As the world’s largest providers of enterprise applications — SAP, Oracle, Salesforce, Workday, and Microsoft — build out end-to-end suites to harness enterprise-wide data for AI, high-flying ServiceNow is building a parallel but complementary suite of end-to-end enterprise workflows on an impressive and ambitious AI foundation.
So the big question is this: Can ServiceNow find a way to convince all of those providers of applications suites — and in particular SAP and Oracle — to leverage each other’s strengths through collaborative partnerships?
I think that’s the future that ServiceNow CEO Bill McDermott is working to create — he’s often said that ServiceNow wants to help customers leverage their existing applications investments by layering them on the ServiceNow platform and workflows.
It’s an elegant idea, but it contains one potential flaw: What if those big apps vendors decide they want a piece — and likely that would mean a very big piece — of the workflow market while also maintaining their powerful positions in applications?
I’ll get to McDermott’s Big Dream in a moment, but right now as we’re 75% of the way through what has been a very fast-moving 2024, I think the big apps vendors believe that their emerging portfolios of AI-infused applications plus their new generations of AI agents will give them the advanced-technology opportunity to become powerhouses in workflows as well.
If the big apps vendors evolve in that direction — and I’d lay big odds on that happening — they will likely be less willing to form partnerships with ServiceNow because the big apps vendors will want to compete on their own for AI-powered workflow opportunities.
McDermott Not Losing Any Sleep
Whichever way that turns out, Bill McDermott’s not going to lose any sleep over it. He’s got his company positioned elegantly and powerfully in the middle of multiple strategic trends: platform relevance, business transformation, AI-centric thinking and technology, full engagement with end-to-end enterprise processes, strong growth in revenue and RPO, plus excellent existing partnerships with the potential for more.
So as this competitive dynamic comes to the forefront for customers, I’d like to revisit some comments McDermott made a couple of months ago on ServiceNow’s Q2 earnings call as he laid out the vision for where his company’s headed — a vision that over the past several weeks has seen ServiceNow’s market cap jump by about 20% to about $180 billion. Here are some excerpts from that call in McDermott’s own words.
Customers buying broad swaths of ServiceNow portfolio. “All of our workflow businesses were in more than 1/2 of our top 20 deals. Security and Risk, ITSM, and ITOM had 8, 9, and 10 deals over $1 million, respectively. Customer Workflows had a big Q2, with 14 deals over $1 million. Employee Workflows had 12 deals over $1 million and creator had 10 deals over $1 million.”
Impressive customer stories. “We had impressive wins across industries, from banking, healthcare and manufacturing to semis, tech and many others:
- “Stellantis is using ServiceNow as its strategic AI platform to manage operations across HR, finance and supply chain.
- “American Honda selected Now Assist as their GenAI solution of choice to improve deflection and efficiency of service, delivering a world-class experience to their employees.
- “Merck is using the ServiceNow platform to streamline operations across IT and cybersecurity to advance its global biopharmaceutical business.
- “Adobe will leverage Now Assist to optimize routine tasks for employees, which will increase efficiency across the entire organization.
- “Dell will integrate Now Assist with its service capabilities to deliver a seamless customer and employee experience.
- “ST Microelectronics plans to enhance productivity and user experiences across their entire organization [with Now Assist].
- “LTIMindtree is using Now Assist for ITSM to increase developer productivity by 30% with code and flow generation. We’re also collaborating together to grow and expand offerings in finance and supply chain workflows.”
- “Bayer is using Now Assist to empower their employees with GenAI and hyperautomation as they create a culture where every employee has the potential to innovate.”
Deploying GenAI into workflows across the enterprise. “Our GenAI strategy is focused on infusing intelligence into the flow of work, end-to-end across the enterprise, every department, every persona. With our native integrations, we already help people orchestrate across different systems and data sources. Now we can train the machines to do the low-value work so the people can up-level to the knowledge work.”
Leveraging the big apps vendors. “Enterprise software buyers are moving away from consolidating the past into building for the AI future. ServiceNow has been the modernizer at many points on this journey, creating a single pane of glass into the IT estate, expanding our core from IT to employee service to customer service, now making it easy to build new consumer-grade applications on a single data model. The AI moment is the culmination of this journey. CIOs don’t want 1,000 points of dim light. They’re betting on a few market-leading platforms, working together as the great unlock.”
The “intelligent action platform.” [CIOs] see ServiceNow as the intelligent action platform spanning the entire enterprise. And that is why our pipeline has shown a 50% year-over-year improvement since our Knowledge event….It’s why more IT and line of business buyers alike are looking at long-term blueprints for ServiceNow and planning out the future with us. It’s why Jensen Huang hit it on the head when he said, ‘ServiceNow is the AI operating system for the enterprise.’ “
Goal: transform industries. “We’re going to transform entire industries. Take the utility industry: they have to maximize the power-grid uptime. They’re trying to detect and mitigate vulnerabilities of critical assets.
“And I need to do everything in real time, whether it’s repairing things, taking care of equipment, skills, parts, field service technicians, equipment suppliers.
“There’s a whole distributed value chain. We’re going to reinvent the whole industry, and we’ve got to put it on the ServiceNow platform. And we’ve got to take the data, and we’re going to connect all the disparate parts that are suffocating companies. And we’re going to move it into the Now platform, and we’re going to reimagine the way work flows.”
Final Thought
I’ve always agreed unconditionally with McDermott’s core belief that Winners Dream — and because he’s driving big-time innovation within his own company while also giving the big apps vendors lots of incentive to accelerate their own workflow plans, enterprise customers can begin to dream about continuing to use all that innovation to be able do things that only yesterday were impossible.
