- Salesforce faces increased competition from ServiceNow, specifically in customer service tools.
- Salesforce is bigger and more stable, but analysts and partners say ServiceNow is growing fast.
- Insider spoke with experts about what the emerging dynamic means for both companies.
At first glance, cloud-software companies Salesforce and ServiceNow appear to work in completely different markets. Salesforce builds a customer-relationship-management software platform, while ServiceNow is primarily known as a platform for managing IT-services.
But recently, the two software-as-a-service companies have been increasingly at loggerheads over key areas of their businesses.
While the overlap of Salesforce and ServiceNow is primarily in customer service tools, it is slowly growing and is likely to make the competitive landscape more confusing for both companies. In fact, a Salesforce partner said they saw ServiceNow as the “biggest existential threat to Salesforce” in the market. The partner didn’t want to be named because they did business with the same company, but other experts shared the idea, and said as ServiceNow grows, it climbs into many of the same business areas that Salesforce operates.
ServiceNow also poached several key leaders and rank-and-file employees from Salesforce, including from its artificial-intelligence and Service Cloud units, Salesforce partners told Insider. For example, the company hired John Ball, a former executive vice president of Einstein, Salesforce’s AI unit, to lead its customer-workflows unit in 2020.
“There will be increasing overlap between them,” Rishi Jaluria, an RBC analyst, told Insider. “Salesforce isn’t in the back office yet in any big way, but we all know that’s going to change. And ServiceNow will definitely be more front office with their solutions.”
Salesforce and ServiceNow are increasing product overlap
Between the two companies, Salesforce is, of course, the larger and more stable company, bringing in more than $ 26 billion last fiscal year. ServiceNow is growing rapidly, but it’s still part of the size of Salesforce, with nearly $ 6 billion in revenue last fiscal year.
Salesforce is first and foremost a customer relationship management company, but it is rapidly growing as a platform to manage customer interactions and the way people work. As it strives towards the ultimate goal with its acquisitions
Slack
, MuleSoft, and Tableau, the company’s largest business is its Sales Cloud and Service Cloud. Service Cloud itself brought in $ 1.7 billion in revenue last quarter.
And that’s the first area where ServiceNow is increasingly challenging Salesforce, analysts and partners told Insider. While ServiceNow is known for managing IT services, it is rapidly expanding into things like customer service and employee experience.
ServiceNow also has the advantage of a very flexible platform, and a customer can build a simple CRM tool directly on it, RBC’s Jaluria said.
Beyond customer service, both companies are making games to get more out of employee and workplace management tools, analysts said. Salesforce’s acquisition of Slack and its goal of becoming digital headquarters for businesses has put it more precisely in the employee management software market-an area that ServiceNow is also investing in. In particular, ServiceNow multiplies employee workflow tools.
Both companies have also released tools to assist with the management and distribution of vaccines, and they both have tools to help companies track their maintenance efforts. Environmental, social, and management goals are another area where they will “fight for thought leadership and for the customer footprint,” said Rebecca Wettemann, a Valoir analyst.
ServiceNow is also reportedly approaching Microsoft, one of Salesforce’s biggest competitors. ServiceNow stopped using Slack after Salesforce acquired the workplace chat app, moved to Microsoft Teams, and then deepened its partnership with Microsoft, Protocol reported.
Increasing competition means more choices for customers
The new competitive dynamics are leading to interesting discussions with customers, implementation partners and market research analysts at Insider. As companies look to digitize, chief information officers are often looking for the strategic anchor for their use of IT. While the Salesforce platform is bigger, and the company is getting bigger deals for its cloud tools, ServiceNow is also fast becoming an option, says Liz Herbert, a Forrester analyst.
“Sometimes, where it becomes a more difficult decision for the client is what kind of anchor product will be that we actually put all our eggs in that basket,” he says.
Aaron Sines, founder of consulting firm Edison and Black, said he has worked with clients who have used both Salesforce and ServiceNow. ServiceNow’s flexible low-code platform is increasingly attractive for customers, he added.
“We see as clients grow and as their needs become more complex, that’s when they somewhat outperform the Salesforce Service Cloud,” he said. “And that’s when they became really curious about what ServiceNow can do for them.”
Salesforce’s robust category of third-party-app integrations could also meet those needs, however, he said. Ultimately, it will meet what each customer needs, and competition will encourage both companies to continue to prioritize product innovation and improvement for customers.
When asked about the growing overlap and competition, a Salesforce spokesperson said that “the company aims to empower companies with a service platform so they can deliver better, personalized service to their customers.”
“We are constantly innovating to make Service Cloud the best product on the market,” they added.
ServiceNow immediately recognizes that Salesforce is a competitor and says there are enough customers to go around.
“There’s too much negativity in the world today. Is Salesforce competing? Sure, but that doesn’t mean they have to lose for us to win,” a ServiceNow spokesperson told Insider. “Digital innovation is the biggest market opportunity of our lives. If we all strive to help customers be successful, there are many things for everyone to contribute.”
Have a tip? Contact this reporter by email at [email protected] or Signal at 925-364-4258. (Pre-pitch by email only, please.)