Underscoring traditional software’s utter inability to meet the challenges of the AI Era, ServiceNow CEO Bill McDermott cited the imminent “collapse of the software-industrial complex” whose limitations pose existential threats to businesses that have poured tens or even hundreds of millions of dollars into those outdated technologies.
While McDermott’s language can be interpreted in various ways, I view his provocative claim not as a direct attack on ServiceNow’s competitors but rather as a profound challenge to business leaders in every industry that asks CEOs to consider this: In the face of the monumental upheavals being triggered by AI in general and agentic AI in particular, are you willing to bet the health and survival of your company on 20-year-old applications and solutions?
It is, in some ways, highly ironic that this impending “collapse of the software-industrial complex” is being called out by McDermott who, after all, was CEO of SAP for 10 years before resigning in 2019 to take over as CEO at ServiceNow. And while McDermott did not mention SAP or any other competitor by name, it is unmistakably one of the companies he sees at the heart of that 20th-century complex.
But, since joining ServiceNow six years ago and igniting its ascendancy, McDermott has been a highly visible evangelist for AI and its potential — his has not been an 11th-hour conversion.
In fact, McDermott channelled the provocative words spoken late last year by Microsoft CEO Satya Nadella who described how agents would decimate the strategic role that applications play today. By the way, Nadella was featured during McDermott’s keynote in a pre-recorded video in which he outlined the expanded collaborations between the companies around agentic AI.
“So, in the era of agentic AI,” McDermott said, “the traditional applications stack will collapse, and the number of apps will be drastically reduced….Traditional apps will become core databases and feed into the ServiceNow platform, where the real innovation will happen.”
Courage to Lead
A theme I heard from multiple ServiceNow leaders during this week’s Knowledge25 event sparks a followup question for executives: Do you have the courage to lead? And specifically, to lead broad and deep and unsettling changes in your mission, your operations, your ambitions, your processes, and your mindset?
Or, and this is my wording, not that of ServiceNow, are you going to ride the inertia of the past 20 years and kick that dirty, messy can down the road by hoping to squeeze a few more years out of that old stuff into which you’ve shoveled staggering amounts of money over the past couple of decades?
There are a million reasons and rationales for choosing the latter course of appeasement:
- Hey, the old stuff still works just fine — why fix what ain’t broke?
- I don’t know how to map out the ROI for all this new stuff;
- Our consultants say they can glom AI onto what we already have;
- The board will have my ass if I tell them that the three “future-proof” approaches we’ve taken the last five years weren’t really future-proof;
- I’m just the CIO, it’s not my responsibility to overhaul the business;
- I’m just an LOB exec, it’s not my responsibility to overhaul IT: and
- The poster in the break room says, “Do More With Less.”
Conversely, McDermott used his keynote at ServiceNow’s Knowledge25 event to make the case that the worst of all choices is to hunker down and hope (pray?) that the pipe cleaners and duct tape don’t give way.
“AI is civilization’s greatest opportunity of the century — it’s a once-in-a-lifetime opportunity,” McDermott said early on in his keynote, describing it as a $22-trillion opportunity between now and 2030.
Over that same five-year span, he said, business leaders willing to take the AI plunge have the opportunity to take out $4 trillion in operating expenses. A few moments later, he cranked up the motivation dial to #11 by describing the ongoing impact of the “20th-century software-industrial complex” as a “$10-trillion tax on U.S. companies alone because 21st-century problems can’t be solved with 20th-century architectures.”
And the first step to salvation, McDermott said, is for business leaders to change their point of view.
“We have to see things differently before we can do things differently,” he said, noting that data siloes, process siloes, lack of integration, lack of innovation, and “rigid, boring org charts” are “strangling” companies in every industry.
“Because of this lack of integration across the enterprise, only 1 in 4 transformation projects are successful,” he said.
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Powerful Customer Testimonial
Standing in stark contrast to those failed experiences, McDermott said, are ServiceNow customers like AstraZeneca, which has committed to rolling out agentic AI end-to-end.
“The goal for us, the key point, is giving back time to our employees to do the work that really matters, which for us is creating life-saving medicines,” said AstraZeneca Chief Digital Officer and CIO Cindy Hoots during the keynote session.
ServiceNow has helped AstraZeneca automate “hundreds” of processes — from all across the company — that had taken 20 or 30 minutes or more, and agents have now slashed that time to seconds, Hoots said.
Noting that her company is looking to apply agents across the entire organization, Hoots said she and her teams’ focus was on helping everyone at AstraZeneca “keep pace with a very fast-paced business environment.” Procurement process improvements might seem far removed from medicine discovery, she said, but those advances along with hundreds of others allow the company’s scientists to dream bigger dreams, pursue bigger trials, and imagine new possibilities.
“It not only saves a great deal of time, but it also helps all of our employees have better experiences every day,” Hoots said.
“And ServiceNow is our end-to-end platform for business transformation.”
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