With customer CEOs fully committed to transforming their companies into eager participants in the GenAI Revolution, CEO Bill McDermott has pushed fast-growing ServiceNow to a new level of aspirational differentiation by rechristening it “the AI platform for business transformation.”
“GenAI adoption remained on a tear in Q1,” McDermott said on ServiceNow’s Q1 earnings call. “Companies are leaning into GenAI as a powerful deflationary force to drive productivity.”
This latest effort by McDermott to advance ServiceNow’s unique value proposition in the market —and certainly among the Cloud Wars Top 10, where ServiceNow holds the #6 spot — comes as many of the other Top 10 companies are pumping up the volume on their platform capabilities. So I believe this gambit by McDermott — unveiled as ServiceNow disclosed its excellent Q1 results on its earnings call late last month — was sparked by two factors:
- McDermott’s desire to inextricably align his company with the utter fixation with GenAI that business leaders across every region and geography are expressing
- The heating up of the Platform Wars that now include — with varying types of focus and specialization — Microsoft, Google Cloud, SAP, Workday, Salesforce, and Snowflake as well as ServiceNow
And with McDermott and ServiceNow being first out of the gate in grabbing the juicy “AI platform” position, I’ll share in a moment how McDermott laid out his thinking on the company’s Q1 earnings call late last month. First, a quick look at some highlights from the latest very strong quarterly performance from ServiceNow:
- Subscription revenue up 25% to $2.52 billion;
- Eight deals of more than $5 million, up from four in Q1 a year ago;
- Four deals over $10 million
- Current RPO up 21% to $8.45 billion
- Of top 20 Q1 deals, 15 included 7 or more products
- Guidance for 2024 was raised, with full-year growth of between 21.5% and 22%
Powered by that broad momentum, here’s how McDermott framed his decision to describe ServiceNow as “the AI platform for business transformation.
“Let’s talk about the demand environment for enterprise software,” said McDermott, who on a few occasions during the call insisted that IT budgets are going up.
“AI is not simply a fast-maturing technology; AI is a catalyst for business transformation. When I speak to CEOs all over the world, they recognize this is a change moment. Over the past 15 years, enterprise has experienced a massive decentralization of technology governance. As every department became an IT buyer, the result was too many systems, too many apps, low data quality, and high vulnerability to cybersecurity risk,” McDermott continued.
“So even as CEOs want to consolidate onto strategic platforms for the long term, they also don’t want to delay the potential of net new innovation in the short term. They want to derisk the past while getting immediate business value from AI.”
That’s a powerful point about the bidirectional focus of CEOs’ intentions — because too often in the past, IT initiatives have been “either/or” situations.
“And with process optimization as the No. 1 GenAI use case in the global economy today,” McDermott continued, “that is why ServiceNow’s strategic relevance as the AI platform for business transformation has never been higher.”
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Final Thought
Not coincidentally, McDermott’s timing in unleashing “the AI platform for business transformation” is ideal: ServiceNow and 20,000+ of its best friends will be convening in Las Vegas starting today for the company’s annual Knowledge 24 event, where AI will no doubt be the centerpiece.
McDermott has always been more than willing to live by Browning’s recommendation that “Ah, but a man’s reach should exceed his grasp, or what’s a heaven for?” And after almost five years at ServiceNow he’s made enormous progress toward the stretch goal he set shortly after arriving of making ServiceNow “the defining software company of the 21st century.”
Is that quest one that “exceeds his grasp”? Possibly.
But in doing some brilliant category creation by positioning ServiceNow as “the AI platform for business transformation,” McDermott has certainly moved his company closer to that goal.
