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:
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.
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.
Quantified benefits. Three-year, risk-adjusted present value (PV) quantified benefits for the composite organization include:
Benefits not included in ROI. Benefits that are not included in the ROI analysis but can potentially provide benefits for the composite organization include:
Unquantified benefits. Benefits that provide value for the composite organization but are not quantified for this study include:
Costs. Three-year, risk-adjusted PV costs for the composite organization include:
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%.
Return on investment (ROI)
Benefits PV
Net present value (NPV)
Payback
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.
Interviewed ServiceNow stakeholders and Forrester analysts to gather data relative to ServiceNow HR Service Delivery.
Interviewed six representatives at organizations using ServiceNow HR Service Delivery to obtain data about costs, benefits, and risks.
Designed a composite organization based on characteristics of the interviewees’ organizations.
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.
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.
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
| Role | Industry | Region | Total FTEs |
|---|---|---|---|
| HR technology leader | Food | Global operations | 123,000 (US) |
| HR service director | Healthcare | North America operations | 32,000 |
| Global HR VP | Environmental services | Global operations | 8,000 |
| People operations manager | Agriculture | Global operations | 20,000 |
| HR IT leader | Government | US operations | 94,000 |
| Head of people technology | Financial services | Global operations | 33,000 |
Prior to the adoption of ServiceNow HR Service Delivery, the interviewees shared that their organizations had a variety of vendor-supplied and homegrown HR solutions in place. The interviewees noted how their organizations struggled with common challenges, including:
Interviewees noted that it was important for their organizations’ service delivery tools to fulfill the following organizational objectives:
Based on the interviews, Forrester constructed a TEI framework, a composite company, and an ROI analysis that illustrates the areas financially affected. The composite organization is representative of the six interviewees, and it is used to present the aggregate financial analysis in the next section. The composite organization has the following characteristics:
Description of composite. The composite organization is a global B2C company with $10 billion in annual revenue. Its 35,000 employees are supported by 250 HR staff. Between basic/tier-one and complex/tier-two requests, employees issue about 120,000 HR requests per year.
With the ServiceNow HRSD investments, the composite seeks to provide:
Deployment characteristics. The composite organization licenses ServiceNow HRSD modules including Pro and Enterprise licensing.
The primary use cases include tier-one HR requests, tier-two HR requests (e.g., leave of absence [LOA], worker’s compensation, disability, employee relations), position management, and benefits.
The composite organization had existing multiple ServiceNow deployments prior to deploying HRSD, including IT Service Management. It uses HRSD to develop 28 workflows developed by Year 3.
| Ref. | Benefit | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|
| Atr | Faster time to productivity for newly onboarded employees | $3,570,000 | $3,748,500 | $3,935,959 | $11,254,459 | $9,300,533 |
| Btr | End-user time savings on HR requests | $236,250 | $468,558 | $694,188 | $1,398,996 | $1,123,564 |
| Ctr | HR time savings on processing employee HR requests | $223,042 | $238,162 | $287,539 | $748,742 | $615,625 |
| Dtr | HR time savings from streamlining HR workflows | $2,246,400 | $3,249,418 | $4,464,046 | $9,959,864 | $8,081,555 |
| Etr | Savings from consolidated technology environment | $275,348 | $497,610 | $623,968 | $1,396,926 | $1,130,360 |
| Ftr | Improved workflow development agility | $270,130 | $504,900 | $956,760 | $1,731,790 | $1,381,673 |
| Total benefits (risk-adjusted) | $6,821,170 | $8,707,147 | $10,962,460 | $26,490,777 | $21,633,310 | |
Evidence and data. With the easier and more streamlined onboarding processes, the interviewees reported that HRSD brought their organizations’ new hires up to full productivity faster.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $9.3 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| A1 | Total new hires per year from growth | C1+5% YOY | 1,750 | 1,838 | 1,929 | |
| A2 | Total new hires per year from turnover | C1*10% turnover rate | 3,500 | 3,675 | 3,859 | |
| A3 | Total new hires in the ServiceNow HRSD environment | A1+A2 | 5,250 | 5,513 | 5,788 | |
| A4 | Historical length of onboarding process (weeks) | Interviews | 3 | 3 | 3 | |
| A5 | Employee productivity during onboarding | Composite | 75% | 75% | 75% | |
| A6 | Average fully burdened salary of a new employee | TEI standard | $83,200 | $83,200 | $83,200 | |
| A7 | Subtotal: Lost productivity during old onboarding process | A3*A4*(1-A5)* (A6/52) | $6,300,000 | $6,615,000 | $6,945,810 | |
| A8 | Length of onboarding process with ServiceNow HRSD (weeks) | Interviews | 1 | 1 | 1 | |
| A9 | Subtotal: Lost productivity during new onboarding process | A3*A8*(1-A5)* (A6/52) | $2,100,000 | $2,205,000 | $2,315,270 | |
| At | Faster time to productivity for newly onboarded employees | A7-A9 | $4,200,000 | $4,410,000 | $4,630,540 | |
| Risk adjustment | ↓15% | |||||
| Atr | Faster time to productivity for newly onboarded employees (risk-adjusted) | $3,570,000 | $3,748,500 | $3,935,925 | ||
| Three-year total: $11,254,459 | Three-year present value: $9,300,533 | |||||
Evidence and data. Interviewees identified further efficiencies and productivity gains across the general end user’s employee journey with HRSD.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.1 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| B1 | Total tier-one HR requests | C3 | 105,000 | 110,250 | 115,764 | |
| B2 | Average end-user minutes saved on tier-one HR requests with ServiceNow HRSD | Interviews | 5 | 10 | 15 | |
| B3 | Subtotal: Total end-user hours saved on tier-one requests | (B1)*B2/60 | 8,750 | 18,375 | 28,941 | |
| B4 | Total tier-two requests | Interviews | 17,500 | 18,375 | 19,250 | |
| B5 | Average end-user minutes saved on tier-two requests with ServiceNow HRSD | Interviews | 15 | 25 | 30 | |
| B6 | Subtotal: Total end-user hours saved on tier-two requests | (B1*B5/60) | 4,375 | 7,656 | 9,625 | |
| B7 | Total end-user hours saved on all HR requests with ServiceNow HRSD | B3+B6 | 13,125 | 26,031 | 38,566 | |
| B8 | Productivity recapture rate | TEI standard | 50% | 50% | 50% | |
| B9 | Average fully burdened hourly rate of an end-user FTE | TEI standard | $40 | $40 | $40 | |
| Bt | End-user time savings on HR requests | B7*B9*B8 | $262,500 | $520,620 | $771,320 | |
| Risk adjustment | ↓10% | |||||
| Btr | End-user time savings on HR requests (risk-adjusted) | $236,250 | $468,558 | $694,188 | ||
| Three-year total: $1,398,996 | Three-year present value: $1,123,564 | |||||
Evidence and data. Prior to HRSD, interviewees described HR environments that missed the mark in terms of providing effective service for a cohesive employee journey. Interviewees noted many ways in which HRSD impacted the volume, duration, and quality of experience related to employee inquiries of all types.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $616,000.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| C1 | Total number of employees | Composite (5% annual growth) | 35,000 | 36,750 | 38,588 | |
| C2 | Tier-one HR requests submitted per year, per employee | Composite | 3 | 3 | 3 | |
| C3 | Total number of tier-one requests submitted per year | C1*C2 | 105,000 | 110,250 | 115,764 | |
| C4 | Average time for an HR resource to resolve a tier-one HR request in the prior environment (minutes) | Composite | 5 | 5 | 5 | |
| C5 | Percent reduction in time for an HR resource to resolve a tier-one request | Interviews | 35% | 40% | 45% | |
| C6 | Subtotal: HR resource hours saved on tier-one requests | (C3*C4*C5)/60 | 3,063 | 3,675 | 4,341 | |
| C7 | Tier-two HR requests submitted per year, per employee | Composite | 0.50 | 0.25 | 0.25 | |
| C8 | Total number of tier-two requests submitted per year | C1*C7 | 17,500 | 9,188 | 9,647 | |
| C9 | Average time for an HR resource resolve a tier-two request in the prior environment (minutes) | Composite | 48 | 48 | 48 | |
| C10 | Percent reduction in time for an HR resource to resolve a tier-two request | Interviews | 15% | 25% | 30% | |
| C11 | Subtotal: HR resource hours saved on tier-two requests | (C8*C9*C10)/60 | 2,100 | 1,838 | 2,315 | |
| C12 | Total HR time savings on processing employee tier-one and tier-two HR requests (hours) | C6+C11 | 5,163 | 5,513 | 6,656 | |
| C13 | Productivity recapture rate | TEI standard | 80% | 80% | 80% | |
| C14 | Average fully burdened hourly rate of an HR resource | TEI standard | $60 | $60 | $60 | |
| Ct | HR time savings on processing employee HR requests | C12*C13*C14 | $247,824 | $264,624 | $319,488 | |
| Risk adjustment | ↓10% | |||||
| Ctr | HR time savings on processing employee HR requests (risk-adjusted) | $223,042 | $238,162 | $287,539 | ||
| Three-year total: $748,742 | Three-year present value: $615,625 | |||||
Evidence and data. Interviewees reported a variety of ways in which HRSD automatons saved their HR resources time while improving the overall quality of service provided.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $8.1 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| D1 | Total HR resources | Composite | 250 | 263 | 276 | |
| D2 | Percent of HR FTE workflows affected by ServiceNow HRSD | Composite | 50% | 55% | 60% | |
| D3 | Percent increase in HR efficiency with ServiceNow HRSD | Interviews | 20% | 25% | 30% | |
| D4 | Average fully burdened annual salary of an HR resource | TEI standard | $124,800 | $124,800 | $124,800 | |
| D5 | Productivity recapture rate | TEI standard | 80% | 80% | 80% | |
| Dt | HR time savings from streamlining HR workflows | D1*D2*D3*D4*D5 | $2,496,000 | $3,610,464 | $4,960,051 | |
| Risk adjustment | ↓10% | |||||
| Dtr | HR time savings from streamlining HR workflows (risk-adjusted) | $2,246,400 | $3,249,418 | $4,464,046 | ||
| Three-year total: $9,959,864 | Three-year present value: $8,081,555 | |||||
Evidence and data. With the modernized technology platform HRSD provides, interviewees mentioned various aspects of capital and operational savings from sunsetting their legacy HR tech stacks.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.1 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| E1 | Total licensing costs for four solutions in legacy HR tech stack | Composite | $1,900,000 | $1,995,000 | $2,094,750 | |
| E2 | Percent reduction in licensing costs with consolidated ServiceNow HRSD solution | Interviews | 10% | 20% | 25% | |
| E3 | Subtotal: License savings from decommissioned HR solutions | E1*E2 | $190,000 | $399,000 | $523,688 | |
| E4 | Total internal IT resource hours dedicated to managing multiple solutions in legacy HR tech stack | Composite | 2,080 | 2,080 | 2,080 | |
| E5 | Percent reduction in internal technology management with ServiceNow HRSD solution | Interviews | 60% | 75% | 80% | |
| E6 | Average fully burdened average IT hourly rate | TEI standard | $80 | $80 | $80 | |
| E7 | Subtotal: Labor savings from managing decommissioned HR solutions | E4*E5*E6 | $99,840 | $124,800 | $133,120 | |
| Et | Savings from consolidated technology environment | E3+E7 | $289,840 | $523,800 | $656,808 | |
| Risk adjustment | ↓5% | |||||
| Etr | Savings from consolidated technology environment (risk-adjusted) | $275,348 | $497,610 | $623,968 | ||
| Three-year total: $1,396,926 | Three-year present value: $1,130,360 | |||||
Evidence and data. Interviewees reported that they were able to develop high-quality automated workflows with HRSD, while previously they relied on third-party contractors to build these workflows. By developing these workflows independently, interviewees were able to reduce contractor fees and redeploy labor hours previously dedicated to managing contractors.
The global HR VP in the environmental services industry noted that their organization was able to build 15 workflows that could not have been built without ServiceNow HRSD.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the benefit will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $1.4 million.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| F1 | Number of automated workflows developed for employee journeys per year with ServiceNow HRSD | Composite | 4 | 8 | 16 | |
| F2 | Total contractor hours to develop a new workflow avoided with ServiceNow HRSD | Interviews | 391 | 391 | 391 | |
| F3 | Average fully burdened hourly rate of a contractor | TEI standard | $150 | $150 | $150 | |
| F4 | Total internal IT resource hours dedicated to contractor management avoided with ServiceNow HRSD | Interviews | 1,040 | 1,560 | 2,340 | |
| F5 | Average fully burdened hourly rate of an IT resource | TEI standard | $80 | $80 | $80 | |
| Ft | Improved workflow development agility | (F1*F2*F3)+ (F4*F5) | $317,800 | $594,000 | $1,125,600 | |
| Risk adjustment | ↓15% | |||||
| Ftr | Improved workflow development agility (risk-adjusted) | $270,130 | $504,900 | $956,760 | ||
| Three-year total: $1,731,790 | Three-year present value: $1,381,673 | |||||
Evidence and data. Interviewees discussed many ways in which their organizations improved their employees’ experiences from the start of onboarding through all the aspects of their hire to retire journey. In streamlining this journey, some interviewees were able to point to significant and measurable impacts on their EX, including an increase in employee CSAT and improved employee retention.
Because a number of external factors affect satisfaction and retention, Forrester quantified the improvement in retention but excluded it from the ROI calculation.
Modeling and assumptions. Based on the interviews, Forrester would assume the following about the composite organization, although this calculation is not included in ROI totals:
Risks. Forrester recognizes that these results would not be representative of all experiences, and the potential benefit would vary between organizations depending on the following factors:
By enhancing employee CSAT scores and streamlining onboarding and training processes, HRSD helps the composite organization reduce attrition.
The decline in turnover helps the composite avoid vacancy costs while keeping current employees more engaged.
| Ref. | Metric | Source | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|
| U1 | Total employees | Composite | 35,000 | 36,750 | 38,588 | |
| U2 | Employee turnover rate in the prior environment | Interviews | 10% | 10% | 10% | |
| U3 | Number of employees leaving the organization per year | U1*U2 | 3,500 | 3,675 | 3,859 | |
| U4 | Percent reduction in turnover rate attributed to ServiceNow HRSD | Interviews | 0.5% | 1.0% | 1.0% | |
| U5 | Additional retained employees with ServiceNow HRSD | U3*U4 | 18 | 37 | 39 | |
| U6 | Cost per vacancy | Composite | $41,600 | $41,600 | $41,600 | |
| Ut | Improved employee retention | U5*U6 | $748,800 | $1,539,200 | $1,622,400 | |
| Excluded from ROI: Three-year total: $3,910,400 | Three-year present value: $3,171,727 | |||||
Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:
The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement HR Service Delivery and later realize additional uses and business opportunities. Interviewees reported several ways in which HRSD allowed them to complete HR processes more quickly and cost effectively.
In addition to the impacts on the newly-onboarded workforce’s experience noted in Benefit A, interviewees pointed to additional value related to a shortened onboarding period. The global HR VP in the environmental services industry anticipated a 30% reduction in their organization’s outsourcing recruiting costs, which totaled $1.4 million in the prior environment. They indicated, “There’s a lot of things that make up that amount, and that doesn’t even include the time that the interview teams spend interviewing the candidates.”
The global HR VP also reported that these recruitment cost savings would be further reinvested in their organization’s HRSD environment, financing their organization’s intended upgrade to the Enterprise version.
Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Appendix A).
| Ref. | Cost | Initial | Year 1 | Year 2 | Year 3 | Total | Present Value |
|---|---|---|---|---|---|---|---|
| Gtr | Licensing costs | $0 | $1,433,250 | $1,504,913 | $1,580,159 | $4,518,321 | $3,733,880 |
| Htr | Implementation | $581,680 | $245,080 | $0 | $0 | $826,760 | $804,480 |
| Itr | User testing and training | $320,320 | $597,960 | $23,320 | $24,618 | $966,218 | $901,689 |
| Jtr | Solution maintenance | $0 | $160,160 | $240,240 | $320,320 | $720,720 | $584,807 |
| Total costs (risk-adjusted) | $902,000 | $2,436,450 | $1,768,473 | $1,925,097 | $7,032,019 | $6,024,856 | |
Evidence and data. Interviewees’ organizations had various configurations of ServiceNow HRSD modules and capabilities deployed, impacting their respective costs related to ServiceNow HRSD licenses, maintenance, and cloud services. Some organizations may include pricing elements based on the number of assets contained within the solution.6
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 5%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.7 million.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| G1 | Licensing costs | Composite | $1,365,000 | $1,433,250 | $1,504,913 | ||
| Gt | Licensing costs | G1 | $0 | $1,365,000 | $1,433,250 | $1,504,913 | |
| Risk adjustment | ↑5% | ||||||
| Gtr | Licensing costs (risk-adjusted) | $0 | $1,433,250 | $1,504,913 | $1,580,159 | ||
| Three-year total: $4,518,321 | Three-year present value: $3,733,880 | ||||||
Evidence and data. Interviewees described a range of implementation timelines. During these phases, interviewees described how their organizations incurred various internal and external costs.
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $804,000.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| H1 | Third-party implementation partner fees | Interviews | $300,000 | $150,000 | $0 | $0 | |
| H2 | IT resources fully dedicated to implementing ServiceNow HRSD | Composite | 2 | 1 | 0 | 0 | |
| H3 | IT hours spent on implementation and stabilization, per resource | Interviews | 1,040 | 520 | 0 | 0 | |
| H4 | Average fully burdened hourly rate of an IT resource | TEI standard | $80 | $80 | $80 | $80 | |
| H5 | Subtotal: Internal IT implementation costs | H2*H3*H4 | $166,400 | $41,600 | $0 | $0 | |
| H6 | Number of HR resources dedicated to implementing ServiceNow HRSD | Composite | 2 | 0 | 0 | 0 | |
| H7 | Number of HR hours spent on implementation and stabilization, per resource | Initial: (52/2)*40 | 1,040 | 520 | 0 | 0 | |
| H8 | Average fully burdened hourly rate of an HR resource | TEI standard | $60 | $60 | $60 | $60 | |
| H9 | Subtotal: Internal HR implementation costs | H7*H8 | $62,400 | $31,200 | $0 | $0 | |
| Ht | Implementation | H1+H5+H9 | $528,800 | $222,800 | $0 | $0 | |
| Risk adjustment | ↑10% | ||||||
| Htr | Implementation (risk-adjusted) | $581,680 | $245,080 | $0 | $0 | ||
| Three-year total: $826,760 | Three-year present value: $804,480 | ||||||
Evidence and data. Interviewees described their organizations’ training efforts, as well as their approaches to user testing:
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $902,000.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| I1 | Number of FTEs engaged in end-user testing for ServiceNow HRSD | Composite | 70 | 35 | 0 | 0 | |
| I2 | Percent of time end users dedicate to testing | Interviews | 10.0% | 10.0% | 10.0% | 10.0% | |
| I3 | Average fully burdened hourly rate of an end user | TEI standard | $40 | $40 | $40 | $40 | |
| I4 | Subtotal: End-user testing costs | Initial and Y1: (2080/2)*I1*I2*I3 | $291,200 | $145,600 | $0 | $0 | |
| I5 | Number of HR resources trained on ServiceNow HRSD | Composite | 0 | 250 | 15 | 16 | |
| I6 | Number of hours spent training on ServiceNow HRSD, per HR resource | Interviews | 0 | 8 | 8 | 8 | |
| I7 | Average fully burdened hourly rate of an HR resource | TEI standard | $60 | $60 | $60 | $60 | |
| I8 | Subtotal: HR training costs | I5*I6*I7 | $0 | $120,000 | $7,200 | $7,680 | |
| I9 | Total end users trained on ServiceNow HRSD | Composite | 0 | 34,750 | 1,750 | 1,838 | |
| I10 | Number of hours spent training on ServiceNow HRSD per end user | Composite | 0 | 0.2 | 0.2 | 0.2 | |
| I11 | Subtotal: End-user training costs | I9*I10*I3 | $0 | $278,000 | $14,000 | $14,700 | |
| It | User testing and training | I4+I8+I11 | $291,200 | $543,600 | $21,200 | $22,380 | |
| Risk adjustment | ↑10% | ||||||
| Itr | User testing and training (risk-adjusted) | $320,320 | $597,960 | $23,320 | $24,618 | ||
| Three-year total: $966,218 | Three-year present value: $901,689 | ||||||
Evidence and data. To maintain the HRSD environment, interviewees discussed the following organizational costs:
Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:
Risks. Forrester recognizes that these results may not be representative of all experiences, and the cost will vary between organizations depending on the following factors:
Results. To account for these risks, Forrester adjusted this cost upward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $585,000.
| Ref. | Metric | Source | Initial | Year 1 | Year 2 | Year 3 | |
|---|---|---|---|---|---|---|---|
| J1 | IT professionals maintaining platform full-time equivalent (FTE) | Interviews | 0% | 50% | 75% | 100% | |
| J2 | Average fully burdened annual salary of an IT resource | TEI standard | $0 | $166,400 | $166,400 | $166,400 | |
| J3 | HR professionals maintaining platform full-time equivalent (FTE) | Interviews | 0% | 50% | 75% | 100% | |
| J4 | Average fully burdened annual salary of an HR resource | TEI standard | $0 | $124,800 | $124,800 | $124,800 | |
| Jt | Solution maintenance | (J1*J2)+(J3*J4) | $0 | $145,600 | $218,400 | $291,200 | |
| Risk adjustment | ↑10% | ||||||
| Jtr | Solution maintenance (risk-adjusted) | $0 | $160,160 | $240,240 | $320,320 | ||
| Three-year total: $720,720 | Three-year present value: $584,807 | ||||||
The financial results calculated in the Benefits and Costs sections can be used to determine the ROI, NPV, and payback period for the composite organization’s investment. Forrester assumes a yearly discount rate of 10% for this analysis.
These risk-adjusted ROI, NPV, and payback period values are determined by applying risk-adjustment factors to the unadjusted results in each Benefit and Cost section.
| Initial | Year 1 | Year 2 | Year 3 | Total | Present Value | |
|---|---|---|---|---|---|---|
| Total costs | ($902,000) | ($2,436,450) | ($1,768,473) | ($1,925,097) | ($7,032,019) | ($6,024,856) |
| Total benefits | $0 | $6,821,148 | $8,700,953 | $10,956,375 | $26,478,476 | $21,623,599 |
| Net benefits | ($902,000) | $4,384,698 | $6,932,480 | $9,031,279 | $19,446,457 | $15,598,743 |
| ROI | 259% | |||||
| Payback | <6 months | |||||
Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”
The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.
Related Forrester Research
“Level Up Your Onboarding Practice With An Experience-Based Approach” Forrester Research, Inc., May 12, 2022.
1 Source: “HCM Tech Growth 2022: HR Service Delivery Software Category,” Forrester Research, Inc., December 14, 2022.
2 Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.
3 Source: “Level Up Your Onboarding Practice With An Experience-Based Approach,” Forrester Research, Inc., May 12, 2022.
4 Ibid.
5 Ibid.
6 Licensing costs are based on the number of end users leveraging the HRSD platform. ServiceNow HRSD is available in three different packages (Standard, Professional, and Enterprise). The following capabilities are included as part of each package:
HRSD Standard
HRSD Professional
HRSD Enterprise
Add-On Applications
Cookie Preferences
Accept Cookies
A cookie is a small text file that a website saves on your computer or mobile device when you visit the site. It enables the website to remember your actions (data inputs, website navigation), so you don’t have to re-enter data when you come back to the site or browse from one page to another.
Behavioral information collected by our web analytics vendor is used to analyze data pertaining to visitor trends, plan website enhancements, and measure overall website effectiveness. We may also use cookies or web beacons to help us offer you products, programs, or services that may be of interest to you and to deliver relevant advertising. We may use third-party advertising companies to help tailor website content to users or to serve ads on our behalf. These companies may also employ cookies and web beacons to measure advertising effectiveness.
Please accept cookies and the collection of behavioral information to receive full functionality and enhance your experience. If you decline cookies, some features of the website may not function normally.
Please see our
Privacy Policy for more information.