ITSM: A Two Horse Race

[#1]

Back in January 2020, we released an article on “Is the ITSM Market Quickly Becoming a Two-Horse Race?” Now with the latest release of Apps Run the World’s report, we can see that this prediction has come true.

In Apps Run The World’s previous report ServiceNow and Atlassian combined for a market share of around 50%. Since then they have expanded this dominance and together now account for 58% of the ITSM market.

Jira Service Management (JSM), Atlassian’s ITSM offering, has impressed most over this period and has boosted its market share significantly. 18.5% of all ITSM revenue now comes through JSM.

However, what we think tells a bigger story than revenue here is customer numbers.

Atlassian as a whole has 226,000 customers (most on Jira Software) including 35,000 Jira Service Management customers. On the other hand, according to Apps Run the World ServiceNow has 6,900 customers.

To put this into context, in Q2 2022 Atlassian added an additional 10,000 customers–far more than ServiceNow’s total customer count.

ServiceNow has been very effective at squeezing significant sums out of its 6,900 customers. Given that their revenue from ITSM is $2.5 billion, this means that the average ServiceNow customer is spending around $362,318 for the privilege of doing business with them. This is up from the equivalent figure of $273,000 that we calculated in our previous article showing that since then transactions with ServiceNow have gone significantly up in price.

The story is different when looking at Jira Service Management’s 35,000 customers. Doing the same calculation we find that on average JSM will cost the customer just $33,428. With Forrester’s latest Enterprise Service Management report placing Atlassian as a leader with a perfect score for “strategy”, ServiceNow customers should be questioning whether the 166% extra they’re paying over JSM customers is really adding value to their business.

Yes, JSM’s average price is slightly higher now than it was when we ran our previous report (up from $19,000). However, since then Forrester reports that it has improved from being a “Strong Performer” to “Leader” based on gains to its “current offering”. When looking at these significant gains to JSM’s “current offering” (versus ServiceNow’s relative stagnation) these price increases look more than reasonable.

Furthermore, with both Gartner and UpGuard scoring JSM higher than ServiceNow, JSM customers can be sure that they are getting great value out of their investment.

We still see ServiceNow proponents arguing that ServiceNow will stay the dominant ITSM offering since it is better suited to the needs of bigger customers. However, Atlassian is already supporting the SDLC and Agile user population of many of those same large organizations. With JSM and Jira Software tightly integrated, transitioning from ServiceNow wouldn’t be difficult and will (as we’ve shown) provide the customer with huge savings.

ITSM is key to the modern enterprise with its importance growing every year. In two years the ITSM market has boomed in value from $4.1bn to $6.3bn. As organizations spend more and more on ITSM they should be sure that they are getting as much value as possible from their investment. For identical/greater functionality Atlassian offers a top-quality ITSM solution at a fraction of the price.

Get in touch with us at hello@blendedperspectives.com if you want to learn more about JSM and how we can help it serve you.

[Antonio Valle _G2_]

Hello @Joseph Law _Contegix_  a very interesting article with lots of useful information to position JSM in the ITSM market. 

It is true that we see SNow as the almost single competitor, but... do you think that it is a good calculation method to divide revenue / number of customers? shouldnt be a better metric to use revenue / number of licensed users?

The cost driver for ITSM licenses in both vendors is the named user, not the tenant.

Thanks!
Antonio

[Joseph Law _Contegix_]

@Antonio Valle _G2_ Hi Antonio, thanks for reading the article!

That's a really good point around the best calculation method to use would be--essentially though we went with the figures we had available from the report that our analysis was based on which was revenue and total customer count.

Of course ServiceNow has a larger number of users per customer so the figures are likely slightly skewed when looking at it by a per user point of view. However, I think the figures do show pretty clearly what we all know to be true which is that JSM is a much more cost efficient product than SNOW.