(Last in our series on the top challenges facing the Cloud Wars Top 10.)
Two months before he officially became CEO of ServiceNow, legendary former CEO of SAP Bill McDermott pushed great expectations almost over the edge when he promised ServiceNow would become “the most admired business-software company in the world.”
Oh yeah, and one other thing: McDermott also committed to tripling the company’s revenue to $10 billion in the next few years. “I completely buy in, stand by it, and I’m looking forward to achieving it,” he said.
Now, there’s an old bromide about how some people see challenges where other people see opportunities, and McDermott is surely an alpha example of the latter type. But ServiceNow’s approach to the enterprise-software market has been so singular and so unique that McDermott’s confidence in ServiceNow’s potential requires some analysis. (ServiceNow is #9 on my Cloud Wars Top 10 rankings.)
How, indeed, does McDermott expect to make 2020 the springboard for achieving both of those goals: reaching $10 billion in revenue in a few years and setting new standards for the big and immensely well-funded business-software industry?
From an article I published on Oct. 31 called Life After SAP: Bill McDermott’s 10-Point Plan to Triple ServiceNow’s Revenue, here’s an abridged version of McDermott’s strategy with portions of his comments from that piece presented here in italics.
1. ServiceNow’s size (about $3.5 billion in annual revenue) and market position are great matches for McDermott’s vision and passion.
“I’m looking forward to doing things that have never been accomplished before, because I’m doing it off of a base that’s just truly incredible. So we’re going to set the standard and be the most admired business-software company in the world. And I’m fired-up and I can’t wait to get started.”
Yes, that’s a lot of emotion and aspiration, but McDermott’s done it before on a much-larger scale and in much more-challenging circumstances: How Bill McDermott Rescued SAP in its Darkest Hour: Courageous Leadership.)
2. Every CEO’s dream: an infinitely large market to pursue.
“Another clear example is the way you broaden the perimeter. Right now, I believe that the TAM of ServiceNow is limitless in the sense that, if you really think about how broken most enterprises are and how messed up the workflow and business processes are and how unpleasant using these old systems are for the user.”
3. Dramatically expand the targets of opportunity: more CEOs, more regions, more midsize, more verticals.
As he touched on each of those growth levers for ServiceNow, McDermott offered this perspective for driving top-line growth via partners: “The team here has done a great job of expanding the ecosystem. But, if you look at the ecosystem and the relationships that I’m plugged into, there may be a value play with some of the partners. And not just the biggest ones, but also the mid-sized ones around the world.”
4. ServiceNow’s runaway success means that McDermott can focus on “continuous evolution” instead of a major overhaul.
“All in all, I’m very, very pleased with everything I’ve seen from the management team so it’s all about a continuous evolution. We do not need to disrupt this place, we do not need to revamp territory coverage, we do not need to break customer relationships. This is going to be a very smooth transition.”
5. McDermott’s very clear understanding that this adventure is very different from his previous one.
“ServiceNow is not SAP, and SAP is not ServiceNow. These are entirely different companies at entirely different stages of their evolution and they have very different business models. So what I believe is that SAP did a great job of taking the core and expanding the perimeter into the cloud through strategic M&A…
“On the ServiceNow side, with the way we’re positioned and the literally immaculate nature of this amazing platform and these solutions that the whole world needs, it’s a matter of expanding the solution set. It’s a matter of getting to new customers, it’s the new geography and expanding the industry. And maybe expanding the market profiles. But it’s all there! All the pieces are there and the TAM for being the platform of the platform and really working through that workflow scenario where we can.”
The Cloud Wars are no place for the faint of heart. And for the great people and customers of ServiceNow, 2020 looks to be a year built around innovation, achievement and some eye-popping growth.
Cloud Wars: Outlook 2020
The Top 10’s Biggest Challenges
|1. Microsoft — Can it sustain a reputation for reliability for the Azure cloud?|
|2. Amazon — Can it win vs. Oracle Autonomous DB? AND vs. Microsoft Azure?|
|3. Salesforce — Can Marc Benioff win the battle to redefine CRM?|
|4. SAP — Can it sell the marketplace on Experience Management / HXM?|
|5. Oracle — Larry Ellison is talking a big talk—can Oracle back it up?|
|6. Google — Can it outflank Amazon through software skills and $$$?|
|7. IBM — Can it catch up with the rest of the Top 10 in growth rate?|
|8. Workday — Can it hold or expand its lead among Fortune 100?|
|9. ServiceNow — Can it live up to McDermott’s sky-high ambitions?|
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