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CEO John Donahoe eyes talent to make ServiceNow a $10 billion business

Derek du Preez Profile picture for user ddpreez September 7, 2017
Just six months into the job, we got the chance to speak to John Donahoe about his direction for ServiceNow and scaling the cloud business effectively.

John Donahoe, CEO ServiceNow
John Donahoe, CEO ServiceNow

Service management cloud vendor, ServiceNow, hired a new CEO this year, in the form of ex-eBay chief, John Donahoe. This interview marks the third time I’ve spoken to Donahoe since he joined six months ago, and it’s now clear that ServiceNow is embarking on a new direction that he hopes will scale the company up to a $10 billion business over the coming years.

ServiceNow historically has gained traction in the IT department as an effective cloud-based ITSM tool. However, in recent years the company has made an effort to expand its presence outside of IT and has launched new offerings that have gained traction with HR, customer service management and security buyers. However, as Donahoe is aware, and as diginomica has noted previously, more work needs to be done in this area to boost the company’s brand and profile beyond IT.

But ServiceNow has a clear proposition that means it can touch all corners of the enterprise. Or as Donahoe recently described it, “fill the white spaces” in the enterprise.

Enterprises have traditionally operated in silos, without much connected thinking, and IT has typically worked to serve those silos. However, as companies realise that quality service and experience is key to future success, tools are needed to work across these silos.

ServiceNow’s platform can essentially work as a layer on top of all systems, to extract data and reorganise workflows in a way that delivers better services. The key objective for ServiceNow is to not simply automate and speed up existing processes, but use the platform to redesign new workflows and processes across the enterprise.

And it’s for this reason that Donahoe doesn’t want buyers or analysts to think that ServiceNow is in competition with Salesforce or Workday - it’s a complementary tool, not a mutually exclusive one. It taps into those systems of records to allow for service workflows to be created on top, rather than replace the systems of records themselves. Donahoe said:

There’s a little bit of confusion because we “do HR”, or we “do CSM” -  but are we competitive with Workday or Salesforce? My perspective is no. Customers need all three platforms. And customers need those platforms to work seamlessly. We're great at workflows. We're not the system of record for HR, we're workflows.

These three ecosystems may rub up against each other for 5% of what we do, but the reality is we need to work really effectively together. That's what customers need and that's what we're committed to. And I think all three companies understand that.

Analysts say, "Oh you're in HR now, do you compete with Workday?", or "Oh you're in CSM now, do you compete with Salesforce?". That's not the fundamental aspiration. The fundamental aspiration is for us to do what we do really well, which is automate workflows.

Scaling with people

ServiceNow hit $1 billion in annual revenue at the beginning of last year, and looks set to soon hit the $2 billion mark. In fact, the company is anticipating it will reach $4 billion by 2020 and Donahoe is already considering how to get it to the $10 billion mark.

There are a number of elements to making this happen, according to Donahoe. One piece is the ramping up ServiceNow’s branding efforts, for which he has hired Alan Marks as new Chief Communications Officer, previously SVP of corporate comms at eBay (Donahoe’s old stomping ground).

However, more importantly, Donahoe is putting a strong emphasis on talent. He has also hired Pat Wadors as the company’s Chief Talent Officer, who previously Vice President Global Talent Organisation, at LinkedIn.

Donahoe states that he has long believed that talent is the key to growing a successful company, having served as president and CEO of professional service firm, Bain & Company. He said:

When you're in a professional services firm, talent's all you have. I have a real focus on that and that's always been important to me. At eBay we implemented much of these things and we'll begin to do it here. And the good news is we have great talent - we just have got to continue to grow and grow the company. We're growing at a breakneck pace.

As ServiceNow eyes those $4 billion and $10 billion run rates, Donahoe said:

We have a goal to be a $4 billion business by 2020, on our way to being a $10 billion business. The way I think about it is, what is required to be a $4 billion company? What kind of leadership? What kind of skillsets? What kind of requirements?

One is we need to do everything we can to develop the talent we have today. We have wonderful talent, but our leadership needs are going to be extraordinary going forward. We have to invest in our top talent today and do everything we can to grow and develop them.

Two, we're going to have to continue to recruit, and recruit effectively. We will need to recruit different types of skills, the breadth of skills that'll be necessary to be a $10 billion business.

Making success easier for customers

Since joining the company back in February, Donahoe has spent much of his time speaking with customers from all over the world and also interviewing ServiceNow’s own VPs, to get a better understanding of what is working and what isn’t. He has spoken with nearly 400 customers and over 100 ServiceNow execs.

It’s refreshing to see a new CEO put in the leg work to understand the business and the pain points, instead of barging in and claiming to know it all from day one. And one area Donahoe is particularly interested in, is making sure customers can easily get value from the platform and share best practice with other customers. Part of this involves getting customers onto the latest standardised version of ServiceNow - Jakarta - so that they can take advantage of the latest upgrades, in line with ServiceNow’s release cycle.

Donahoe explained:

We’ve been putting a lot of focus on the general topic of customer success. And under that umbrella of customer success, is how we capture and codify best practice and make it available for customers. We're very diligent in the training and certification of our implementation partners, who are essential to successful implementations of ServiceNow. We want to systematically build customer dashboards that include not just the size of the customer but include their success in getting to time to value of their usage of their product.

Some of our longest term customers are on highly customized versions of ServiceNow. And [we are working] to get them on to more current, pre-configured versions. They're all saying the same thing, which is, "We love ServiceNow but we overly customize, help us get to a more current version so that we can get the out of the box benefits". They want the out of the box, off the shelf benefits, and they want to be in a faster upgrade cycle.

So that's what we're doing. And everyone's excited about it, because once they get on more pre-configured, more contemporary versions, their ability to take advantage of all the aspects of the platform goes up.

GDPR an opportunity?

Given that I was speaking to Donahoe from Frankfurt, it seemed appropriate to ask him about whether ServiceNow customers had been seeking advice on the upcoming EU General Data Protection Regulation (GDPR), which comes into force in May next year.

The tougher data protection regulations will put a strong onus on businesses to have better control of their data. Research thus far suggests that enterprises are woefully unprepared for the new requirements.

For example, a recent government study found that only 6% of the UK’s FTSE 350 are completely prepared for GDPR compliance.

GDPR has a number of requirements, which include:

  • a requirement for consent – businesses will need to ensure that all customers know that you have their data and that they consent to the business having that data
  • businesses will have three days to report data breaches to both the authorities and customers
  •  the Right to be Forgotten – customers will have the right to ask businesses to delete all of their data, and to prove that they have
  • data portability – the aim being to create an environment where businesses can easily swap their data between different providers, whilst ensuring the data is erased from the old provider’s systems.
  • hefty fines for data breaches will be introduced – up to €20 million or 4% of global annual turnover for the preceding financial year, whichever is the greater.

However, as I suspected, ServiceNow’s platform could help companies get to grips with this, given its ability to manage data within new workflows. And it seems Donahoe has been getting interest from customers on this exact issue. When asked, ‘Have customers been seeking advice from you on how to use ServiceNow to prepare for GDPR?’, Donahoe said:

Definitely. There's two separate issues here. Obviously the data that relies on ServiceNow being compliant with those regulations. But then, as you observed, our platform could help them. It's another workflow they've got to worry about, right? It's another set of services. They have got all these different pockets of data that are trying to comply with the new set of regulations. And they now also have to monitor audits and manage that, which is becoming a workload in of itself.

I don't know if we'll get an out of the box application on it, but you can apply some of the same capabilities - software asset management, hardware asset management, data access management.

My take

When I asked Donahoe what he had been up to since I last spoke with him at ServiceNow’s last annual user event in May this year, he quipped: “I’ve been playing a lot of golf”. Highly unlikely given the amount of customers Donahoe has been travelling to see to speak with. He has only been in the job for six months and he’s already put in a significant amount of leg work and set a new tone for the company - one that’s open to improvement, looking at service as a whole market (rather than just ITSM), and is thinking ahead to $10 billion in revenues. A focus on people as an asset is incredibly promising.

I’ve always said that I think ServiceNow has a promising proposition to be a highly competitive cloud platform - because of its focus on service and its ability to touch all corners of the enterprise. But I’ve also argued that ServiceNow needs to get better at explaining this value and its proposition, because it’s not as easy as a sell as CRM or HR, which everyone understands. However, Donahoe seems to get that, which bodes the company well.

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