CEO Bill McDermott - ‘ServiceNow will be the defining enterprise software company of the 21st Century’

Profile picture for user ddpreez By Derek du Preez June 2, 2020
Summary:
Bill McDermott argues that ServiceNow is ready to take advantage of the ‘workflow revolution’ in the enterprise.

Image of Bill McDermott ServiceNow CEO
(Image sourced via Bill McDermott’s Twitter)

It's a bold statement to make. But Bill McDermott believes that ServiceNow is in a unique position to become the ‘defining enterprise software company of the 21st Century'. Why? Well, he argues that ServiceNow can take advantage of a number of changes happening in the enterprise market, particularly in a post-COVID-19 world.

These include: the simplicity of the ServiceNow platform; the historical failings of the enterprise software industry; the drive for ‘everything as a service'; as well as the demand from customers to let them define how processes should look, without complexity.

That's not to say that ServiceNow doesn't face challenges. McDermott is frank about the company's need to drum up an effective partner ecosystem, as well as the need for it to properly scale away from its modest ITSM roots. But he sees opportunity in the enterprise, where he argues the system of record vendors have failed to drive real change.

And as the ex-CEO of SAP, a position he held for a number of years, it's a bullish stance to take.

We got the opportunity to speak with McDermott ahead of his keynote this week at ServiceNow's virtual Knowledge 2020 event, which you can access here. For all of diginomica's coverage from Knowledge 2020, take a look at our dedicated resource hub.

It's also worth taking a look at my background analysis on ServiceNow, which outlines how it has matured from being an ITSM cloud vendor, to one that focuses on process redesign across a number of service use cases in the enterprise. ServiceNow's advantage is that it isn't looking to replace existing systems of record across the enterprise, but instead asks: what should this service look like? It then taps into existing systems and allows customers to define workflows with the aim of reducing friction. In his own words, McDermott said:

What is all of this about? What's the big idea? The big idea is this. I believe with everything I have, we are in the midst of a workflow revolution. I believe the workflow revolution is taking place in the modern enterprise for the following reasons. One, most companies have a very difficult time giving their workers a mobile, web based, conversational, tool based, consumer driven user experience. It's all about the consumer driven user experience.

Well, how can you do it? Why can't everybody do it? Here's why. You've got to remember the one thing about ServiceNow - this is the only $75 billion market cap software company in the history of the world to have one architecture, one platform, one data model. We have never done a large scale acquisition. There is no complexity on this platform. What does this enable? That enables us to seamlessly integrate into more than 500 major systems that are out there today, including a Salesforce, an SAP, an Oracle, a Workday.

McDermott's comments clearly - and unsubtly - make reference to most of the other vendors in the market that acquired their way to the cloud. But I think more importantly McDermott's points pick up on a more interesting trend we see in the enterprise - one around service design. Companies are increasingly realising that ‘user experience' isn't typically driven by simply implementing a new cloud tool.

Instead, it requires organisations to think about their processes and how these can be simplified, optimised and redesigned to drive true operational change across the company. McDermott seems to understand this and his argument for ServiceNow very much stems from a growing desire in the enterprise to really change how things are done. He said:

We're that workflow workhorse. The customer can just rewire the processes to accommodate this modern workforce. What does that mean? It means that in the old days companies used to manufacture software, shrink wrap it and shoot it out to the market and say ‘this is best practice'. And then consultants used to come in behind that, customise it how the customer wanted it, and then millions and millions of dollars, countless hours, days, weeks, months and years passed. This comes in the cloud, on demand, as a service.

And because it's a workflow revolution, you design the process. The worker tells you how they want to consume the work, and how they want to wire from one department to another. The consumer or the customer tells you how they want their services and you simply accommodate that. It's a revolution.

McDermott gave a number of examples for this, including helping a 500,000 employee company move to work from home overnight using the Now platform or improving another customer's software utilisation by as much as 25%. McDermott also argues that ServiceNow is able to deliver this value quickly for buyers. He said:

What's unique about ServiceNow - and why I am so bullish - is that you are going to get a 5X to 6X return on your investment in the first twelve months. In many cases in less than a few months. Who else can say that? Who else can get there that quickly? The answer is nobody. And that's why I think in the enterprise we will be the defining enterprise software company in the 21st century. I've said it. And I stand by it.

Opportunity in crisis

ServiceNow was one of the vendors to respond very quickly to the current COVID-19 pandemic by releasing a suite of apps that could help organisations manage employees and operations when shifting to a distributed workforce. These emergency response apps were taken up by more than 6,000 customers, according to ServiceNow. However, as lockdowns ease, the vendor is now thinking about how it can use its ‘workflow engine' to help companies manage a transition back to the workplace. McDermott explained:

When I say ‘return to workplace' - it's a ‘work from anywhere' world. However, we have to understand that lots of workers have dual income families. Some of them have young children. Some of them have elderly care issues. Some of these houses are pretty tense right now and pretty tight in terms of work per square foot.

So people want an outlet and one of those outlets is an office. So in terms of returning to the office we announced four major applications - what's a little bit different about our announcement versus others, is we actually have these applications. We are running them at ServiceNow and they're available globally at mass scale. We've had over 200 of the world's largest companies already download them.

You can read about these applications in our coverage here, but they include:

  • Workforce readiness - are people ready to come back to work in this environment? Are they mentally, emotionally and physically ready to return to the workplace? McDermott said that only about a third of employees are currently answering ‘yes' to those questions, which poses challenges for workforce management.

  • Health screening - When companies do bring people back into the office, they are going to have to follow screening protocols, temperature checks, swabs and other testing mechanisms.

  • Workplace safety management - Companies will have to know by department, by floor, by building that they have appropriately configured offices for social distancing and safety.

  • PPE inventory management - This will help companies ensure that they have the necessary gear in each of their locations and that offices are being cleaned to a maximum standard.

McDermott said that companies need to get these things right, because if they don't, they could well face legal action. He said:

Some companies are doing this proactively, but others have to realise that there's liability issues if you don't do it. I can tell you, this is going to be a huge liability issue if companies are not up to speed.

Challenges and opportunities

As noted above, whilst McDermott is headstrong in his ambitions for ServiceNow, he is also fairly pragmatic in the work that needs to be done to achieve these ambitions.

One point is that McDermott recognises that ServiceNow needs to refine its messaging for specific industries - where he notes that retail will act differently to financial services, manufacturing, utilities, etc. However, his current primary focus is to beef up ServiceNow's partner ecosystem. He said:

We have to expand the ecosystem quite dramatically. And when I say the ecosystem I don't only mean the people that implement the Now platform. I'm also talking about the business partners, the consulting firms that speak to C-level executives about digital transformation. We want them all to get the memo on the power of ServiceNow. We also want all the C-level executives, across all the personas of an enterprise to understand the power of the Now platform.

I do believe the workflow revolution is in its early days and we have to be missionaries to make sure the word gets out. I believe the days of investing in heavy, complex systems of record will slow down quite dramatically. I believe that workflow is the revolution that will close that gap, enabling great things to happen to these customers. But we still have to get the word out to them.

My take

McDermott is a charismatic leader. But he's also one that's spent a long time in this industry and he knows more than most about the struggles that enterprises are facing with complexity. I have no idea whether or not ServiceNow will be the enterprise software vendor to beat in 10 years time, but I do think it is a vendor that is playing directly into a specific challenge companies are dealing with - the need to change how they operate through process redesign.

Companies are less convinced by huge systems of record upgrades and want tools that have a real impact on engagement and experience. Where I think ServiceNow needs to double down is on showcasing the art of the possible. I've said it before, but ‘experience' and ‘engagement' are very objective. Customers need help and guidance in understanding what outcomes can be achieved. I think ServiceNow's recent COVID-19 apps do exactly that - they provide a clear use case for challenges faced by most enterprises globally at the moment. It would do ServiceNow well to think about how those learnings could be applied for use cases elsewhere.

That being said, as long as service redesign stays at the front of mind for buyers, there's a huge opportunity for ServiceNow to lead the way.