offerings (in the Training Videos section).
* Remedyforce 3 has just been released. This is more of a minor release than Remedyforce 2. Some examples of new functionality: Ability to re-size input fields, text boxes… create and modify new navigators, listing Service Request as action items. These are the types of things that most applications already have, so we consider this to be pretty minor unlike Remedyforce 2. Oh wait – BMC says that you can reduce resolution times by 90%, what an amazing feature – http://www.bmc.com/products/remedyforce/it-help-desk.html – I’m sorry, but we had to sarcastically point out at least one ridiculous statement from a vendor.
* Remedyforce 2.0 was recently released with some pretty impressive enhancements. ITSMU has some concerns from a usability standpoint, but the difference between 1.0 and 2.0 is fairly striking. Knowledge Management, cross-process integration and Change Approvals appear to be some of the most important new features.
*** HP ***
* http://www.hp.com/hpinfo/newsroom/press/2012/121022a.html – HP Service Anywhere is HP’s new SaaS offering. It is still based on the HP SM architecture, but the functionality has been reduced in scope and there are more configuration options to allow customers to avoid some of the pitfalls traditionally associated with customization. We’re not sold on those arguments entirely, but it is an on-going discussion in the ITSM community that has been heated for years.
* HP Executive Scorecard – A great concept showing that HP is still focused on innovation, but this product begs the question (for Enterprise customers) – Why would I want to bring in a proprietary Business Intelligence platform into my organization that goes against my corporate standard of SAP, Oracle, Microsoft or IBM. This product seems like an attempt to drive tablet sales more than anything else.
* Gets serious about SaaS for ITSM, gains flexibility in pricing model and establishes the most partner-friendly model on the market. HP has also addressed on-going interface issues and continues to have the most robust CMDB offering on the market. We believe that HP is growing its share of the ITSM market in 2012 based on field activity & reports.
* For more information on what’s new with HP SM 9.3, please see here: http://vimeo.com/27504411 – Customers generally agree that HP’s Service Catalog is the worst on the market, but CMDB is the best.
*** ServiceNow ***
* ServiceNow Berlin Released – Fairly minor changes for the most part, but here’s a summary list: https://wiki.servicenow.com/index.php?title=Berlin_Notable_Changes – ServiceNow still has a more mature and robust social IT aspect than most vendors, email integration is very good with the ability to filter content and assign roles, built-in U.S. holiday schedules a plus… but the most development work probably went into Service Catalog internationalization. While it’s probably important only to a subset of enterprise customers, it’s pretty important for long-term growth and expansion into WW markets.
* Why the UBS Downgrade in October? http://finance.yahoo.com/news/servicenow-reports-third-quarter-2012-200200533.html
* SeekingAlpha in-depth research on ServiceNow – http://seekingalpha.com/article/1006341-servicenow-decelerating-growth-limited-market-size-point-to-large-downside.
* http://seekingalpha.com/article/1082571-servicenow-s-technology-is-not-now-anymore?source=yahoo – In response to the technology research, there is a bit of a flaw in the commentary. While it’s true that ServiceNow operates in the single tenant model which increases implementation times and decreases margins, it is not a deal killer for 99.5% of companies purchasing an ITSM solution. In fact, having your own dedicated server provides some unique performance and security advantages in winning deals in certain verticals.
* Per the latest numbers, it appears that ServiceNow’s growth, while impressive at 88% (October, 2012 earnings release) is decelerating. Here’s our opinion on it… ServiceNow won many of it’s early converts through favorable pricing that was beneath their competitors annual maintenance renewal. In our opinion, this is a great strategy that was leveraged by SNOW’s expert ITSM sales team. Many of SNOW’s account managers have a background (less so as they’ve grown larger) in the ITSM space, so they knew right where to hit their previous manufacturer’s products and price points. Also, it is our belief that SNOW is actually expanding the ITSM market just as salesforce.com did, so kudos for bringing IT organizations with no service desk in place (or a homegrown solution). The key is going to be whether or not SNOW can truly execute on it’s PaaS story. Then, the question becomes, can SNOW compete with SFDC? This will certainly be exciting to watch. It is our belief that there is never a sole winner in any market. How many predicted the death of the mainframe? Or the Server? Or the PC? Or that cloud will rule the world and no on-site implementations will remain? Bold statements make fun marketing messages, but people in marketing don’t work in the trenches solving complex IT problems.
* A few items worth noting with Aspen, Source: (http://wiki.servicenow.com/index.php?title=Aspen_Notable_Changes): Re-open Incidents, Tracking audit activities – IT GRC continues to be an interesting and exciting differentiator, scripting continues to be a bit daunting, although new script options have been added that are helpful (new_query method).
* We believe that ServiceNow will begin to strictly enforce license usage after going public in a bid to increase profitability and growth at some point, because shareholders and boards are so unforgiving. It wouldn’t be surprising at all to see SNOW end up in the hands of another large software manufacturer given Slootman’s background with Data Domain (went public, bought by EMC).
*** CA Technologies (CA) ***
* Although CA remains 4th in the ITSM market, we just haven’t heard much from customers who are excited about the CA direction. In our opinion, Nimsoft lost a key player to BMC very recently (Bruce Campbell) which is part of their on-going struggle to integrate high-growth potential products into the company.
* http://www.nimsoft.com/solutions/demos.html – Company product demonstrations can be found here.
* Struggling in ITSM Market. Nimsoft Service Desk is comparable to Remedyforce in functionality but without the adoption rate of the Force.com platform. Even though the most recent Gartner numbers show growth (2010 actuals), the revenue numbers contained a massive outlier deal with the US Federal government that hides a major decline in ITSM.
*** Frontrange Solutions ***
* Frontrange has re-branded and re-architected. They’ve decided to stick with the more popular HEAT (and added in CLOUD to indicate the new architecture and SaaS offering) name which is a good idea. It’s hard to get unbiased information on the new offering at this point, so we’re biding our time and doing further research.
* We expect to cover HEAT CLOUD in the next release, but we need to find some customers to speak with… if you’re interested please contact us through the website, we’ll be happy to give you an hour of free consulting on the ITSM topic of our choice!
Overall State of the Market
BMC is #1 in the market with @40% market share (Remedy is around 25% of that), HP Service Manager is #2 at a little under 17%, CA is #3 at 8%, Service-Now is #4 at @6% (see financial statements for subscription revenues), and Frontrange is #5 at 5% (but most of this market share is heat and not Frontrange ITSM) In terms of ranking, we would rank the vendors using these criteria: Interface, Architecture, Functionality and Price (list pricing, because most vendors offer special discounts based on a wide range of criteria), Platform Integration, Innovation, Administration, Operations (for SaaS solutions only).
** One recommendation (and disclaimer) before we list the rankings. We highly recommend that as a customer you go into depth on each module (Incident, Change, CMDB, Release, etc…, because the devil is definitely in the details). For example, you could argue that Incident Management is a commodity application at this point, but CMDB definitely is not (in terms of functionality and architecture).
Ratings (1 is Lowest, 5 is Highest, ordered by market share):
- BMC Remedy ITSM 8.0 – Functionality 5, Architecture 4, Pricing (Blue/SaaS) 4, Interface 4, Sales Team 2, Implementation Community 5, Platform Integration 4, Innovation 4, Administration 4 (associated with , Operations 4 (recent improvement), Market Share #1 (Includes all BMC products, but Remedy is still #1 when pulled out separately)
- HP Service Manager 9.3 (Still researching Service Anywhere, but likely will be similar due to using the same platform) – Functionality 5, Architecture 3, Pricing 4, Interface 3, Sales Team 3, Implementation Community 4, Platform Integration 2, Innovation 3, Administration, 2, Operations, 4, Market Share #2
- Service-Now Berlin – Functionality 3, Architecture 3, Pricing 2, Interface 3, Sales Team 4, Implementation Community 2, Platform Integration 5, Innovation 4, Administration 3, Operations, 4, Market Share #3
- CA Service Desk Manager 12.6 – Functionality 3, Architecture 1, Pricing 4, Interface 2, Sales Team 4, Implementation Community 2, Platform Integration 2, Innovation 1, Administration, 2, Market Share #4
- Frontrange ITSM 7 (not HEAT Cloud, we’re still researching) – Functionality 3, Architecture 3, Pricing 5, Interface 3, Sales Team 2, Implementation Community 2, Platform Integration 3, Innovation 3, Administration, 3, Market Share #5 (Most of the market share actually comes from Heat)
Additional remarks, thoughts and comments:
* Cherwell is most likely going to overtake Frontrange for the 5th spot in the market, once we have the final numbers for 2012 in, we’ll decide if it’s necessary to revise our research and focus on Cherwell. One thing that stands out in our research so far – these people are customer-friendly, partner-friendly and growing quickly. They have more than 400 customers… and attained them in a short period of time.
* For customers who have already implemented HP SM and are looking for a best-of-breed Service Catalog that has native integration to HP SM… have a look at PMG – http://www.pmg.net
* We expect CA to move away for the Service Desk Manager platform towards the Nimsoft architecture. Service Desk Manager will probably remain supported in perpetuity, but continue to lag in on-going development as Nimsoft takes the top spot due to it’s native SaaS architecture.
* IBM TSRM remains largely a footnote in the ITSM market… in 6th place. Some major customers have chosen this product because they are IBM shops… and it made financial sense. IBM rarely wins on price/performance. From a purely technical standpoint though, IBM’s Maximo product architecture is in better shape than CA Service Desk Manager.
* Numara had annual revenues of about $75 Million before being acquired by BMC.
* HP executes well on strategic relationships with customers in order to win ITSM opportunities, much like IBM. Having the EDS services arm, relationships with Managed Service Providers, the ability to handle full IT Outsourcing and leverage hardware sales puts HP in a position of winning enterprise deals. So, it is unlikely to find HP in SMB deals in the ITSM market.
* Remedyforce is built on Force.com, therefore it is built on arguably the best SaaS application architecture available. So, it is a native SaaS architecture, opposed to popular opinion.
Many customers have confused this offering with BMC Remedy on Demand which still leverages the AR System architecture. Remedyforce is probably one of the most promising upcoming solutions in this market. Field activity indicates that demand is strong, but most definitely in the SMB. Enterprise deals remain the exception.
* ITRP is a new ITSM SaaS offering that is positioned as serious and packaged ITSM. They have purposefully taken the opposite approach as ICCM (for example) as an application that isn’t designed to be customized, but leverages best practices. The interface is truly excellent. So, for those customers looking for a packaged ITSM application with robust functionality, a superb user interface and a simple SaaS licensing model, ITRP is worth considering. Group Danone is a recent large win for ITRP, so ITRP is definitely a company to watch.