Inside ServiceNow’s Boom: The Rise of Digital Workflows

2039 0

While ServiceNow continues to grab lots of well-earned attention for its steep revenue growth, the really interesting story for the company is how it’s creating an entirely new category within the crowded SaaS marketplace by interconnecting the siloed workflows that other SaaS products are creating.

As ServiceNow posted Q4 revenue growth of 35% and projected ongoing growth for 2019 of at least 34%, CEO John Donahoe emphasized that while customers are eager to deploy ServiceNows applications for IT, customer service and HR, the higher-level value those customers really crave is the ability to stitch those disparate workflows together across the entire enterprise.

John Donahoe speaks about ServiceNow Q4 revenue growth on a recent earnings call
John Donahoe

“As one CIO told me, he doesn’t view us as just another cloud partner,” Donahoe said during his prepared marks on the Jan. 30 earnings call.

“Instead, he sees ServiceNow as the platform that creates a multiplier effect in his cloud ecosystem because our enterprise capabilities link together other systems and platforms enabling seamless digital workflows that create great experiences and unlock productivity—and that’s what every C-suite executive I speak with is looking for.”

It’s a fascinating value proposition: as the rise of digital business triggers sweeping changes in every facet of operations, how can companies avoid recreating the old-world silos that limited their ability to have enterprise-wide views of operations, of customers, and of opportunities?

Donahoe said ServiceNow lets its customers address that challenge by helping them deliver two primary outcomes: great experiences for employees, and rising productivity. And if you think about it, where those two outcomes exist, each constantly feeds off of and into the other.

“Today, every company wants to recruit millennials and retain them, and everyone wants to increase productivity,” Donahoe said during the call.

“So that requires an employee experience that is by definition cross-functional because the employee doesn’t really care if they’re dealing with IT or HR or finance or facilities.

“As a result, we’re seeing more and more customer initiatives that deliver cross-functional support to drive better experiences for employees where IT’s not only involved but is also partnering with the CHRO and the HR team, and they’re partnering with facilities or partnering with finance,” Donahoe said.

“And they look to ServiceNow to stitch that workflow together.”

For Q4 and for the entire year, ServiceNow’s financial results and ongoing momentum indicate that customers across the world are buying into Donahoe’s vision.

  • ServiceNow has 5,400 enterprise customers, including about 75% of the Fortune 500;
  • 678 customers are spending more than a $1 million in business annually with ServiceNow;
  • 74 customers are spending more than $5 million annually, which is more than double (54%) the number of customers at that level a year ago;
  • 18 customers spend more than $10 million annually, up from 5 last year;
  • 3 of those 18 are spending more than $20 million per year with ServiceNow; and
  • growth was strong in all regions of the world, led by accelerating year-over-year growth in EMEA.

On an industrywide level, the ServiceNow phenomenon reflects the subtle but unmistakable deconstruction of the classic categories of enterprise applications that has existed for at least 20 and in some cases 30 years: ERP, HCM and CRM.

ServiceNow’s offerings defy those traditional classifications and, at the same time, we are seeing some of the market leaders recast their value propositions for their products.

  • SAP is looking to redefine the CRM category by weaving in ERP data to give a more-complete view of the customer, and also with its recent blockbuster acquisition of Qualtrics to get into the new category of experience management.
  • Microsoft’s Dynamics 365 SaaS applications have been rewritten to adapt easily to vertical industries, to cut across fast-changing workflows, and to integrate seamlessly with HoloLens mixed-reality tools and applications.
  • And every leading SaaS company, including not only those mentioned above but also Workday and Oracle, are unlocking new capabilities for and value of their applications by infusing them with AI and machine learning.

Cloud Wars Top 10 rankings February 4 2019 in the context of ServiceNow Q4 revenue growthAs Donahoe put it near the end of the ServiceNow earnings call last week, “For the last 30 years, software has been functionally designed and functionally bought—and while that might have improved operations and those functions, it didn’t really drive great productivity or better work experiences because it didn’t reflect the reality that for employees and customers, most business processes are cross-functional in nature.

“And a cloud platform like ServiceNow enables that cross-functional work to happen by driving cross-functional processes.”


Subscribe to the Cloud Wars Newsletter for twice-monthly in-depth analysis of the major cloud vendors from the perspective of business customers. It’s free, it’s exclusive, and it’s great!


The World’s Top 5 Cloud-Computing Suppliers: #1 Microsoft, #2 Amazon, #3 Salesforce, #4 SAP, #5 IBM
Amazon Versus Oracle: The Battle for Cloud Database Leadership
As Amazon Battles with Retailers, Microsoft Leads Them into the Cloud
Why Microsoft Is #1 in the Cloud: 10 Key Insights
SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”
Watch Out, Microsoft and Amazon: Google Cloud CEO Thomas Kurian Plans To Be #1
The Coming Hybrid Wave: Where Do Microsoft, IBM and Amazon Stand? (Part 1 of 2)
Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019