ServiceNow CEO Bill McDermott: ‘We’re Putting AI To Work For People’

After a half-century of doing things one way in the enterprise software industry, it’s time for exponential change, says ServiceNow CEO Bill McDermott, who’s creating that new future by infusing AI into every aspect of the Now platform to drive astonishing productivity gains.

ServiceNow CEO Bill McDermott is tired of the “soul-crushing” limitations that have defined the IT services business for the past 50 years.

McDermott, who started his career in IT as a cold calling sales rep for copier maker Xerox, in fact, sees a future where every business workflow in every enterprise in every industry is reinvented with GenAI at its core.

“We’re putting AI to work for people,” said McDermott in a recent interview with CRN, speaking about the GenAI IT services reset that he has said is every bit as transformative as the internet or Apple iPhone. “We’re fundamentally changing the enterprise software industry, and we’re doing that because it needs to be disrupted. It’s a half a century now of doing things in a similar fashion. This is the time for exponential change. We integrate with the past. And we create the future.”

Creating the future means infusing AI into every aspect of the ServiceNow platform—the gold standard for IT services delivery and automation in enterprise environments—to power mindboggling gains in productivity. According to a Goldman Sachs report, the GenAI revolution could boost global gross domestic product by nearly $7 trillion, a statistic McDermott has quoted.

[RELATED: GenAI ‘Is A Once-In-A-Generation Move’: ServiceNow CEO Bill McDermott]

By McDermott’s own count, the ServiceNow plan to create a single architecture with its Now platform powered by GenAI will eliminate “70 [percent] to 90 percent” of the current time-consuming IT processes or workflows holding back employee productivity. What’s more, it will result in a “minimum 50 percent improvement” in writing new software for companies, said McDermott. “In a year, it’ll be 90 percent improvement,” he said. “So we’re changing exponentially how companies run. That’s what I mean by an exponential moment or a disruptive moment.”

Beyond that, the ServiceNow-fueled GenAI IT automation surge will solve the perennial digital transformation dilemma where customers are complaining that 85 percent of the time the IT investment they make does not deliver positive ROI, said McDermott.

“Well, why is that?” asked McDermott, getting revved up at the very thought of failed high-priced digital transformation projects. “Integration. Those old systems do not integrate with each other. And that’s what’s crushing the ROI on digital transformation. That’s where we come in. We clean up the mess. We put a single pane of glass over the complexity, and we integrate.”

That means “not competing” with systems and companies that are currently running at customer sites, said McDermott.

“We’re not interested in replacing those systems,” he said. “What we are interested in is creating a workflow and an automation layer that gives people great experiences. And in many cases, these systems are not integrated. There are many instances of them. … The customer has to win. And we have to cooperate with other companies so the customer wins.”

McDermott boasts that the Santa Clara, Calif.-based company’s “customer has to win” philosophy is generating positive ROI and “game-changing” results for customers that have long been frustrated by IT systems that hold them back. “What company wants their employees ‘swivel-chairing’ across 13 different systems on average a day when they don’t have to?” he asked. “What company doesn’t want to eliminate 70 [percent] to 90 percent of the cases that are soul-crushing and really taking the heart out of people and their enjoyment of the work? What company would allow that to happen when they can deflect this, and AI can do the work to give the people back a better life, and they can work on more important things? What customer will want to deal with a company that puts them on hold or doesn’t give them a great experience?”

McDermott envisions an IT services landscape where someone can take a picture of an object on their iPhone and instantaneously turn it into software code. Or better yet, he said, take a picture of an object or workflow and then transform it into a personal dashboard powered by GenAI.

“Executives can have their own dashboard on how they’re running a department or a company, all based on natural language text, or even an object, and soon a video, where code will be written from these natural things that happen in the environment every day,” he said. “That’s unbelievable.”

One of the biggest fans of McDermott’s GenAI business process workflow revolution is none other than Nvidia co-founder, President and CEO Jensen Huang, who has become something of a Wall Street luminary for capitalizing on the AI frenzy. With Nvidia GPUs powering large language models (LLMs), Nvidia delivered a whopping 126 percent annual growth rate in the last fiscal year to hit $60.9 billion in sales.

“ServiceNow is the first enterprise software company that started working on a full-stack generative AI platform,” Huang said in a keynote presentation at ServiceNow’s Knowledge 2024conference in May. “We’re going through a major platform shift[with] accelerated computing and AI. Every layer of computing is being transformed, from the computing infrastructure, the processors, to the acceleration libraries, to pretrained models. Nvidia’s been pivoting into this direction for some time. And it was incredible that [ServiceNow] saw the same vision that we saw.”

Indeed, Huang said Nvidia has ServiceNow at the heart of its digital workflow. “And just so everybody knows, we also are built on ServiceNow,” he said. “Every morning, I wake up and the first thing I say is, ‘I want my service, now!’”

The ServiceNow Channel Plan

Changing the economics of services delivery with GenAI is resulting in ServiceNow doubling down on reseller partners like CDW, SHI, Computacenter, SoftwareOne and Cancom to drive new logo acquisition, ServiceNow Chief Commercial Officer Paul Smith told CRN.

The aim is to move beyond the 8,000 customers the company has today to 50,000, said Smith. “That partner resell piece is going to be massively important,” he said.

At the same time, ServiceNow is making “minority investments” in smaller and midsize partners, including startups, through the $150million slice of its venture fund that it has set aside to help partners power its GenAI revolution. “The opportunity is massive,” he said. “There is a supply shortage of partners. One of the things I want to make sure of is that we never sell too far ahead of the capacity of our partner organization to be able to deliver and execute. And in some markets, in fact everywhere, there is massive demand for ServiceNow skills.”

That massive demand comes amid a “subtle but important mindset shift” in the sales culture within the company that has resulted in more co-selling from the outset of a deal with partners. “It’s the difference between being partner-friendly, which we have always been, and being very proactive and deliberate with partners and saying we only win with a partner,” said Smith. “That’s just a fact. And I am a big fan of us joining up with partners and choosing to win together early and go to market together, and ultimately be very, very successful together.”

The ServiceNow Partner Advantage

Two years ago, Vicky Papa was at a crossroads. She found herself with a set of clients that had new business needs and was looking at the best way to serve them.

“At the time, there was a lot of pressure on my clients to find ways to bring IT and business together with a product that could pioneer innovation for their businesses,” she told CRN. “This made the decision to start a ServiceNow consultancy very easy.”

Papa co-founded Boston-based Astrica two years ago and early this year took over as CEO. And she is already staring at the kind of growth few companies enjoy.

“We have about 10 people now, and I’m trying to go to 30 people,” she said. “That will be triple our size this year. And we are only hiring billable resources. We’re not hiring any overhead.”

The ProPlus GenAI-infused versions of the ServiceNow applications are helping to power that fast growth, said Papa. Every element of a ServiceNow implementation has an opportunity to be accelerated through AI, from doing estimates to creating user stories and test cases to testing data and even writing test scripts, Papa said.

“From the beginning of the design all the way through implementation, there are opportunities to infuse AI in our methodology,” she said.

Even though Astrica was only founded in 2022, the solution provider has already created its own LLM based on previous clients and projects, Papa said.

“We’re going to continue to grow that language model,” she said. “We’re able to drop in meeting notes from conversations we’re having with clients, and it spits out requirements and user stories and acceptance criteria, and we’re cutting the use of business analysts who would traditionally be writing those requirements, and in turn saving the clients money. So we’re actually infusing AI into every area of our methodology.”

ServiceNow’s GenAI Success

The key to ServiceNow’s GenAI success lies in large part on the fact that it has built its Now digital workflow platform as a single robust architecture, and not from technologies acquired from others over time, said Paul Andrew, co-CEO of The Whole Group, a Missoula, Mont.-based ServiceNow partner that was founded in 2022.

“What ServiceNow has done is brilliant,” Andrew told CRN. “They’ve layered GenAI with Nvidia as a partner. I mean, how good is that? And they’ve put it over a platform that has really helped enterprises consolidate the data and the knowledge or the integrations to data that they need, to actually make that AI useful. And ServiceNow owns the workflow layer so they can inject AI into any components of the workflow, draw up on knowledge that’s already connected, and start to give a really tangible, useful result to enterprises much faster than most can.”

Many companies struggle with which AI to use in what form from what provider, along with how to train the AI and integrate data sources, Andrew said.

“I think that ServiceNow is able to give a tangible return on its AI investment and to the enterprises that buy from them way faster than anybody else,” he said. “And that, I think, makes it a juggernaut that’s hard to slow down once you’re used to being able to quickly address problems in your business with a known AI tool, a common interface and a common connection to data. That’s pretty powerful.”

For The Whole Group, the attraction of what was happening at ServiceNow was too much for Andrew and his partner Peter Goodman, who previously founded a solution provider focused exclusively on Salesforce, to ignore.

“We spent the best part of nine months, maybe closer to a year, looking at the ServiceNow ecosystem and where it was going, and we saw a lot of parallels to Salesforce,” he said. “But we also saw in ServiceNow a faster rate of growth and a singular platform, which is very different from Salesforce today. And we also saw a lot of customers that knew ServiceNow as a dominant[IT service management] player but didn’t necessarily understand its full platform. They really understood and liked working with ServiceNow, and they were starting to look at what ServiceNow was doing to push into employee services, employee workflows and customer workflows. So for us, it was a great opportunity with a mature but rapidly growing ecosystem where we could see there were going to be some gaps in the partner space.”

Goodman said he is happy to see ServiceNow look to build its business with startup solution providers and to place equity investments in partners like Salesforce does.

“We haven’t taken an investment from ServiceNow yet, but I’m very happy to see ServiceNow taking that same approach,” he said. “Two of my prior businesses were invested in by Salesforce Ventures. So I know that model very well. And it’s a great model. It allows ServiceNow to show commitment to the ecosystem to maybe help shape and guide the way that ecosystem unfolds and I think puts a little fuel into it as well. So we haven’t taken that investment yet, but never say never.”

A Growing Appetite For Channel Partner Acquisitions

ServiceNow’s success has spawned a wave of acquisitions of fast-growing partners by solution provider behemoths like Cognizant, the $19.4 billion systems integrator that bought Thirdera, an elite ServiceNow partner, earlier this year.

Jason Wojahn, CEO of Thirdera, Broomfield, Colo., told CRN his company is finding it now has a wider range of opportunities as part of Cognizant than it ever could have had on its own.

Wojahn said his job is now to build a thriving ServiceNow business group at Cognizant, which includes combining that company’s2,000 ServiceNow-focused employees with his original1,000-person team.

“We want to build something that is known for value and reach and being ambitious in the ServiceNow ecosystem just as we were at Thirdera, but at a Cognizant scale,” he said. “The second thing that I’m responsible for doing is mobilizing the ServiceNow value proposition across service lines and industries at Cognizant. That is something I’m really passionate about because in my opinion that is the Thirdera value in the ServiceNow ecosystem.”

In a sign of Cognizant’s commitment to grow that ServiceNow business, Wojahn reports directly to Cognizant CEO Ravi Kumar. “When you think about it, [Kumar has] 355,000 people [in the company],” said Wojahn. “Why would my little 3,000-person business need to report directly to him? But we’re really going down the path of exploring the horizontal enterprise-wide play because ServiceNow is a horizontal. It’s not a vertical.”

One of the biggest advantages of the ServiceNow GenAI model is a contained data model that makes data security a top priority, said Wojahn.

“You’re not having to worry about if you’re using their LLM, for example, on your own data or data in your enterprise,” Wojahn said. “You don’t have to worry about that data leaking out in some way into the broader LLM. So there’s safety and security there. And using it on a less broad data set also lowers the risk of hallucination. It also means you don’t have quite the sprawl of data types that you might have in those broader LLMs.”

Because ServiceNow developed its own LLM, the company is able to keep sensitive ServiceNow data within the boundary of data centers to analyze and create generative AI responsive data, said Brett Karl, vice president of solutions and alliances at GlideFast Consulting, a Waltham, Mass.-based Service Now partner.

“What that essentially means is if you are looking to do any sort of case summarization or chat summarization, the data goes to the ServiceNow large language model, not to a third-party or external large language model,” Karl told CRN. “So your data is secure. And there’s a quicker return time and responsiveness inside that model without having to go through the external piece of it.”

Looking Ahead

ServiceNow Chief Innovation Officer David Wright sees a dramatic shift in how customers will use the ServiceNow platform in the years ahead to drive sales growth.

Historically, ServiceNow was primarily utilized to streamline processes and reduce costs, focusing on efficiency and speed, Wright told CRN. However, he said, there’s now a move toward leveraging the platform for industry-specific applications and to manage assets that are critical to business success.

“What can I do in telco, in finance, in whatever vertical I choose?” he said. “The interesting thing about that is that’s all about driving top-line revenue. So you end up starting to view things in a different way. ... This has led us into the world of OT [operational technology] asset management. If I go to a car manufacturer and say, ‘Hey, I’ll predict if that server is going to fail,’ that’s interesting, but so what? They’re not in the business of servers. But if I can say, ‘Let’s use that same technology and predict that that welding robot is going to fail,’ then it’s a different value proposition because now it’s affecting car production. We’re just scratching the surface.”

ServiceNow is also looking at how advancements in AI and spatial computing are opening new possibilities for workflow automation and enhanced field services, Wright said. “It’s interesting for me because I’m getting educated in industries and verticals that I didn’t know,” he said. “But this also looks at how you manage things that are more valuable to your business than the technology that the business runs on.”

McDermott, for his part, said ServiceNow is helping to fundamentally change the way companies are run. “Today, the structures of companies are based upon organizational constructs,” he said. “I have a financial system that serves the financial function. I have an HR system that serves the HR function. I have a sales system that serves the sales function. I have various IT tools for serving engineers. We’re talking about one platform that takes the past and integrates it with a clean pane of glass. We build GenAI into that same platform. We offer one architecture, one data model, one platform, to create mass simplicity.”

That ability to take all of those different functions and put them into a single GenAI platform will enable employees to work more closely together across all parts of a company’s business, according to McDermott. It changes “the way work really happens, the way decisions are really made, the way cases are really managed,” he said. “It’s not in silos anymore, and it never has been. But the systems were structured for hierarchical functional execution. Companies now execute across all domains. Everybody matters. And that’s how work gets done. So we’re transforming the way work is done. We’ll make it work better for everyone.”

McDermott is determined to make that happen and to forever change the employee and customer IT experience with GenAI.

“This is a once-in-a-generation move,” he said. “Don’t miss it. Don’t blow it. We have to get in there and do a great job, give them great results, and the rest will take care of itself.”