ServiceNow CEO John Donahoe: ‘We are filling the enterprise white spaces’

Recently appointed ServiceNow CEO John Donahoe, whilst just 50 days into the job, is already placing his mark on the cloud-based service management vendor. I’ve noted previously that I believe the ServiceNow platform is underrated and has huge potential value across the enterprise - but Donahoe is beginning to clearly articulate this value in a way that has been lacking in previous years.

Journalists at ServiceNow’s annual user event in Orlando got the chance to sit down with Donahoe and grill him on the company’s strategy, which is slowly but surely shedding its hardcore ITSM roots and focusing on becoming a cloud platform that can help enterprises rethink their ageing processes - no matter their technology make-up.

This reiterates Donahoe’s key point during his keynote this week, which outlined how enterprises have traditionally operated in silos, without much connected thinking, and that 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 (see my colleague Phil Wainewright’s work on frictionless enterprise).

ServiceNow’s platform, whilst historically found its use case in ITSM, 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.

Donahoe said:

The combination of technology and a service management mindset is very powerful - and ironically that’s what the consumer internet companies do. We don’t label it that way, but that’s what we do. You take what is complex and make it simple.

The history of the company is really interesting and instructive. Fred Luddy created the company as a platform. He wanted a platform that worked across all workflows. He launched it and nothing happened, because people don’t buy platforms. He realised he needed a use case and he knew ITSM, so he built an ITSM application on top - and then boom, it took off like crazy. So now ITSM is more than a billion dollar business.

What customer after customer has said to me is that they’re just beginning to understand the power of the platform, where they can use that same workflow mindset, where they take what’s complex and simplify it, across different areas. Believe me, there was no one sitting at ServiceNow saying ‘oh let’s go into HR service management, or security service management’. Customers were pulling us into those workflows.

Not a zero sum game

Donahoe said that the key focus over the past couple of years for ServiceNow has been to systemise the areas that it has since branched into, outside of ITSM - HR, customer service and security. And whilst he said that ServiceNow’s oldest customers started in ITSM and are branching out into other areas, it’s new customers are buying bundles of the company’s products.

Interestingly, Donahoe believes that ServiceNow, whilst not typically replacing systems already in place, is in fact providing new technology to new processes and workflows - across multiple silos - for which there hadn’t traditionally been a solution. He said:

In some of these use cases - in the on boarding functionality, for example - that’s actually applying technology to something that was previously an unstructured workflow. There’s no software that was doing that. It was taking what was manual and automating it. And I think to some extent I view us as having enormous white space.

I think that’s why I’m optimistic about our growth prospects, because it’s not a zero sum war against some other software provider. If there was software there before, it was premise-based, legacy software. But in many cases we are addressing workflows, processes, complex things in companies that technology wasn’t really helping with before.

Equally, Donahoe isn’t perturbed by the idea that an enterprise may be buying ServiceNow when it already has the likes of Salesforce and Workday in place, as it serves a different purpose and is aiming to tap into these systems of record - to help organisations define their own workflows on top.

Donahoe said that he doesn’t see the cloud wars as a zero sum game, he believes that ServiceNow can do well up against the other key players and serve a unique purpose. He said:

I see cloud to be a gigantic, undefined whitespace. Cloud exploded in consumer. Facebook, Google, Apple, Amazon. The major winners, all exploded from cloud. And you could have argued five years ago that they were all sort of competing with one another. And the reality is there have multiple big winners. Not 100, but there have been 10 or 15. The focus is on the whitespace and digitising the consumer’s lives.

In the enterprise, I think it’s five to ten years behind that. And cloud is a phenomenon that can produce multiple winners. I don’t think it’s zero sum, whatsoever. I think you can have a very healthy and successful Salesforce, Workday and ServiceNow. And the most sophisticated customers need all three platforms, or equivalent platforms. It’s a cloud ecosystem. And those platforms have to work effectively with one another to create those seamless experiences.

I think that’s what we’re discovering - I’m a little hesitant to say that we are the integrator of all the clouds, that’s too arrogant and that’s not our goal - but actually what we are pretty good at is this cross-functional service management. We’re the grunty guys and we understand the hard work that takes to do that, that used to be called IT, but is now turning out to be pretty important. And I think that’s our role, to do that with customer focus and humility and stay with what we’re good at.

Challenges

Donahoe explained that he sees mobile, cloud and the Internet as allowing companies to think differently about there technology stack and the services they provide - in a horizontal approach that wasn’t before possible.

However, getting an organisation to change and redesign its processes isn’t easy - not necessarily from a design and technology perspective, but from a people perspective. As ever, it comes down to cultural change and this is what Donahoe is seeing as one of the main barriers. He said:

I had a dinner the other night with CIOs of five of the largest companies in the world. And the number one topic that they wanted to talk about? How you drive cultural change. They were basically saying, we’ve got the technology, but driving cultural change across is the hard part. It’s really hard to change culture really fast. Part of what does it though is that solutions pop up. In the consumer world, eBay popped up, PayPal popped up, Uber popped up, and that motivates everyone else.

Elsewhere, ServiceNow is also aware that it has somewhat been operating under the radar from a branding and marketing perspective. The other cloud vendors - and software vendors in general, actually - have ploughed huge sums into their marketing budgets. However, Donahoe says that ServiceNow took a different approach and focused on the technology first, with branding coming later. But he admits, now is the time to push this. He said:

Now, our brand awareness, our marketing materials, our narrative, is almost behind the reality. The typical software company promises a lot and then delivery lags behind. That’s the story of tech to some extent. This company has got a great stake. We’re sort of just learning to communicate and market that.

Our brand awareness and our brand identity, I do think that lags. Our brand identity and awareness is on average very IT-orientated. But if you look at the frontline customer behaviour, the financials and facts would say actually it’s expanded. And it’s expanding. But brand-wise we have some work to do.

My take

Great first meet with Donahoe. A big change from his predecessor Frank Slootman. Donahoe is far more amicable and collaborative in his approach (although I did enjoy Slootman’s direct approach too). But I think to take ServiceNow to the next stage, someone like Donahoe is needed.

The key is going to be articulating to buyers why they need another cloud platform on top of all the others they already have. And articulating that this is about redesigning processes across the organisation - not a small task and will be too daunting for some. But if ServiceNow can get that right, it has a lot to play for.