ServiceNow’s Big Secret: Bill McDermott Redefining Software Business

Its record revenues, record stock price, and soaring expectations aside, perhaps the most-disruptive initiative at high-flying ServiceNow is the way new CEO Bill McDermott is helping to redefine and redirect the enterprise-software business.

Here at Cloud Wars, we’ve recently made the case on a few occasions that the traditional structure of the enterprise-software business—ERP, CRM, HCM—no longer reflects the way modern digital business operates.

No software executive in the world understands that traditional structure better than McDermott, who spent the last decade as CEO of SAP, the iconic company that in many ways created that industry.

And 3 months after plunging into his new adventure at ServiceNow, McDermott made it very clear on this week’s Q4 earnings call that his new company will shape itself to fit where the business world is headed and not where it’s already been.

For ServiceNow, that general intention is already woven deeply into the company’s DNA. It has managed to reach a $4-billion run rate without competing head-on with any of the major SaaS vendors. It’s done so by serving departments such as IT, customer service and HR in ways that none of the “horizontal” vendors have touched: workflows.

And now McDermott—firing off his characteristic high-energy messages of “We’re just getting warmed up! We’re fired up! We’re ready to go!”—is clearly preparing to push ServiceNow’s unique capabilities into new categories while also fortifying its hugely successful existing approaches.

Before we get into that, I want to acknowledge also McDermott’s unabashed embrace of the ServiceNow goal of becoming a $10-billion company by pushing into specific industries, enhancing its partner ecosystem, and leveraging his own world-class Rolodex of CEOs.

I showcased those intentions 3 months ago in Life After SAP: Bill McDermott’s 10-Point Plan to Triple ServiceNow’s Revenue when McDermott joined former ServiceNow CEO John Donahoe on the company’s Q3 earnings call and pretty much stole the show. 

So while those details are extremely important and relevant, I find it even more compelling to think about the implications McDermott’s dreams could well have on the entire enterprise-software business.

Look at a few of his comments from this week’s call:

The Workflow Revolution.

We’re modernizing IT, enabling high-performing services with modern experiences. That is enabling us to not only enhance the core of how IT works, but also extend the perimeter of IT itself. We’re doing this across the entire enterprise, and that’s driving momentum in our vast portfolio of products, including our fast-growing HR and [customer-service] products.

So the workflow revolution starts in IT but is rapidly radiating outward to other parts of the company. And if ServiceNow plans to triple revenue to more than $10 billion, does anyone really think this workflow revolution will be confined to IT, HR and customer service?

Demolishing traditional boundaries—and approaches.

With a focus on CSM [customer-service management], we expanded our relationship with one of the largest global content companies in the telecommunications, media and technology industry. You see, they needed one solution with one platform to serve their customers. Using our workflow and integration capabilities, they’re now consolidating all customer-related processes into streamlined workflows.

Hey—did McDermott just say that customer is moving “all customer-related processes” to ServiceNow? So in the new world, the CRM category no longer has a stranglehold on such opportunities. 

A Workflow Alternative to ERP?

In a strategic C-suite win, Roche, the world’s largest biotech company, has signed an agreement with ServiceNow to support its digital-transformation strategy. ServiceNow will be the global solution to service project and portfolio management across the entire Roche group.

This strategic partnership will help Roche transform its internal business processes end to end, simplifying and improving the user experience. This will enable Roche scientists and researchers to work in a more agile way, so they can redouble their focus on their business, which is creating innovative healthcare solutions.

Wait a minute—“transform internal business processes end to end?” I thought that’s what ERP is all about—but ServiceNow doesn’t sell ERP, and it won this huge deal. What’s going on here?

Turning Systems of Record into Systems of Action.

We’ll take a bigger, bolder position on the role that this incredible system of engagement, the system of action called ‘workflow,’ can have in the modern workplace. If you think about the problems customers are having today, they have many systems of record. And unfortunately, when they try to think about how people work and how people want to work, they don’t have the workflow that enables a team to really set a course for executing a simple business process.

With ServiceNow, that all changes! You can see the impact that we’ve had on the employee with employee-service delivery, you can see the impact that we’ve had on customer-service management, and many of the big companies in the world today are figuring this out pretty quickly.

Again, Bill McDermott will certainly not allow ServiceNow to be limited to just HR and customer service—he’ll push it across as many functional units as possible.

The Power of the Platform.

I was working with one CEO who was very interested in having a rewards program built on the platform. But he wanted to do it in a couple of days or a week, as opposed to years. And, he didn’t want a team of consultants to have to do it—he wanted his own business analysts to do it. Of course, we were able to do that for him in a few days on the Now platform. So think of it as expandable on many dimensions.

If you think about technology people, you think about analysts, if you think about business people, they’re all going to build magic workflows on this magic platform to create immense productivity and growth in their digital transformation strategy.

Can any of the pillars of traditional enterprise software—ERP, CRM, HCM—handle that?

Final Thoughts

ServiceNow’s in an ideal position to trigger this upheaval. It’s got a great technology foundation, a great reputation, great financial resources, a unique market position—and now it has Bill McDermott. He knows better than anyone what traditional software can do, and what it can’t do. And he’s hypercharging ServiceNow to rush into that breach and start the revolution. With that, I’ll give the final word to McDermott.

Watch out, world: “It is our dream to become the defining enterprise software company of the 21st Century. This is the limitless opportunity I saw in ServiceNow. It is why I chose to come here, and in my first three months as CEO, my belief has only become deeper, my commitment stronger, and my passion greater!”

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