1 IDC ExpertROI SPOTLIGHT Allstate Getting Much More from Its IT Services with ServiceNow Cloud-Based IT Service Management Solution Sponsored by: ServiceNow Matthew Marden March 2015 Overview The Allstate Corporation (Allstate) is the largest publicly held personal lines insurer in the United States, providing insurance services to approximately 16 million U.S. households. Allstate is headquartered in Northbrook, Illinois, and owns and operates a total of 17 companies across the United States and Canada. Like many organizations, Allstate has found it persistently challenging to maximize the value of the IT services it delivers to its employees and customers. In an effort to drive more value through IT, Allstate deployed the ServiceNow cloud-based IT service management (ITSM) solution in January Since deployment, Allstate has leveraged ServiceNow to improve key IT-related metrics, including IT staff productivity levels in incident and change management operations. In addition, ServiceNow is delivering value to Allstate across its business by changing how incident-related data flows through the organization and influences decision making. Several years ago, Allstate realized that it needed a more intuitive IT platform capable of driving more IT and business value. After concluding that its "second generation" IT service management tool was not up to the task, Allstate began seeking a "third generation" IT platform to replace it. It chose the cloud-based IT service management Business Value Highlights Organization: Allstate Location: Northbrook, Illinois Challenge: To optimize IT service delivery across the entire business Solution: ServiceNow cloud-based IT service management solution Five-Year Cumulative Benefits: $33.4 million (discounted) ROI: 291% Payback period: 9.2 months Other Benefits: solution from ServiceNow and set objectives with ServiceNow to simplify its IT operations, create operational efficiencies, and reduce IT process times and costs. Allstate regarded ServiceNow's use of a single user interface, code base, and data model as advantageous because it would enable Allstate to provide IT services and create a single system of record through a consolidated IT service platform. Enable 20 25% productivity gains for the incident management team Reduce total IT service platform downtime by 15 20% Cut spending on end-user devices by 5% by creating visibility in the procurement process Cathy Kirch, ITSM office manager at Allstate, praised ServiceNow for enabling integration across Allstate's IT operations. According to Kirch, ServiceNow "has been a huge success in helping us get to the next step of IT integration across our production processes." In particular, she noted that Allstate March 2015, IDC #255072
2 benefits from the robust IT operations related data it can gather with ServiceNow, which allows Allstate to be proactive in determining the root causes of IT problems. Kirch said that Allstate benefits from ServiceNow serving as an enablement platform for the creation of more efficient processes for IT service management. "Before, we had multiple types of processes, but they were not integrated. Now, we can tie processes together, so if we get a change into production and it's broken, we can track the problem, do an analysis, and provide a fix and we can do all this with visibility and transparency that we didn't have before." Allstate is closely monitoring the impact of its ServiceNow deployment through what it calls "Time and Motion" studies that it conducts quarterly. Kirch said that these studies, which capture metrics about IT operations such as problem, change, release, and incident management activities, were started "to ensure that we did not stray from our original intent" but are "now changing our behavior and have become an important view into the ServiceNow user experience." "Before, we had multiple types of processes, but they were not integrated. Now, we can tie processes together, so if we get a change into production and it's broken, we can track the problem, do an analysis, and provide a fix and we can do all this with visibility and transparency that we didn't have before." Allstate's Time and Motion studies confirm that IT operations and IT users are benefiting from ServiceNow in a number of ways. For example, downtime has fallen thanks to ServiceNow's automation and robust problem identification capabilities. As a result, customer satisfaction with IT services and the productivity levels of Allstate employees have increased as IT platform downtime is reduced. In addition, Allstate is leveraging ServiceNow to add significant value to its incident management operations. With ServiceNow in place, Allstate collects more data about each incident, and data that is more granular and of higher quality, which translates into actionable insights for Allstate to improve its IT and business operations. ServiceNow has also triggered significant productivity gains in Allstate's problem, change, and release management operations. In addition, Allstate is realizing device procurement cost savings as a result of having better visibility with ServiceNow and has reduced costs by retiring legacy ITSM-related hardware and software. IDC projects that Allstate will realize benefits from the ServiceNow IT service management solution worth an average of $9.8 million per year by making its IT operations more productive, reducing downtime, lowering device- and datacenter-related costs, and increasing user productivity levels. This results in a five-year ROI of 291% and a payback period of 9.2 months. Implementation Allstate considered upgrading its legacy IT service management solution before choosing to deploy ServiceNow but decided against it because it would have required the investment of considerable resources and time without the benefits of any new features or capabilities. Instead, Allstate chose to deploy ServiceNow's cloud-based software-as-a-service (SaaS) IT service management solution IDC #
3 Allstate was impressed with the speed and ease of implementation of ServiceNow. "Our legacy system took 13 months to deploy, and we couldn't afford that much time," said Kirch. "We were able to deploy ServiceNow in 8 months." Allstate also wanted an IT platform that supported cross-process integration. Kirch explained that "trying to integrate processes with our legacy system was clunky and costly. ServiceNow has a code base designed for integration out of the box." After several months of preparations, Allstate migrated from its legacy ITSM solution to ServiceNow in January 2013, deploying ServiceNow for its incident, problem, change, and release management operations. Since then, Allstate has also begun using the ServiceNow Service Catalog. Allstate initially deployed ServiceNow for 5,000 users and was prepared for the possibility of a disruptive transition. Kirch reported that instead, ServiceNow's intuitive nature has facilitated training and initial use and that the transition proceeded smoothly. According to Kirch, "We expected a drop in efficiency during implementation, but the training went well and we suffered no measurable drop in productivity." Allstate has since added 5,000 more users, and Kirch reported that internal IT satisfaction with ServiceNow is high. Benefits Allstate is leveraging ServiceNow to make its IT operations more integrated, robust, and efficient, and with ServiceNow, it has gained more visibility into both IT and business operations. Improvements to IT operations achieved with ServiceNow through automation, consistent processes, and better flow of data are being leveraged to add capabilities and to support company decision makers. According to Kirch, Allstate's senior officers now have access to more consistent and higher-quality data that they can use to support their decisions: "With ServiceNow, a consistent, standard report is being used by all officers, so decisions across the organization are being made from a common ground." Allstate is using deeper integration of IT processes and platforms to make its IT operations more methodical, which Kirch said has translated to a "definitive upward trend in availability" of IT services. Allstate has also leveraged ServiceNow to gain visibility into core IT operational areas such as change, problem, release, and incident management. In addition, Allstate is able to put more efficient processes in place because "ServiceNow has given us the ability to tie together activities across our IT operations by having a common platform for managing these operations," said Kirch. "ServiceNow has given us the ability to tie together activities across our IT operations by having a common platform for managing these operations." As a result, ServiceNow is having a notable impact on Allstate's incident management operations. With ServiceNow in place, Allstate is collecting more detailed data about why and how problems occur by linking incidents and problems with changes and releases, in part through its use of ServiceNow's Knowledge Base application. An incident record can now be populated with information from Knowledge Base with a single click, which improves the quality of incident documentation and reduces the time needed to handle each incident. Improved visibility has made overall incident management operations more efficient. According to Kirch, "The analyses we can perform because of ServiceNow have been an eye-opener. We can see what is consuming system resources and take corrective action. For instance, we might be able to 2015 IDC #
4 ($) avoid recurrent problems simply by changing five lines of code." Given its successes with ServiceNow in incident management, at the time this white paper was written, Allstate was considering providing end users with self-service capabilities to fix their own problems and is underway with this initiative. Overall, these efficiencies mean that Allstate's incident management team has become more productive and is delivering more value across the organization. ServiceNow has also enabled Allstate to integrate additional capabilities to its IT services such as hardware and software asset management that were previously performed by other tools. "By retiring these tools, we have been able to simplify our technology footprint while creating a more complete IT platform," Kirch said. Allstate also is leveraging ServiceNow to achieve efficiencies outside of IT. For example, the ServiceNow Service Catalog tool is being used to locate cost savings in purchasing desktop computers. Quantifying the Benefits To quantify the benefits Allstate is achieving from deploying the ServiceNow IT service management solution, IDC conducted several interviews with senior Allstate IT managers. Based on these interviews and Allstate's Time and Motion studies, IDC quantified the cost savings and productivity gains that Allstate is realizing. In total, IDC estimates that these benefits will average around $9.8 million annually over a projected five years (see Figure 1). FIGURE 1 Average Annual Benefits 12,000,000 10,000,000 8,000,000 $1,850,000 6,000,000 $3,100,000 4,000,000 2,000,000 $4,890,000 0 IT staff productivity benefits User productivity benefits IT infrastructure cost reduction IDC-Projected Total Average Annual Benefits: $9.8 Million Source: IDC, IDC #
5 IT Staff Productivity Increase Allstate is leveraging the ServiceNow IT service management solution to achieve significant IT staff efficiency and productivity gains. IDC projects that in total, Allstate will achieve IT staff productivity benefits of around $4.89 million on average per year over five years. ServiceNow has made Allstate's IT staff more productive as a whole. With ServiceNow in place, Allstate's IT employees need less time to perform the same responsibilities thanks to automation, better information flow, and more consistent processes. Allstate's IT staff can reinvest these time savings to spend more time on business-enabling activities that offer greater business value. IDC estimates that on average, each member of Allstate's IT staff has one hour per month of additional productive time with the ServiceNow platform in place. ServiceNow is also having a significant positive impact on the productivity and capabilities of Allstate's incident management operations. IDC estimates that Allstate's incident management team will achieve 20 25% higher overall productivity levels with ServiceNow as its IT service platform because of three primary categories of benefits: Enhanced capabilities: By offering Allstate visibility into service relationships and configuration data, ServiceNow is enabling incident management operations to provide more value across the company as a whole. Allstate can now identify root causes and predict impacts of incidents while correlating them with recent activities such as changes or new releases. Allstate could not have achieved this with its legacy solution without large-scale investments in its staff. Increased productivity: By helping Allstate capture, prioritize, and route incidents, ServiceNow is enabling Allstate's incident management team to handle more incidents with the same number of employees. As the incident management team's capabilities improve, more business units within Allstate use the incident management team, which creates further beneficial synergies across lines of business. Decreased frequency of escalation: By providing Allstate richer data and enhanced incident management capabilities, ServiceNow is helping Allstate reduce the percentage of incidents that must be escalated. Because escalated incidents typically take much longer to resolve, this results in a significant staff time savings. ServiceNow is also helping Allstate streamline and improve the efficiency of its change, problem, and release management activities by providing a common platform for tying together these actions: Change management: Allstate has reduced the amount of time its staff needs to carry out management of a single change by 40 50% by integrating the change process across the company and having a single repository of all planned changes and releases. Problem management: Allstate's IT staff can better investigate incident root causes through structured problem analysis with ServiceNow, which means that the company is deriving additional value from its problem management activities. In addition, Allstate's IT staff spends 80 90% less time on problem management activities since the deployment of ServiceNow. Release management: Allstate has streamlined its release management operations with ServiceNow, enabling it to handle more than two times as many releases and decreasing the average amount of IT staff time needed per release by about 75% IDC #
6 Finally, Allstate's IT staff has become more productive as it spends less time remedying downtime with ServiceNow. IDC projects that by reducing the occurrence of downtime, Allstate's IT staff will spend a total of 15 20% less time responding to outages related to the company's IT service platform. User Productivity Benefits Allstate is also leveraging reduced downtime with ServiceNow to make its non-it employees more productive. With ServiceNow, these employees are spending more time focused on their jobs and driving Allstate's business and less time waiting for problems to be resolved or trying to find workarounds. IDC calculates that by increasing availability and reducing the median time for resolution of downtime incidents, Allstate will reduce the amount of unproductive staff time lost due to downtime by 20 30% over five years. As a result, IDC projects that Allstate will realize an average non-it staff productivity benefit of $3.1 million per year over five years. IT Infrastructure Cost Reduction Because the ServiceNow IT service management solution is cloud based, Allstate has been able to retire the servers and databases needed to support its legacy ITSM solution and eliminate software licensing and maintenance costs. Allstate is also realizing savings on costs related to end-user devices such as laptops and thin-client devices by using the ServiceNow Service Catalog to better understand provisioning needs across the company. IDC projects that by identifying device overprovisioning, Allstate will reduce its spending on these devices by about 5% per year. When projected over five years, these IT infrastructure related savings average $1.9 million per year. Return on Investment IDC projects that Allstate will realize a discounted total benefit of $33.4 million in staff productivity gains and cost savings through its use of the ServiceNow IT service management solution compared with a discounted investment of $8.5 million. This results in a five-year ROI of 291% with payback on its investment occurring within 9.2 months (see Table 1). TABLE 1 Five-Year ROI Analysis Benefit (discounted) Investment (discounted) Net present value (NPV) $33.4 million $8.5 million $24.8 million Return on investment (ROI) 291% Payback period 9.2 months Discount rate 12% Source: IDC, IDC #
7 IDC conducted several interviews with Allstate to quantify the benefits and investment associated with its use of the ServiceNow cloud-based IT service management solution and created an ROI analysis from the results. IDC calculates the ROI and payback period in a three-step process: 1. Measure the benefits from increased IT staff and user productivity and other cost savings since deployment. 2. Ascertain the total investment. 3. Project the investment and benefit over five years and calculate the ROI and payback period. The ROI is the five-year net present value of the benefit divided by the discounted investment. To account for the time value of money, IDC bases the ROI and payback period calculations on a 12% discounted cash flow IDC #
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