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Knowledge 2023 - ServiceNow pitches the ‘exponential enterprise’ as it announces ERP workflows and generative AI tools

Derek du Preez Profile picture for user ddpreez May 16, 2023
ServiceNow CEO Bill McDermott took to the main stage at Knowledge 2023 to tell the audience that with the advancements in AI, intelligence will become the primary source of value creation.

An image of ServiceNow CEO Bill McDermott on stage at Knowledge 2023
(Image taken by author)

Some 15,000 attendees descended on Las Vegas this week for ServiceNow’s annual user event, Knowledge, where the workflow vendor made a number of announcements that CEO Bill McDermott believes can support customers in becoming ‘exponential enterprises’. More on what that means, later. 

The announcements range from bolstering ServiceNow’s skills programme, to supporting non-profits, to new ERP workflow capabilities, and of course, integrating with generative AI tools. diginomica has an interview with McDermott later in the week to dig deeper into the announcements, but following the keynote this morning, it’s clear that the company is progressing at pace with its strategy to unify systems of record to create a ‘system of engagement and action’ across the enterprise. 

Speaking on stage, McDermott said: 

ServiceNow it is the intelligent platform for end-to-end, digital transformation. We're cleaning up the mess.

We're building the future of business on this intelligent platform, for end-to-end digital transformation. That's what we're building.

By way of context, ServiceNow has found success with customers by recognizing that its platform can be used to unlock value for buyers across their organizations, using the Now platform to tap into siloed systems of record, creating a common system of engagement/action. In essence, it aims to reduce complexity by providing employees or customers with automated workflows that don’t require an understanding of the complexity that’s built into an underlying system of record. 

Historically, ServiceNow built a name for itself within IT, for its ITSM workflow capabilities. However, it has since expanded its presence across the enterprise, as its customers saw opportunities for using the platform in areas that range across HCM, CRM and ERP (and integrating across all of these). 

A key selling point for buyers is that they don’t need to replace technology purchase decisions of the past, building on top of existing systems, and enabling automated workflows across organizational boundaries. 

Now with the advancements on AI (read more on the product releases below), McDermott said that the Now platform can become the foundation for  what he is calling the ‘exponential enterprise’. He said: 

To maximíze this moment we need to understand the difference between linear and exponential thinking. If we take 30 linear steps - 1, 2, 3, 4 - we will go 30 meters. But if we took 30 exponential steps - 1, 2, 4, 8 - we actually go a billion meters. That’s the difference between thinking old school and thinking exponentially. 

So let's think about applying that mindset to where our businesses have been, where they are today and where they need to go. I call this the exponential enterprise. It goes beyond the 20th century architectures, beyond these silos that kill us, beyond the side projects. It moves to end-to-end digital transformation. 

It goes beyond last year's results or last month's numbers, to predicting the future outcomes with great accuracy. This will drive beyond expectation results for your companies. And it will drive a new era of economic prosperity in the world for the exponential companies.

So for the technology landscape, it's always a question of what to build and what to buy and how to operate at maximum efficiency. My take on it is we have the great re-prioritization of enterprise systems. And this is a massive undertaking. And we're gonna simplify everything for you. 

To support this top-level ambition, let’s take a look at some of the announcements coming from ServiceNow this week. 

ERP modernization

As most will know, McDermott has a long history in the field of ERP - having previously served as SAP CEO for a number of years. But more importantly, if ServiceNow wants to be a system of engagement/action for the whole enterprise, it cannot ignore the system of record that is often described as the ‘engine of the enterprise’. 

McDermott told diginomica last year that ServiceNow would be targeting ERP modernization, without forcing customers to consolidate, upgrade or rip out their systems. Today we got some finer details on what this looks like, with the launch of ServiceNow Finance and Supply Chain Workflows. 

ServiceNow said that Finance and Supply Chain Workflows bring together people, processes, data and technology to support new features that include: 

  • Accounts Payable Operations (APO) - which claims to automate the accounts payable process so employees don’t have to manually enter data or reconcile invoices against purchase orders and goods delivered. The ambition is to enable teams to manage more suppliers and incorporate ESG, legal, and compliance activities into a single view to operate more efficiently.

  • APO is part of Source‑to‑Pay Operations - this is set to bring together those involved in sourcing, procuring, and paying for goods and services into one environment to automate the entire process. 

  • Clean Core ERP with App Engine - this feature uses ServiceNow’s low‑code development tool to identify legacy ERP technical debt that can be removed, replaced, or automated. 

Speaking with media and analysts yesterday, and commenting on the progress with ERP, CJ Desai, ServiceNow’s Chief Product Officer, said: 

When an employee wants to purchase something - if you think about it, a few years ago, it was not easy for an employee to do that. If an employee wants to purchase something, how can we give them an Amazon-like experience that works with the procurement department, things that have been approved by the corporation, and integrates with ERP systems? This is not a system of record, this is a system of action that works well across systems of record. 

He added: 

We also have been onboarding and offboarding employees using ServiceNow workflows in our HR product for a long, long time. Think about a large organization that is onboarding suppliers, offboarding suppliers, is doing compliance checks, ESG checks - that entire workflow is currently manual and it is usually a mailbox with lots of emails flying around. 

So we believe that supplier lifecycle management can be done on ServiceNow in a really, really efficient way, that makes suppliers’ lives easier, but also the organization or department that deals with suppliers. 

Generative AI and ServiceNow

As is the case with many other B2B vendors in 2023, ServiceNow announced new generative AI capabilities for the Now platform. However, it’s worth noting that ServiceNow is taking a two phased approach to this. Today it is announcing partnerships with Microsoft’s Azure Open AI Service and OpenAI’s API large language models. Down the line, ServiceNow will, however, be prioritizing its own domain specific LLMs - as it believes that this will move it beyond the general purpose capabilities of the likes of OpenAI. Think along the lines of an LLM for ITSM, an LLM for HCM, an LLM for CSM, etc. 

We will be exploring this in a more detailed piece over the coming days, so keep an eye out for that. However, the crux of today’s announcement is: 

  • ServiceNow Generative AI Controller - allows customers to connect ServiceNow instances to both Microsoft Azure OpenAI Service and OpenAI API LLMs. It includes built‑in actions so customers can integrate generative AI capabilities—like answering questions, summarizing content, and content generation—into existing ServiceNow experiences such as Virtual Agent from a single integration point. 

  • Now Assist for Search - this feature provides natural language responses based on the customer's own knowledge base, when users pose questions in Portal Search, Next Experience, or Virtual Agent. ServiceNow says that because Now Assist for Search pulls information from within a customer’s environment, customers can better trust that robust security layers are applied and results are more accurate, reducing the likelihood of error or hallucinations. 

Speaking about the impact of AI on the enterprise during today’s keynote, McDermott said: 

There have been substantial times in history, when systems have actually changed in the world. This new period of hyper-automation will be bigger than all of them combined. Think about it this way: the industrial revolution changed the way we work at scale; the .com era changed the way we consume and transact; social media and mobile changed the way we connect and communicate. 

This next revolution is an intelligence revolution, which is about machines. But it's also a creative revolution which is about the people and the potential of the people. And we will be rethinking everything. How we work. How we live. How we build. And how we make mission critical decisions

We can consume data faster now, and more proficiently, thanks to generative AI. Data no longer needs to be classified to train the machine. With AI, intellectual capital is more valuable than physical or even monetary capital, because intelligence will now become the primary source of value creation. 

My take

A lot to digest on the first day of Knowledge and in mind there are two clear priorities that should be focused on: the generative AI tooling that ServiceNow is planning to build itself (not all datasets are the same and domain specificity in the enterprise will matter), and the vendor’s continued development of a cross-enterprise system of engagement/action. These two things combined do hold the potential for customers to accelerate value creation - but as ever, it’s the customer stories that matter. So we look forward to speaking to more buyers over the coming days. 

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