The Total Economic Impact™ Of ServiceNow HR Service Delivery

Cost Savings And Productivity Benefits Enabled By
HR Service Delivery

A Forrester Total Economic Impact Study Commissioned By ServiceNow, February 2024

Intentionally designing a cohesive employee experience is the key to higher levels of engagement, productivity, and retention for new hires. HR service delivery is a growing area of an organization’s tech infrastructure that can optimize this employee journey and lower the cost to serve employees. It enables HR teams to track and manage their interactions with employees and manage critical employee experiences.1

ServiceNow HR Service Delivery (HRSD) consists of a suite of applications that enables employees to find the information they need, self-serve, and get personalized and guided support across the employee journey, all within a single portal. The applications include:

  • Employee Center Pro. This provides a single, unified portal for service delivery across the enterprise.
  • Case and Knowledge Management. This standardizes documentation, interactions, and fulfillment of employee requests.
  • Employee Journey Management. This builds complete enterprise wide workflows to support employees through complex moments.
  • Now Assist for HRSD. This allows agents to summarize customer chat conversations, generate case resolution notes, and wrap up cases faster using generative AI.
  • HR Agent Workspace. This connects HR teams to the information they need fast, in a personalized workspace.

Other ServiceNow HRSD capabilities include Now Assist, Employee Relations, Process Mining for HR, Virtual Agents, Issue Auto Resolution, and Workforce Optimization.

ServiceNow commissioned Forrester Consulting to conduct a Total Economic Impact™ (TEI) study and examine the potential return on investment (ROI) enterprises may realize by deploying HR Service Delivery.2 The purpose of this study is to provide readers with a framework to evaluate the potential financial impact of HR Service Delivery on their organizations.

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Return on investment (ROI)

259%

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Net present value (NPV)

$15.60M

To better understand the benefits, costs, and risks associated with this investment, Forrester interviewed six representatives with experience using HR Service Delivery. For the purposes of this study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization that is a global B2C organization with 35,000 FTEs and revenue of $10 billion per year.

Interviewees said that, prior to using ServiceNow’s HR Service Delivery, their organizations struggled with inefficient HR processes, a lack of self-service tools for employees, and a need for better reporting and visibility into HR operations. As a result, HR productivity suffered, and organizations struggled to meet their employee experience (EX) goals. A mix of prior vendor-supplied and homegrown HR service delivery solutions created an inoperable lack of governance and integration strategy for the IT team, and a broken and frustrating employee experience for HR and the workforce. Not only did the workforce suffer from productivity-sapping manual processes, the IT and HR teams had to spend manual effort to resolve simple tasks, all of which cost more money and time.

After the investment in HR Service Delivery, the interviewees aligned their HR tech stack with larger digital transformation efforts and future fit capabilities, integrating many systems into a single shared service standard and model. A consolidated knowledge base made it easier and faster for employees to find important information and resolve inquiries that kept them from being productive. In turn, HR employees automated inefficient processes, giving them more time to focus on problems rather than churning through volumes of tickets.

Key results from the investment include improved consistency, productivity, and overall EX for employees and managers alike through automated workflows and self-service hubs. This improved experience cascades into meaningful and measurable impacts in employee satisfaction, retention rates, and other employee engagement areas.

Key Findings

Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:

  • Getting newly onboarded employees to full productivity two weeks faster. Rather than operating at 75% productivity for the duration of a three-week onboarding period, the composite brings resources to full productivity within one week with HRSD. This faster time to full productivity for newly onboarded employees equates to a financial benefit of $9.3 million for the composite organization over the three-year analysis.
  • Over 77,000 hours in end-user time savings on HR requests. Compared to the prior environment, end users save up to 15 minutes on tier-one HR requests, and up to 30 minutes on tier-two HR requests. These end user time savings add up to more than $1.1 million for the composite organization.
  • Over 17,000 hours of HR time savings on processing employee HR requests. Compared to the prior environment, HR employees spend up to 45% less time on tier-one HR requests, and up to 30% less time on tier-two HR requests. These HR time savings equal more than $615,000 to the composite organization.
  • Up to 30% HR labor efficiencies regained by streamlining HR workflows with HRSD. ServiceNow HRSD automates workflows for things like onboarding, offboarding, payroll, leave management, employee relations, compliance, and other HR workflows. For the composite, HR resources save up to 80,000 FTE hours compared to their prior environment. These time savings are worth over $8 million to the composite organization.
  • Savings from consolidated technology environment. By consolidating four HR technology solutions into one, the composite organization saves excess license costs from its legacy technology stack. The composite organization is also able to redeploy more than 4,000 hours of IT labor that were previously devoted to managing their legacy systems. In total, these savings are worth more than $1.1 million.
  • Improved workflow development agility. HRSD enables the composite organization to independently develop high-quality, automated workflows, which previously were built by third-party contractors. As a result, the composite organization reduces its contractor spend and productively redeploys employee hours previously dedicated to contractor management. Over three years, the reduced reliance on contractors is worth $1.4 million to the composite organization.

Benefits not included in ROI. Benefits that are not included in the ROI analysis but can potentially provide benefits for the composite organization include:

  • Improved employee retention and experience. HRSD improves employee engagement across service platforms, enhancing employee satisfaction scores and streamlining onboarding and training processes to position new employees for success, ultimately reducing attrition for the organization. The decline in turnover helps the composite avoid vacancy costs while keeping current employees more engaged.

Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:

  • Improved standardization and governance. The composite organization leverages ServiceNow HRSD’s digital platform to enable HR teams to create standardized agreements and automate approval processes, ensuring that all necessary documentation is completed. The composite organization uses ServiceNow HRSD to create a dynamic knowledge management system, allowing HR teams to easily update knowledge articles, ensuring that employees have the most up-to-date information. The improved knowledge base lowers the risk of providing employees with incorrect information, which can lead to confusion and errors in HR processes.
  • Improved functionality and visibility into HR-related business objectives. ServiceNow HR Service Delivery centralizes all of the composite organization’s HR-related information and KPIs into a single platform, allowing HR teams to easily track and monitor employee data, performance, and metrics. Additionally, ServiceNow HRSD offers customizable dashboards and reporting tools, enabling the organization to create and visualize KPIs specific to its HR goals and objectives.
  • Improved preparedness for audits. ServiceNow HRSD provides the composite organization with a centralized repository for all HR-related data, documents, and processes. This ensures that all information is easily accessible and organized, making it easier to meet compliance requirements and respond to audits.

Costs. Three-year, risk-adjusted PV costs for the composite organization include:

  • Licensing costs. HRSD licensing costs for the composite organization increase 5% year over year in keeping with organic headcount growth, totaling $3.7 million over the three-year analysis.
  • Internal and external implementation costs. The composite organization engages a third-party implementation partner and dedicates IT and HR resources to implementation and stabilization. In total, the composite’s implementation costs come to $804,000.
  • User testing and training. A small portion of the composite organization’s employee base tests HR SD during the implementation and the initial deployment phase. Additionally, the organization trains both HR users and end users on using HRSD. Total testing and training costs amount to $902,000 over three years.
  • Solution maintenance costs. The composite organization devotes one IT employee and one HR resource to managing the HRSD platform. The employees spend 50% of their time managing the platform in Year 1 but dedicate more time to maintaining the platform as more use cases and functionalities are deployed. Over three years, internal maintenance costs amount to $585,000.             

The representative interviews and financial analysis found that a composite organization experiences benefits of $21.62 million over three years versus costs of $6.02 million, adding up to a net present value (NPV) of $15.60 million and an ROI of 259%.

Increase in HR team efficiency with ServiceNow HR Service Delivery

20% to 30%

“We are resolving customer issues versus closing tickets. … The employee has one place to go versus 78.”

HR IT leader, government

Key Statistics

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    Return on investment (ROI)

    259%
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    Benefits PV

    $21.62M
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    Net present value (NPV)

    $15.60M
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    Payback

    <6 months
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Benefits (Three-Year)

Faster time to productivity for newly onboarded employees End user time savings on HR requests HR time savings on processing employee HR requests HR Time Savings From Streamlining HR Workflows Improved application development agility Savings from consolidated technology environment

Forrester Perspective: Business Impacts Of Better Onboarding

The onboarding journey begins the moment a new hire accepts a job offer to the day they are fully ramped up and productive in their new role. Fragmented onboarding can result in disconnected and negative experiences. If the onboarding experience is intentionally designed, it can lead to higher engagement levels and better new-hire retention. But many organization fails to deliver an intentional onboarding experience, offering only compliance-based orientation.3 This has consequences, including:

  • Low productivity. Productivity is the goal of most onboarding programs. New hires must become strong contributors as quickly as they can. Without the proper resources and a lack of clarity around job demands, full productivity is impossible.
  • Low engagement. Unstructured onboarding leads to uncertainty around job roles and disengaged employees. Disengagement is expensive, typically costing employers the equivalent of 18% of the disengaged employee’s annual salary.4
  • Low retention. A lack of engagement can lead to turnover if left unresolved — and the cost of replacing an employee is far higher than the cost of a disengaged employee, costing from 33% to 200% of their annual salary.5

TEI Framework And Methodology

From the information provided in the interviews, Forrester constructed a Total Economic Impact™ framework for those organizations considering an investment in ServiceNow HR Service Delivery.

The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that ServiceNow HR Service Delivery can have on an organization.

  1. Due Diligence

    Interviewed ServiceNow stakeholders and Forrester analysts to gather data relative to ServiceNow HR Service Delivery.

  2. Interviews

    Interviewed six representatives at organizations using ServiceNow HR Service Delivery to obtain data about costs, benefits, and risks.

  3. Composite Organization

    Designed a composite organization based on characteristics of the interviewees’ organizations.

  4. Financial Model Framework

    Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewees.

  5. Case Study

    Employed four fundamental elements of TEI in modeling the investment impact: benefits, costs, flexibility, and risks. Given the increasing sophistication of ROI analyses related to IT investments, Forrester’s TEI methodology provides a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.

Disclosures

Readers should be aware of the following:

This study is commissioned by ServiceNow and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.

Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the study to determine the appropriateness of an investment in HR Service Delivery.

ServiceNow reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.

ServiceNow provided the customer names for the interviews but did not participate in the interviews.

Consulting Team:

Courtenay O’Connor

Matt Dunham

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