Benioff vs. McDermott: Agentic AI Disruption at Heart of Salesforce-ServiceNow Battle

As the rise of agentic AI has triggered what Salesforce CEO Marc Benioff calls “a complete transformation” of his 26-year-old company, the corresponding growth imperative has also led Benioff to pursue a head-to-head clash with ServiceNow and its CEO Bill McDermott in the ITSM (IT Service Management) space.

Benioff’s decision to step outside Salesforce’s traditional CRM category has several implications of profound significance to both customers and Cloud Wars Top 10 vendors:

1. New hunting grounds. Salesforce clearly recognizes that to sustain reasonable growth on its Q2 revenue base of $10.2 billion, it must expand beyond CRM into new categories. And if, as it steps out into the uncharted territory of ITSM, that happens to spark some competition with McDermott and high-flying ServiceNow, well that’s not so bad either, is it?
2. Agentic AI not limited by traditional boundaries. Benioff is leveraging the enormous interest in and potential of agentic AI as an open invitation to jump into hot markets where agents can be particularly disruptive.
3. Salesforce the apps data company. Benioff’s new obsession with agents and their enabling colleague, Data Cloud, reveals that the huge cloud apps that drive Salesforce to global prominence over the past quarter-century are now supporting players in a very different game. In fact, on the Salesforce Q2 earnings call last week, Benioff said, “Data Cloud is the heart and soul of the success of these agents because it is providing the data and the metadata that you need and the context to get the accuracy…. I think the data business is probably the most strategic and most important business for Salesforce going forward” (emphasis added).
4. The Salesforce-ServiceNow clash will be intense. The two companies come to this new face-off from very different directions — Salesforce is looking to regain growth-company status by pushing apps aside in favor of data and agents, while ServiceNow has been growing rapidly by replicating its ITSM success across more-mainstream customer functions. And the rivalry between Benioff and McDermott goes back about a decade to when McDermott, then CEO of SAP, vowed to overtake Salesforce in CRM, an ambition that Benioff scoffed at. But at ServiceNow, McDermott is taking a different approach into the CRM market and in that quest is already using embedded AI and agents and data, which are the same tools Benioff is planning to deploy.
5. Big picture: the apps business will never be the same. I don’t buy the premise, first voiced by the estimable Microsoft CEO Satya Nadella, that AI will gut and skin the SaaS business — but it sure is shaking it up, and in so doing will spur huge opportunities for the customer-centric vendors and will spell huge trouble for vendors wedded to their pasts. For customers, the booming innovation and impact will be enormously valuable.
6. Farewell, traditional LOB-app categories! Agentic AI will obliterate many of the boundaries —particularly the random and/or intrusive ones — that have governed and proscribed the enterprise-apps business for 25 years and have conditioned business customers to view their operations in silos. The end-to-end potential of agents, along with their inextricable fusion with modern enterprise apps, will send the long-standing ERP/HCM/CRM template off into the sunset, and will trigger fresh and high-value new possibilities for customers.
7. Every apps company will become a data company. Following along the model noted above with Salesforce, apps vendors will rapidly morph into data vendors whose apps are no longer the end but rather the means to the high-value end of hoovering in real-time data for agents to act upon.
8. And, finally, both Benioff and McDermott will win. That’s because their success will come not from battering the other into submission but rather by creating new levels of AI-powered capabilities for customers. The CRM space is huge and can certainly support both ServiceNow and Salesforce as well as many others. And while the ITSM category isn’t as big or broad, the Salesforce entry will force not just ServiceNow but every vendor in that space to dramatically improve their products, make them easier to use, make integration seamless, and the time to value much shorter.

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Final Thought

While the simple reality of the mutual incursions by ServiceNow and Salesforce into the home fields of the other will certainly drive big benefits for customers, I expect those benefits will be particularly outsized for and prized by customers because of the transcendent technologies at the core of this upheaval: data and agentic AI.

Competition is a great thing, particularly when that competition is intense, relentless, and high-stakes. That’s exactly what we have here in a microcosm with Salesforce and ServiceNow, and the same dynamic is playing out on an even larger scale with agentic AI and data clouds popping up as well with SAP, Oracle, Workday, Microsoft and others.

Which means that once again, the biggest winners in the Cloud Wars will be the customers.

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