It was announced towards the end of last year that John Donahoe would be stepping down from his role as ServiceNow CEO and returning to his consumer roots, taking the top job at Nike. His replacement? None other than long-time SAP CEO Bill McDermott, who had recently announced his departure from the enterprise software giant.
To observers it seemed like McDermott barely had time to catch his breath before transitioning to the cloud-based vendor, with the aim of cementing ServiceNow’s goal of ‘making work, work better for everyone’.
This week I got the chance to talk to McDermott in an exclusive interview for diginomica, to get a better understanding of his ambitions for ServiceNow.
I’ve been following the company for many years and have always been impressed by the platform and its applicability to multiple enterprise scenarios - with the key being changing workflows and outcomes to improve engagement. However, I’ve also noted how the company has suffered sometimes struggled to shed its ITSM history (the IT department is still typically the first purchaser of ServiceNow) and find a consistent message that resonates with all buying personas. The potential for ServiceNow is huge, given that ‘a workflow is a workflow’, regardless of where it sits in the enterprise.
This was helped by Donahoe during his tenure, who understood expanding, but also simplifying the messaging was key. I thought it was smart to bring in someone with his consumer background. However, I also recently argued that McDermott is a savvy choice for ServiceNow, given his enterprise experience and his understanding of what it takes to put a vendor at the centre of a company’s transformation story.
So, what did I learn from my conversation with McDermott? A few things:
He recognises that the history of ServiceNow in the field of ITSM is an asset, but he also understands the opportunity to expand its scope more aggressively.
Messaging needs to focus on outcomes and the ability for ServiceNow to sit at the centre of improving productivity and engagement for both employees and customers.
Building a partner ecosystem that can help the company scale further is critical.
Firstly, I was keen to understand why McDermott decided to take the job at ServiceNow. A CEO with his experience will have had a lot of opportunities knocking, so what drew him to the cloud vendor? McDermott said that he felt there was a mutual benefit and opportunity.
I was 17 years at SAP and 10 years as CEO. Having seen the transformation through, I think 10 years is the right amount of time. I’m pretty sure that should be a standard.
When I looked at ServiceNow and studied it very carefully, I was very impressed with a few things. One is that it is a company with real purpose - this idea of making work, work better for people is real, it’s palpable. The idea that you can bring a consumer grade experience to the enterprise was long overdue and there weren’t too many companies that were this young, operating at mass scale in the cloud and doing it super successfully.
And at the same time I saw that what I brought to the equation could add value. Namely in the area of expanding the market in various geographies and industries. Certainly expanding the perimeter of the C-suite and for sure the ecosystem that would get behind the Now Platform. I also build teams, winning teams, championship teams - that’s what I do. I saw all of that in one package and thought, I’ve got something to offer ServiceNow, ServiceNow has something to offer me, and together we will be spectacular.
McDermott also added that he believes John Donahoe was “100% right” on the direction he took the company, focusing on consumer grade experiences in the enterprise, as well as nurturing ServiceNow’s culture and values. He said he’s going to double down on that direction and accelerate it.
Designing workflows for all
A big part of the conversation with McDermott centred around his belief that the beauty of ServiceNow is that it’s essentially a platform for workflow redesign, with the aim of improving engagement for both employees and customers. Whilst the company’s roots are within the IT department and service management, engagement and workflow redesign is central to all business areas across the digital enterprise.
This idea of designing the experience through the workflow, or workflow designed experience - I believe this is a big, big, big change in the enterprise. I’m bringing the idea that workflow designed experiences are the precursor to digital transformation.
Every C-suite executive knows that digital transformation is the opportunity of our time. They know they’ve got to change the game on customer experience, yet at the same time, building fierce loyalty with the customer requires them to be served differently.
ServiceNow already offers product packages that cater to buyers that include security, HR and customer service management. However, more needs to be done to cement this, McDermott acknowledges. But, as I’ve stated previously, ServiceNow isn’t a platform that requires other cloud or on-premise systems of record to be replaced. It’s essentially an integration engine that taps into these data systems and allows users to design an engagement outcome that allows them to work differently. McDermott said:
We really need to focus on the C-suite. I have met with at least 30 accounts right now and we have an amazing standard with ServiceNow within ITSM. All those elements of the backbone, or the technology layer - ServiceNow is a standard across most well run companies, 80% of Fortune 500.
Every company needs a step-function improvement in productivity. It’s not about doing what they used to do a little bit better or a little bit differently, it’s literally reimagining the work itself. And changing the way your company works to get a different outcome. And as you know, changing out legacy systems of record and the time/cost associated with that is not going to get them from here to there fast enough.
And the major opportunity for ServiceNow is that we don’t need anybody to lose for us to win, we just need to reimagine the work through workflow design experiences that serve the customer and the employee.
He gave an example of a recent company he met with that had 75 different HCM systems that were serving 75,000 different employees. ServiceNow allowed that company to take a ‘one’ employee portal approach to case management and knowledge management, using a mobile app that has a strong focus on consumer grade UX. McDermott said it reduced the time it took for that company to recruit, hire, onboard and equip employees from months to minutes. He added:
This of course goes into the CFO with financial close, it goes into the head of security with our security based solutions, and so on. Expanding the perimeter of the C-suite with relevant solutions is huge.
I think our company was a little bit shy about expanding into the ‘business’ because we were so focused on IT. But they’re all asking me to help them solve their business problems. And they’re all asking us to bridge the gap between IT and business. Because the workflow goes across all of the domains. It breaks down the silos. It creates this operational agility and works best when IT and the business are aligned on a common strategy.
Expanding the partner ecosystem
McDermott was also keen to highlight that part of his ambitions for ServiceNow is to expand the company’s partner ecosystem, to make it clear to SIs that there is an opportunity for multi-department deals across large enterprises with the Now platform. I know work has been progressing on this front in previous years, but it seems that McDermott believes this can be better articulated to the SI market.
I’ve had chairmans and CEOs of a handful of the biggest SI firms in the world come to Santa Clara to visit. When they come to these meetings they’re all interested in partnering with us. Generally they’ll come in with an ambitious plan to create a billion dollar business with ServiceNow. By the time they leave they’re talking about $3.5 billion to $5 billion.
And the reason that their eyes are opening wide is that they see the power of the platform, they see the expansion of the C-Suite, they see the broadness of the portfolio. They generally didn’t know all the products that we had in that portfolio. And they see our appetite for growth.
However, McDermott also wants to make it clear that SIs need to deliver value quickly for customers and perhaps not take what could be a traditional project approach to enterprise software. He added:
But even as we expand the ecosystem, we want to make sure the ecosystem knows it’s really about volume, creating value through unbelievable experiences, getting quickly to the answer for value and not dwelling and extending the lifecycle for projects. We want to get in, get things done, and do it at a very high quality and very affordable price. The partners are okay with that because there’s so many thousands and thousands and thousands of opportunities.
He also issued a warning to those partners sitting on the fence, those that are considering getting into bed with ServiceNow. McDemott said:
If you’re considering becoming a partner, or a more serious partner, we’re a company that’s on the move. Don’t waste time. This train has left the station and we are working full flight. This market is going to move very, very quickly. And if I was them and had a chance to have a piece of the ServiceNow franchise, I wouldn’t miss the opportunity and I would move now. The urgency of now cannot be overstated.
It’s no secret that I’ve long thought that ServiceNow could have a huge impact on digital enterprise transformation stories, if it could execute on a market strategy that made sense. Some of those concerns were alleviated under John Donahoe, but I think with Bill McDemott at the helm it’s more likely that ServiceNow can pursue cross-enterprise deals more aggressively.
McDermott is all too aware of the branding challenges facing ServiceNow. He said that the company’s biggest risk is “awareness”, but that once customers are aware there are plenty of expansion opportunities, as long as ServiceNow can “execute beautifully”.
I wrote recently that ServiceNow needs to consider how it puts itself at the centre of these transformation stories. And I think the answer to that is what McDermott touched on during out conversation, around changing outcomes for companies that *need* to operate differently. This is what customers are struggling with.
Enterprise buyers understand that they need to change the rules of engagement with customers and employees, but they don’t know how or are restrained by legacy systems. Rethinking workflows can force a company to focus on user-centred design, whether that be an employee or a customer. Couple that with ServiceNow being an integration engine across multiple platforms and systems of record, and you’ve got something quite compelling. We will be watching closely over the coming months to see whether McDermott can fully capture that for buyers looking for helpful solutions.