Mike Beale, managing director of TeamUltra continues to analyse the research his organisation carried out at SITS16, this time pointing the spotlight at the rapidly changing ITSM software market.
The landscape for ITSM software has changed significantly over the last decade. SaaS solutions have taken the market by storm but there is still a place for conventional on-premise systems. However, the growth in cloud-based deployments has served to drive up a number of customer expectations.
Today, customers want short, dynamic project implementations, they demand regular upgrades that have minimal impact on the business and a more convenient migration path should a customer want to move to another solution that better suits their requirements. Increasingly, customers are refusing to accept being locked into one system where historically the sheer difficulty and effort in switching to another system has outweighed the perceived benefits.
Churn rate remains high for ITSM software
For years IT industry analysts have quoted high churn rates for ITSM tools – with customers changing tools on average every three to five years. In some ways, the growing adoption of SaaS ITSM tools should have helped with this, particularly because of their more modern user interfaces and the increased frequency and ease of upgrades associated with SaaS.
However, the TeamUltra survey (see Diagram 1 below) shows otherwise – with nearly 40% of respondents looking to change ITSM tool in the next 12 months.
Diagram 1: What initiatives are you looking at in the next 12 months?
- Introduce a new service management system: 38.3%
- IT security and vulnerability: 36.7%
- Service desk alignment to ITIL: 32.9%
- Governance, risk, and compliance: 30.3%
- Upgrade ITSM systems: 26.3%
- Extend ITSM to non-core IT lines of business (HR, facilities etc.): 17.7%
- SIAM (service integration and management): 13.9%
- Outsource IT functions: 10.1%
It is important to note that not all SaaS ITSM systems are born equal and the SaaS delivery model in itself is not enough to ensure customers are happy with their chosen ITSM software.
Secondly, the ability to quickly implement a new SaaS tool removes one of the main barriers to churn – the time and cost of change. Removing the lock-in mentioned above that is typically associated with some inflexible monolithic ITSM systems will continue to drive churn rates.
It’s also interesting to see that a third of respondents still aim to align their service desks to ITIL best practices. This is a testament to ITIL’s ongoing relevance to service desk operations.
Finally, the 13.9% of respondents who are looking at service integration and management (SIAM) in the next 12 months are an indication of the growing complexity of IT provision and management. It is no longer the preserve of the very largest organisations as more and more organisations look to leverage the benefits of automation and workflows to manage end to end service management processes.
The UK ITSM market share
SaaS has altered the ITSM tool marketplace forever. The TeamUltra SITS survey shows just how much. Looking at Diagram 2, ServiceNow leads the market share table with one in five survey respondents stating that their company uses ServiceNow.
Looking at the top five places, the inclusion of Atlassian and Zendesk is testament to how two even newer SaaS ITSM tool providers can quickly gain market share (albeit when measured by customer numbers rather than seats).
With both companies no doubt leveraging their existing customer bases, in the application issue tracking and external help desk spaces respectively, to win ITSM business.
Diagram 2: What ITSM or service desk solutions are you currently using?
- ServiceNow: 20.8%
- Atlassian: 16.2%
- Hornbill: 10.9%
- BMC: 7.6%
- Zendesk: 7.6%
- HP: 6.6%
- House on the Hill 2.3%
- HEAT: 1.6%
- Other/none: 46.9%
Analysis of the “other” option showed that, based on the SITS survey, a number of other ITSM tool vendors have a reasonable UK market share but not enough to displace any of the top six ITSM tool vendors listed above.
Which still leaves 30% of survey respondents using other ITSM vendor, or home grown, tools for service desks and ITSM. In fact, if listed, “home-grown” or “no tool” would be seventh in the above table at 5.3%.
The market for ITSM systems is likely to be growing and sufficiently large to sustain both existing vendors and newer market entrants. However, with many organisations preferring to work with established vendors, I would expect to the top six vendors to retain the lion’s share of the market. Whether anyone can challenge ServiceNow’s supremacy will be interesting to follow.
Download a full copy of “The State of UK IT Service Management in 2016” from TeamUltra white paper.