Oracle, Salesforce, and SAP are fighting for the future. Can ServiceNow expand?

Bill McDermott transformed ServiceNow from a fast-growing niche market company to a fast-growing global giant. He made it very clear that he has no disputes with traditional enterprise software vendors such as SAP, Oracle, and Salesforce.

(In my weekly “Cloud Wars” top 10 rankings, ServiceNow ranked 9th, SAP ranked 5th, Oracle ranked 6th, and Salesforce ranked 3rd.)

In fact, during his first year as CEO of ServiceNow, McDermott occasionally shed a slight hint that the partnership with ServiceNow can bring unique value to any or all of these corporate giants.

But now, with the rapid development of digital business and digital workflow and digital lifestyle, as well as more and more digital life processes, I believe that soon there will be at least one or two or even all three huge huge Things Enterprise Applications decided to sign ServiceNow’s “workflow revolution”.

So why do I think ServiceNow (one-fifth of Salesforce, one-eighth of SAP, and one-tenth of Oracle) can bring such meaningful impact and value to larger software vendors?

Under McDermott’s leadership, ServiceNow has been one of the fastest-growing major cloud providers in the past year (subscription revenue increased by 29% in the third quarter to $1.09 billion), and its market value has doubled to nearly 100 billion Dollar.

During that time, McDermott attracted the attention and imagination of customers, potential customers and partners with a strong vision of the workflow revolution, which can interconnect and improve the existing LOB applications of SAP, Oracle and Salesforce. value.

McDermott said on ServiceNow’s third-quarter earnings conference call on October 28: “As companies adapt to the workplace of the future, CXO is using the Now Platform to create new workflows for the new value chain, thereby changing the isolation of the entire enterprise. System and function experience.”

“The Now platform is the missing integration layer. It doubles the power of the company’s existing technology investments and creates extraordinary time for value realization.”

Sounds great-are the customers as enthusiastic as the enthusiastic McDermott? Consider this set of financial points. The first few are from McDermott:

• “We surpassed expectations across the board. More than 1,000 customers have an ACV of over $1 million.”

• “We have reached the largest transaction in history with our largest customer, and this customer now has more than $40 million in ACV transactions.”

• “We are driving sustainable growth, and we are moving towards a direction of $10 billion or more.”

These words from CFO Gina Mastantuono:

• “Our sales team continued to win larger deals in the third quarter, including our largest ever $13 million ACV transaction.”

• “During the quarter, we completed 41 ACV transactions with a value of more than $1 million, and nine of them were new customers.”

• “We now have more than 1,000 customers who have paid us more than $1 million in ACV.”

• “We are improving our guidance for the whole year. We have increased the subscription revenue range to between US$4.257 billion and US$4.262 billion, an increase of 31% year-on-year.”

• “We have reinvested in R&D and quotas to promote innovation and development channels to fill our huge organic growth engine, ensure that we maintain our market leadership and have the ability to take advantage of digital acceleration in 2021 and beyond.”

Okay, the growth is very real. But what are the hooks for Salesforce and SAP and Oracle? Why did they choose to cooperate with a smaller company, if the alliance proves successful, they can eventually win the greatest reputation and attention?

In other words, what use are those Big Three?

Without mentioning any name, McDermott outlined the current state of the enterprise software operations and functions:

“All value chains are splitting. They are being transformed into modern digital workflows throughout the enterprise.

“More than $3 trillion has been invested in digital transformation programs. However, as IDC research shows, only 26% of the investment has brought considerable ROI.

“Large-scale investment will not bring about huge changes at all. This has promoted the revolution of the work process, and the missing link is integration. Systems, silos, departments and processes must all together constitute the overall workload across the enterprise.

“The Now platform unleashes this return on investment by providing speed, agility, and flexibility. Companies need it now. It enables companies to deliver experiences that employees and customers demand at scale.

“This is the power of Now Platform, which is the single architecture and data model for the enterprise platform used as all other platforms.

“In other words, this is a platform for digital business” (Emphasis added).

Now, is Bill McDermott one of the most persuasive people in the world? Well, he is.

Is Bill McDermott doing his best to position ServiceNow as a unique ability to drive the digital revolution? Yes, of course he is.

But even if those factors are fully understood, can McDermott accurately describe the challenges, obstacles and potentially fatal obstacles faced by many companies?

Again, the answer is the same: yes.

This is why I believe that Salesforce, SAP and Oracle will all choose to establish some form of partnership with ServiceNow in the next few months to see if McDermott’s vivid promise of Now Platform features can be realized.

Alas, this is not an untested approach-a few months ago, Microsoft greatly expanded its relationship with ServiceNow. In the past week or two, both Accenture and IBM have partnered with ServiceNow to create new business units. The pursuit of digital revolution in various fields.

McDermott talked about competition in the “Q&A” section of the earnings call. Morgan Stanley analyst Keith Weiss asked him the following question: “I do feel your excitement about the workflow space, but it seems that there are many other vendors trying to capture this. An opportunity and an attempt to automate. People have seen different competitive environments or workflows in environments in the history of ServiceNow… Who are the main competitors of ServiceNow’s vision?”

This is the key part of McDermott’s response:

“Keith, this is amazing: we don’t need anyone to lose to us to win. So if you consider the large record system providers there, then we won’t fight. Most of the CEOs and technical leaders there All of them have invested heavily in these platforms.

“The last thing they are interested in now is to switch these platforms, especially in the COVID environment, where speed, acceleration, resilience and serving customers and employees are their top priorities. So this is for us Said it was not a problem.

“Then, if you consider point solution providers, there will always be point solution providers everywhere. But we have become the platform standard for workflow automation.

“Now, we have expanded the scope to the field of employee and customer service management. This is a huge TAM. And, as Gartner said, we have indeed gained a huge traction on the platform itself, and people are innovating on the platform. So. What I see is that the big companies of Fortune in 2000 have basically inherited the inheritance and continue it to the present. They basically said, “How do I fire my inheritance? Because I can go to ServiceNow to bring a great experience to consumers. I can automate my workflow across domains, systems, and islands, and give my employees and their customers a great experience. “

“It’s so important to them that they don’t even ask about the price, but how quickly you can complete the price. Then, when we tell them how quickly we can finish this work, they are really in awe because We are going to talk for a few weeks-we have not spoken for several years, and for most large companies, this is a completely different language.

“So, indeed, no competitor makes us worry about these big deals.”

Final thoughts

If you want to study McDermott’s ideas in more depth, please take an excerpt from an analysis I wrote on February 10 called Salesforce-SAP Showdown: Will Bill McDermott and ServiceNow become the kings of CRM?

The mind of a man who has been CEO of SAP for 10 years is fascinating. He knows business customers, other software vendors, and anyone on earth.

“If you look at some of Morgan Stanley’s latest data, if you just want to automate manual or paper-based processes in your business, your TAM will exceed $225 billion in the United States alone,” McDermott said in the “Q&A” section In the earnings call on January 29.

When asked to talk about CSM’s growth opportunities [Customer-Service Management] In this field, McDermott eagerly put forward his very optimistic expectations, not only expecting ServiceNow to do something on its own, but also hoping to establish large-scale partnerships with large enterprise application vendors.

“I am very excited about CSM because I like swimming in the big pond, which is the biggest TAM,” McDermott said.

“There are actually three layers in customer service management that are closely related to customers. One is the participation layer: do you know who I am and can you adopt a multi-channel strategy that creates value around me? The second is a huge operation running in the middle and back office Business because it involves the workflow of providing quality services to customers.”

McDermott said the third is service management.

“Therefore, we are more broadly regarded as on-site services with service management functions, because we can find the root cause that other companies cannot match. This is the work of our platform.”

So, how does ServiceNow position itself to get the most value from these huge opportunities?

“We can participate, and obviously other people are there. We can operate like everyone else, we can manage service like everyone else, or we can do all three at the same time.

“I think people who are engaged in cooperation (hello, Salesforce and SAP)” should try to cooperate with ServiceNow because we are the best in terms of operations and service management.

Then, as an alternative, he proposed the classic McDermott hypothesis. “Or we can do it.”

In view of this, McDermott advises the enterprise application community: “If you have any questions about what you should do with ServiceNow, it is best to work with us.”