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Services TBM

ServiceNow’s Service Costing vs ITFM Modules

iStock_000005703253_LargeAt the recent ServiceNow Knowledge15 conference, there was growing buzz around the new ITFM module, but some confusion around how the new module would compare with the already existing Service Costing module. Once you understand how they both work,the difference becomes clear and the possibilities for how they can work together are exciting.

The Service Costing module has been around for a bit, and is based on each service having a set “cost”. The confusion enters because ServiceNow calls this a “cost”, when it is really a “rate” or “price”. It is a set, fixed amount that a customer would have to pay for the Service. This is very useful for companies who are fairly mature in their TBM journey and are ready to use a P*Q methodology for either Showback or Chargeback to the business. In this case the P (Price) is the rate or “Cost” that is set in the Service Costing module and the Q (Quantity) is the quantity of the service being requested by the customer. Using this module assumes that you understand the cost composition of your services in order to set a reasonable price (cost to the consumer) and that the business is ordering services in specific quantities.
Most companies get stuck on knowing what rate to set for their services, because they do not understand the cost composition of their services. This is where the new ITFM module comes into play.
The new ITFM module is the newest entry in a landscape of tools that includes Apptio, VMWare’s ITBM, and Upland Software’s ComSci, among others. This new ServiceNow module allows you to model the cost composition of services using your financial data combined with the operational data already in ServiceNow or other IT Operational Systems. For companies who have little insight in the cost composition of their services,we recommend implementing a modeling tool like this so that they can measure and monitor their actual costs ( internal to IT) as well as variance to Budget, and learn enough to be able to set a reasonable rate.
With both modules in place, Service Owners as well as IT executives get the transparency and insight they need to manage the cost of services to the rate ( or price) they are charging.