When Bill McDermott joined ServiceNow as CEO at the end of 2019, following a long stint as chief at SAP, he made his intentions clear that he joined the workflow cloud vendor to make it the ‘defining enterprise software company of the 21st Century'. McDermott outlined a clear target of scaling ServiceNow to become a $10 billion annual revenue business, with the aim of bringing the ‘workflow revolution' to the enterprise.
ServiceNow was on a good trajectory prior to McDermott taking the helm, but it did have some challenges in terms of expanding its partner ecosystem and raising its brand awareness amongst senior decision makers. That has changed under McDermott's tenure thus far, with buyers starting to get a better understanding of the impact of process automation and workflow redesign in the enterprise.
This has actually been aided by the onset of the COVID-19 pandemic, with companies around the world needing to quickly rethink how they engage with employees and customers, whilst ensuring stability of their systems. ServiceNow has always played well with other vendors, aiming to be a ‘platform of platforms' via integration, which means in theory buyers can tap into their existing systems of record and build out new processes quickly.
This week McDermott was speaking at the Morgan Stanley Technology, Media and Telecom Conference, where he provided some deeper insight into how he has changed ServiceNow's sales approach to reflect his ambitions for the company. Not only this but McDermott shared his views on how COVID-19 is changing priorities in the enterprise, with the CIO/CTO regaining authority.
On ServiceNow's approach to customer acquisition since he took the top job, McDermott said that he wanted to adjust how the company approached conversations with buyers. Not only is ServiceNow focused on the C-Suite as a priority, but the nature of the conversation is changing too - with the vendor prioritising solving the ‘big' problems for buyers, rather than point solutions. McDermott said:
One of the things I said right out of the gate is we have to be the C-Suite favorite company. And instead of having a product or even a solution conversation, we're having a $600 million or a $1 billion conversation, because that's what's on the line for the customer.
We came up with relevant executive briefings that were tied very specifically to the industry domain of what was happening within the company that we were serving. And we didn't waste any time in operating at the top of the house. I always tell people, the air is a lot thinner and a lot easier to cut through at the top of the house, than it is down below.
So we have a Rolodex that we exercise quite freely. And it's powerful people that are looking for solutions to problems. And that was really the key. We increased our executive briefing volume 80% year-over-year.
Impact of COVID-19
McDermott also spoke at length about the impact of COVID-19 on ServiceNow and how the company is responding. His main priority, he said, is to ensure that the vendor makes a difference in the coming months and years on the big problems facing economies and organisations around the world. McDermott said;
I explained to the leadership team, I had seen this movie a couple of times before, meaning the world taking on a large shock. I saw it with 9/11, I saw it with the 2008 financial crisis. And I explained to the team that COVID would be different than those, but we would have to step up and be a brand that really contributes to fighting back.
McDermott highlighted how ServiceNow quickly responded by rolling out its emergency response applications, followed by its return to work suite. Since then it has also been involved with vaccination programmes at a national and state level around the world - most notably with NHS Scotland.
He also discussed how when things return back to ‘normal', with the rollout of vaccines globally, ServiceNow will be taking a somewhat different approach going forward to its engagement with customers. This by and large will depend on the needs of the customer in question, but McDermott does believe that he will be thinking differently about travel and in-person meetings (which reflects the broader changes happening in the market). McDermott said:
It will be a hybrid strategy. I think we all learned we were doing a lot of silly stuff when you could get on a plane and fly anywhere. And I myself am guilty as charged. I can remember flying from Beijing to Europe for a few meetings. Whereas we could have done some of that by Zoom.
But we will get more active participants in the direct sales process, once the vaccination process has taken hold and people feel safe again. You can take an already qualified, existing, excellent customer relationship and broaden a lot more easily with this kind of technology, than meeting a net new logo customer who doesn't currently do business with you.
And then you have to be very discerning about how you market yourself one-to-one, one-to-few and one-to-many, based upon the attributes of: is it a customer? What industry are they in? What geography are they in? And ultimately if you are going for new business, it's going to definitely be helpful to have a hybrid between the digital world that we're operating in now and the direct world. People still want to meet people, they still want to trust people that they are doing business with. So we'll have to do both.
The CIO regains influence
ServiceNow also has an interesting take on the role of CIOs at present and their future influence in the enterprise. McDermott notes that the onset of cloud led to a lot of line of business authority in companies, where those leaders saw the opportunity of SaaS applications and took matters into their own hands. However, as time has moved on, enterprise leaders recognise that the CIO is still an important figure in getting organisations to move as one, with the customer as the main priority.
McDermott said that companies have poured billions of dollars into IT in the last 30 years, but they are still left with a "hornet's nest" of complexity on their hands - where they struggle to see beyond the systems and silos. He said:
People working together is really hard, because right now everything is optimized for one department at a time. But when you look at it from the CEO point of view, they just want to win. And they want all the people to come together around a common mission to deliver something unique and really special for their customer.
What we do at ServiceNow is we create software that enables them to manage security, development, operations, service management, asset management, business management, operations management - that whole IT backbone. So, the employee experience means having one portal where I can hire people, onboard people, give them the tools that they need, the training that they need, the benefits that they have, aligned to core values."
And this means the CIO has a renewed position of power in the enterprise, according to McDermott. He explained:
The power of the CIO and the Chief Technology Officer has been fully restored in the enterprise. For a while, there was a decoupling between the line of business executives and the CIO, or the CTO. And that was in the early days of the cloud where operational expenses were easy to come by.
But what happened was the CEO realized, as it relates to the performance of the whole company, they're not going very far. And they're still pouring a lot of money into technology. Why is it that we're not able to innovate faster? Why is it that our people aren't happy? Why is this that our customers aren't buying more and retaining or staying with us? That's because they weren't working across those silos very well.
And ultimately, this is where McDermott believes ServiceNow has a sweet spot with the C-Suite - where its workflow platform can play a vital role. He said:
They weren't working in teams to get something very specific done that really mattered to the company. And now that has all fundamentally changed with the workflow revolution. And that is the biggest change that has empowered the CIO and the CTO.
You can't have a happy customer without having the right IT backbone. You can't create a Michelin three-star experience for the customer until you've created a Michelin three-star experience for the employees. And they have to use common tools and processes in the workflow.
Everybody's working for the customer and that is fundamentally what has changed. And that is really the bottom line fact on why the workflow revolution is here to stay. It's not because any of those point solutions are less good, it's because the cross platform integration of work has become the new defining standard for a well-run business.