As business leaders cautiously cut costs while needing to invest for future growth, the era of feature-limited applications is coming to an end and giving rise to a new generation of solutions specifically designed not only for industries, but also for specific functions and geographies, says Bill McDermott, CEO of ServiceNow.
“Our clients are in a tough macro right now,” McDermott said in a Zoom chat last week for this CEO Outlook series. (You can see our full video interview here.)
“They need to increase their automation, speed and productivity for every business asset as they try to do more with less. But they also need to keep an eye on digital transformation and invest for growth, because they don’t invest in the short term, they will pull back in the medium term and might not be there in the long term.
And since all of these purpose-built applications and solutions – perhaps as many as 750 million in the next two years – will need to interact seamlessly, digital business platforms become the foundation on which these modern businesses of the future are built. .
As this new reality affects more and more business leaders who are no longer purely consumers from business technology to creators Among these new purpose-built solutions, the race will be for those who choose to shape their own destiny, McDermott said.
“It’s really a very, very interesting development because at the height of the pandemic hype cycle, a lot of investment was being made in similar point solution technologies.
“They weren’t always made by a central control tower – some were very sporadic and made in various departments,” McDermott said.
“But now that the belt-tightening is in full swing, the customer says, ‘Hey, wait a minute, I have three or four technologies that do very similar things.’ So these point solutions on their own can work well, but they have to be best in class – otherwise they’re going to be under-selected or canceled outright.
At the other end of the relevance spectrum, McDermott believes that a whole new generation of purpose-built applications and solutions that can be built and implemented in weeks rather than months are the future, as businesses are striving to harness the power of speed here in the accelerating economy.
“I strongly believe that end-to-end digital transformation — whether it’s reducing costs or increasing growth — on a common platform is a sensational concept. And what I’m seeing now is ROI for clients in less than 90 days on some of the biggest projects you can imagine! McDermott said.
“We were just at the board meeting with a client who has 50,000 call center agents who brought ServiceNow online for customer service management without a hitch. In less than 90 days!
So, in this time of extreme optimization, the right platform is key to delivering that “control tower” capability and expertise that McDermott alluded to.
“And that’s why I say it’s a platform game now where only the fittest survive and the best platforms win. And I like to believe and I certainly know that our results are a testament to the fact that ServiceNow has become the ‘one of the standard platforms for digital transformation in the global economy,” he said. In the fourth quarter, ServiceNow subscription revenue reached $1.86 billion, up 22% or 27 .5% in constant currency.
“And that’s why we say we’re the platform for end-to-end digital transformation, because with ServiceNow you can play both ways: both cost and growth.”
The end-to-end positioning that ServiceNow has claimed since McDermott took over as CEO nearly three and a half years ago became very clear during the company’s recent fourth quarter earnings call. As ServiceNow launched and built its first trajectory as a modern automation tool for information technology (IT) departments, McDermott aggressively expanded ServiceNow’s offerings to several other business units to enable the company to meet customer needs for simplified processes and associated workflows.
On the call, McDermott outlined the impressive inclusion of ServiceNow’s various offerings in the company’s largest Q4 deals:
- IT service management featured in 14 of the top 20 deals, many worth more than $1 million;
- IT operations management was in 16 of the top 20, with 14 over $1 million;
- Security and risk management solutions in 13 of the top 20, with nine over $1 million;
- Customer workflows in 13 of the top 20, 13 of which exceed $1 million;
- Employee workflows in 13 of the top 20, 11 of which exceed $1 million; and
- Creator workflows in 19 of the top 20, 11 of which exceeded $1 million.
Listening to this January 26 call, I was struck by the impact that Service’s high-flying creator workflows had, with inclusion in more offerings than any other product (19 out of 20). I asked McDermott about the significance of this boom in the creator industry, and in his response he described this powerful “revolution in enterprise software.”
“What’s happening there is that our customers are building their own applications on the ServiceNow platform,” he said, contrasting that 20 to 30 years ago when “it got was always a big software company creating a shrink-wrapped application, shipping it around the world, then rinsing and repeating that cycle every one or two years” with complex, expensive, and often disruptive upgrades.
“But what’s super cool here is that everything is in real time. Thus, all applications being created are created by our customers for their own use. And they can do it in a super-fast way, at an extraordinarily low cost, and it fits in with all the great needs of the department.
McDermott described how a business analyst in a human resources (HR) department can create an employee reward program that can then be instantly integrated into the broader employee experience portfolio.
“That’s where the common platform is so powerful: there will be 750 million new apps built over the next two years on low-code platforms like ServiceNow,” McDermott said, “and that’s is more application development that has taken place in the last half-century.
“So this really is a revolution in enterprise software.”
Revolutions are powerful things, and they can be wonderful for those on the right side of the new order. To help business leaders assess where they stand in these revolutionary times, I’d like to see ServiceNow create an interactive application that allows a business to quickly analyze its internal capabilities to help determine the role it is likely to play in this business. software revolution: Will it be a major player in the new movement, or is it destined to become a relic in a history museum?
McDermott, always a passionate optimist, says the choice between these two fates should be clear to every business leader – but they can’t just accept and, even worse, perpetuate the status quo.
“Finally, regular people – like you and me – are building apps on the ServiceNow platform – you don’t have to be an exemplary engineer because it’s so simple that real people can build apps on it” , said McDermott.
“This is happening at a record time, and each of these new apps is hugely important because they represent different personalities.
“But collectively, it’s a platform game. And with ServiceNow, it’s all integrated out of the box and it all resides on a platform that resides above check-in systems and the mess that’s been created over the last half-century.
“And now businesses can operate simply, and that’s a game-changer.”
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