Part 1 of 2: Why is billable utilization so tough in the ServiceNow partner ecosystem?
By Scott Jacocks www.billfly.com
This article is designed for practice leaders, resource managers, CROs, COOs, CFOs and private equity investors in the ServiceNow Consulting and Implementation Partner Ecosystem
In the ServiceNow Consulting and Implementation Partner ecosystem, billable utilization is more than just a profitability metric. It’s a core driver of financial stability, growth, partner designation/tier attainment, delivery excellence, customer satisfaction and employee retention. It’s also a major delivery distraction if it’s volatile or consistently below target.
As every ServiceNow partner knows, maintaining target utilization while keeping teams certified, scalable, and ready for the next wave of demand is a constant balancing act. And it’s really damn hard.
This 2-part series explores why billable utilization is uniquely challenging in the ServiceNow ecosystem and how to handle billable utilization in a way that supports profitability, delivery quality, and long-term success.
What Is Billable Utilization?
Billable utilization is the percentage of a consultant’s available hours that are spent delivering client-facing, billable ServiceNow work.
Formula:
Billable Utilization = (Billable Hours ÷ Total Available Hours) × 100
For ServiceNow partners, billable hours usually include:
- Client workshops and requirements gathering
- User story/requirements development
- System configuration and development
- Testing and training
- Go-live support and hypercare
Non-billable but essential work typically includes:
- Presales solutioning and scoping
- ServiceNow training, certifications and delta exams
- Internal enablement and reusable asset development
- Practice development
- Internal sprint ceremonies not billable to the client
- Other internal meetings not billable to the client
- Re-work
In the ServiceNow partner ecosystem, these non-billable activities are vital and/or inevitable. Therefore, achieving even 70-80% billability (a common target in professional services) in a sustained manner in the ServiceNow ecosystem can be a serious challenge.
A Realistic Partner Scenario: Utilization Directly Impacts Revenue
Consider a 20-person ServiceNow partner practice with an average bill rate of $165/hour and
1,916 available billable hours in a year.
- At 65% utilization → ~24,908 billable hours/year → $4.1M revenue
- At 75% utilization → ~28,740 billable hours/year → $4.7M revenue
- At 85% utilization → ~32,572 billable hours/year → $5.4M revenue
That’s a + $600,000 improvement in revenue for every 10 points in billable utilization
improvement without adding headcount!
For smaller partners, even a small improvement in billable utilization can achieve CFO-approved profit margins while funding:
- Additional consultants
- Domain-specific architects
- A sales engineer/solutions consultant (often handled by architects in smaller practices)
- New certifications
- New service offerings
Utilization affects more than just revenue — it powers growth in the partner program itself
Typical Utilization Benchmarks for ServiceNow Partners
In the ServiceNow ecosystem, benchmarks often vary based on role, maturity, and deal size.
Some examples of common targets:
- Technical Consultants / Developers: 70–80%
- Business Process Consultants: 65–75%
- Solutions Architects: 55–70%
- Engagement Managers / Project Managers: 40–60%
- Practice Leads / Directors: <30% (and ultimately zero to reduce the risk of burnout and achieve scale)
It’s critical to make sure that roles/responsibilities are well defined (particularly when there are formal job responsibilities that are not billable) as this will impact feasible billable utilization targets. For example, it is very common for Solutions Architects to be involved in presales activities, demos, sales meetings and scoping inside smaller organizations and until such time that specialized roles like Presales Consultant/Sales Engineer/Solutions Consultant can be established. Billable utilization targets must be adjusted accordingly to align with reality and reduce the risk of burnout of key staff members.
It’s also critical to factor role-based utilization targets into bill rates to ensure that profit margin targets can be achieved where utilization targets by role are achieved. In other words, it’s not a good practice to apply a universal markup to all resources to arrive at the rate card. Rather, utilization targets by role must be included in the markup formula.
Why Billable Utilization Matters for ServiceNow Partners
1. Profitability and Forecasting
ServiceNow work is often project-based and often cyclical. Strong utilization ensures:
- Predictable revenue
- Healthier delivery margins (profitability)
- More accurate staffing forecasts
- Better visibility into when to hire or pull in contractors, freelancers or subcontractors via other partners
In a competitive ecosystem, profitable delivery on a consistent basis can make or break a partner’s ability to forward-invest in the practice and therefore scale in a healthy manner. The ability to forward-invest in the practice has a direct correlation to billable utilization and overall profitability of the business….
2. Meeting Partner Program Requirements
The ServiceNow Partner Program evaluates partners on multiple metrics, based on the “3 Cs” (Competency, Capability and Customer Success) including:
- Certified resources count
- Approved deal registrations
- Deployments
- Pipeline and Net New Annual Contract Value (NNACV)
- Customer success/Customer Satisfaction (CSAT)
While billable utilization is not a direct program metric, it supports:
- Funding headcount for more certified roles and more certifications for existing resources
- Project/customer success in that when billable utilization objectives are being met, partners are typically less likely to “stretch” their resources to take on projects they are not properly skilled to address; matching qualified resources to each task avoids rework, escalations and low CSAT scores
- Ensuring all resources have time to maintain certification deltas and train on new releases (vs only those resources “currently on the bench”, which can be counterproductive if your busiest/best resources are unable to keep pace with professional development)
Unique Challenges for ServiceNow Partners
While billable utilization optimization is a key challenge in any partner ecosystem (and for any professional services business), it’s especially challenging in the ServiceNow partner ecosystem. Why?
1. ServiceNow Platform Breadth
Whether you’re one of the handful of the mega-large global systems integrators (GSIs) with the “Global Elite” partner status or a top-performing “Premier” partner tier boutique specializing in a specific domain like ITSM, HRSD, CRM or custom apps, billable utilization targets are almost never perfectly achieved and sustained.
In the early days of ServiceNow (and at the time this author entered the ecosystem in late 2011), the platform was really limited to IT Service Management (ITSM) automation and simple custom apps. Therefore, we saw services partners often pivoting from (or extending to) ServiceNow from point solutions like BMC Remedy and Peregrine and the large service desk/ITSM suites from IBM, HP and CA. The ITSM-based business processes are tool-agnostic, so all it took was learning how to configure and develop on the ServiceNow platform.
Fast-forward to today, and ServiceNow is way more than just an ITSM point solution, with over 40 (and counting!) product families and a dozen industry solutions. This means that no longer is there feasibly an “everything” ServiceNow Solutions Architect (SA) or Business Process Consultant (BPC). In my experience ServiceNow SAs and BPCs will have expertise as a “major” in 1-2 product families and might “minor” in 2-3 others.
There is also the challenge of domain/industry vertical where ServiceNow is tailoring solutions to these verticals. For example, a CRM Solutions Architect and Business Process Consultant with experience limited to retail and finance will likely struggle with a telecom customer.
Given all this complexity on so many levels, even the massive GSIs/Global Elites will struggle to effectively tackle all areas of the platform, across all domains all the time for their customers.
While many ServiceNow partners (particularly startups) have found success by specializing in an area like HRSD or CRM, this approach comes with its own set of challenges. For one, what happens when the CRM boutique and the customer want to engage because the project focus is CRM, but there is a major requirement to integrate with various components of an existing IT Operations Management (ITOM) deployment? Assuming that CRM boutique does not have that skillset on the team AND on the bench, what options do they have to meet the customer’s requirements?
Today, the options include a) hire the necessary resources, b) engage a contractor from a staffing firm or a freelancer, c) engage another ServiceNow partner or d) decline the work. For this hypothetical CRM/ITOM project scenario, none of these options are ideal:
a) Hiring a fulltime employee (FTE) with this skillset would mean needing to take the 4-6 weeks to find, vet, hire, on-board and train the resource AND now being committed to keeping that resource highly utilized going forward. Regardless, is a highly competent ITOM architect going to want to work for a CRM boutique?
b) Engaging a contractor from a staffing firm or a freelancer is typically time consuming, particularly given that most contractors and freelancers are not interested in what is often part-time, short-term work. Is a freelancer typically going to sign up to do 7 weeks’ worth of work where the billable hours might vary from 10 to 40 hours over that period?
c) Engaging another ServiceNow partner is often a good option, but finding the right partner with the right bench resources at the right time can be extremely challenging, particularly for highly unique skillsets (what, if in this example, the resource must have experience integrating ITOM with CRM in Telecom?). That skillset certainly exists, but one would likely need to cast a very wide net to find it!
d) Declining the work where the core of the work is aligned to your capabilities is not ideal for obvious reasons.
2. Variable Project Pipelines
The days of “cookie cutter” or “rinse/repeat” ServiceNow (typically ITSM) projects are largely over. ServiceNow projects can swing between:
- Large, enterprise-scale multi-application transformations (some of which may operate directly in the revenue stream or as critical path to the organizations’ core competencies/functions); most of these will also require complex integrations to multiple 3rd party solutions;
- Medium-sized, limited scope and single-application implementations
- Short, targeted enhancements or upgrades to existing environments
- Managed services (ex. ongoing care and feeding of existing ServiceNow environments – often referred to as “virtual administration”)
- And everything in-between!
The larger, enterprise projects and managed services engagements are longer term deals, often requiring dedicated (e.g. 40 hrs/week) resources for long stretches. Some ServiceNow partners will exclusively focus on managed services engagements (and in some cases, projects enveloped in a managed services wrapper – e.g. executing to a continuous project roadmap) so as to mitigate billable utilization pitfalls. However, the vast majority of partners find that projects (e.g. engagements with a defined scope and duration) of all sizes are necessary for the purposes of tiering, customer acquisition and retention, and to boost profit margins due to typically higher rates (assuming project-team utilization targets are being achieved of course!).
Given the fact that it is virtually impossible to avoid the bench costs inherent to the gaps associated with moving resources from project to project, variable project pipelines are difficult to mitigate.
3. Context Switching Across ServiceNow Products
A single consultant might work across:
- ITSM → ITAM → CMDB
- HRSD → FSO
- CSM → Field Service
- App Engine Studio / Custom Apps
That same consultant is often working across multiple different environments across multiple different customers!
This context switching increases cognitive load and decreases efficiency. This is something not always reflected in utilization metrics but most ServiceNow consultants will tell you that they feel like they are constantly having to “reset their brains” to work across multiple different projects across multiple different customers. They will also tend to spend a lot of time with AI tools, on the ServiceNow Community forum and watching YouTube videos to learn or brush-up on skills they don’t currently possess.
Therefore, if they are pushed into working into “stretch” areas that exceed their expertise, they will burn more hours than a peer with that expertise, resulting in utilization and/or project budget challenges. I have personally seen consultants working on 4+ projects across 4 different customers at the same time; this is not an uncommon practice as we vie to keep our consultants billable.
Simply stated, while it may sound counterintuitive at its face, if a consultant is working across multiple environments and/or multiple customers, billable utilization can be lower due to the inefficiencies inherent to constant context switching.
4. ServiceNow as an Atypical Practice
ServiceNow is one of the most powerful and transformational platforms to ever exist and is a wise investment and area of focus for many professional services and private equity firms, but it must be approached eyes wide-open and treated with unique care.
It’s common for multi-practice professional services and private equity firms to view a ServiceNow practice as a natural complement to a cloud/SaaS portfolio of practices. Pick your platform, but many limited-scope platforms are not as difficult for a professional services firm to tackle and achieve a more sustained degree of billable utilization. As such, the internal benchmarks for these practices regarding billable utilization and how best to tackle under-utilization may not play out with ServiceNow. With many of these platforms, “platform x” simply requires a “platform x implementation consultant”.
By contrast, with ServiceNow, you may have 5 senior architects on the bench, but still have to engage net-new architects to achieve the correct skills-match for a new deal. This condition will greatly frustrate a typical CFO (“You’re hiring MORE people at a time that we have people on the bench?!”). If you’ve spent any time in ServiceNow delivery leadership, you’ve likely been told by your leadership team to simply cross-train your resources while Sales/Marketing is being coached to align their strategy to that ever-volatile bench…
Are +80% billable utilization objectives achievable in the ServiceNow ecosystem? Absolutely, but this must be achieved with a deliberate plan that mitigates and adjusts for what is unique to the platform and the ecosystem.
5. Conflating Bench Cost with Investment
One of the biggest hidden barriers to achieving stable utilization is to allow past bench costs to overly influence practice investment decisions. Many organizations, particularly at the CFO/Finance office, treat past bench cost as ‘investment.’
For example, “We spent 50k on bench last quarter which means we can’t afford to invest in training/certifications, sales, marketing, service offerings, conferences, etc. Once billable utilization picks back up, we can spend money on those things.” However, bench cost is a sunk, backward-looking expense; investment is forward-looking capability building. Forward-investing is a key driver of billable utilization.
While budgets are real and the money to fund forward investments must come from somewhere, I would argue that in this hyper-competitive ecosystem, the forward investments must precede billable utilization optimization and one cannot feasibly operate with an expectation that billable optimization will materialize in advance of forward investments.
When organizations avoid real investment because they’re anchored to sunk cost, utilization becomes nearly impossible to improve.
Conclusion
For ServiceNow partners, billable utilization is a strategic lever that touches every part of the business: stability, profitability, partner tiering, delivery quality, and team health and happiness. Billable utilization is uniquely challenging to the ServiceNow partner ecosystem and these challenges are growing in parallel with the expanding breadth and depth of the platform.
While the GSIs/Global Elites appear to be benefitting the most from these conditions due to their size and scale providing greater ability to achieve solution and domain coverage, they are also not immune to these challenges. Further, many organizations and opportunities are simply too small for the Global Elite’s target markets. The specialized boutiques can find great success operating within their particular niche/focus areas, but they will also continue to struggle where projects inevitably require expertise that spans outside their niche.
The good news is these challenges are not insurmountable. At Billfly, we offer a unique service and platform that is laser-focused on helping ServiceNow partners address these challenges in a manner that is a win for all parties, to include the customer and ServiceNow. I encourage you to read part 2 of this series “Actionable steps ServiceNow partners can take to maximize billable utilization” and to visit www.billfly.com for more information on our services and our unique platform.
I’m always open to feedback and a conversation. Please feel to reach out to me at scott.jacocks@billfly.com.