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ServiceNow’s Bill McDermott: a ‘work in progress’

Bill McDermott, president and CEO of ServiceNow, speaks to Computer Weekly about his vision for the company and the technology industry, which he believes to be in the throes of exponential change

Bill McDermott cuts an unusual figure among the gilded tech bros of Silicon Valley. As is well known, he comes from a working-class, New York Catholic background. First and foremost, he is a sales professional, who has spent his career in the business technology industry, but with a wider perspective on the global economy. At 61, he might be eyeing up retirement, but he says he is still hungry, humble, and a “work in progress”.

McDermott took the helm at ServiceNow in 2019, as president and chief executive, after 17 years at SAP, latterly as CEO. He had previously been co-CEO of the Germany-based business software giant, and CEO of SAP America.

ServiceNow has its origins in the cloud delivery and management of IT services, but now styles itself as a broad platform for digital transformation, by way of digitising and further automating workflows. It has exhibited substantial revenue growth in recent years, reporting full-year 2022 revenue of $7.2bn, up 23% on 2021.

McDermott wrote a memoir, with business journalist and author Joanne Gordon, published in 2014, Winners Dream: A Journey from Corner Store to Corner Office. From its pages he comes across as hard-working, humorous and democratic – someone who has not forgotten where he came from. The corner store in the sub-title was his own deli, which he owned and ran as a teenager, as a former employee. And it is well known that he had a bad accident in 2015, which cost him an eye.

On a recent visit to London, he gave the following interview to Computer Weekly. The day before he had been with the Irish Taoiseach Leo Varadker to mark the creation of 400 new ServiceNow jobs in Ireland.

The supplier had also announced Now Assist for Virtual Agent, billed as a generative AI system “designed to create truly conversational experiences for more intelligent self-service”. This builds on the generative AI announcements it made at its customers and partner event Knowledge 23, in Las Vegas in May.

We begin by asking him if he’d consider doing another book. The text that follows has been compressed.

Bill McDermott: Absolutely. I’m thinking about it, because a lot has gone on since I finished that story – and I promise you, every place I go, they want the next book. So, I’m working on it. I got a lot of ideas. But I want something that’s in service to the reader. I want the reader to see it as a 2.0 version of Dale Carnegie’s How to Win Friends and Influence People. So, if I do one, and I believe I will do one, it’ll be when I feel like I’ve got the perfect idea. If I don’t serve the reader, there’s no point to doing it.

And by the reader, would you mean CEOs, CIOs, or everyone in business?

McDermott: Anyone in business, and anybody who really has an interest in bringing out the best in themselves: from the clerk at Starbucks to the CEO of the biggest bank in the world.

Coming to you as CEO, you describe ServiceNow as “the intelligent platform for end-to-end digital transformation” – can you unpack that? What does it mean?

McDermott: The intelligent platform is all about building the intelligence into the platform. There’s been a lot of hype about AI, both positive and negative. The intelligent platform means the data is the customer’s data. It’s the business data, or the public sector data that they’ve had in their databases that they’ve curated for years and years. We’re not relying on the hallucination of the internet – we’re dealing with your data, not ServiceNow’s.

We’ll give you the governance, the compliance, security guardrails. But in the end, the customer feels very comfortable with us, because we don’t look at it. We don’t even have the right to look at it and anonymise it, we make sure it’s the customer’s data.

And then the second thing, the “platform for end-to-end digital transformation” is best explained like this. Let’s think about the 1970s. That’s when you had large application companies bringing ERP to the market. By 1990, you had guys like Michael Hammer talking about business process reengineering.

But, in that era, you had operating systems, you had databases, and you had the early stage of applications. Some of them were in financials, some of them were HR, later, some of them were dedicated to customer relationships – but they were applications. They required servers and databases to feed those applications. And they were all siloed.

Bill McDermott

 “CEOs have to change – 85% of the projects today in technology do not deliver a positive ROI”

Bill McDermott, ServiceNow

So, [in those days] I was dealing with a CFO for their financials, I was dealing with the head of HR for their people, and I was dealing with the heads of sales, marketing, field service for the customer. And then the engineers basically relied on these large-scale companies to build applications, shrink-wrap them and ship them globally.

Fast forward 50 years to today. We now still have databases, operating systems, applications in the enterprises. But over 50 years, there has been a tremendous sprawl of these points solutions targeted for a specific department.

And what has made it even worse is there are multiple instances of each one of those individuals siloes for any given company. I’ve been in situations where companies have an HR system for every 1,000 employees.

One of the examples I can give you – they have 75,000 employees, they have 73 HR systems. Can you believe that? This is crazy. You can go to the average large-scale company today – a well-run company – and if they’re global, it’s not unusual for them to have 25 different ERPs, not unusual at all.

So, the “platform for end-to-end digital transformation” resonates with me and our customers because it’s a new generation architecture that resides above the mess.

All the data is the customer’s data. They own it. And all of that integrates into the Now platform, no matter what function you’re talking about. Now there’s a new generation of developer that works for the customer. So, you’ll go to some major banks, they have bigger development organisations than I do. They’re building apps all the time. There’ll be a billion net new apps built on low-code platforms like ServiceNow. What makes ServiceNow so damn strategic is that as you build these apps, you also have to recognise they have to integrate into your workflow.

My biggest challenge was putting that in a capsule that everybody can understand and swallow and get the notoriety that every company needs this now. It started out with IT, but the platform was never just designed for IT – it’s just that technology people got it.

Today [Tuesday 13 June] we made a major announcement of Now Assist on the virtual agent side. That is about having a conversation with the employee. Any natural language question you have in English, or any other language based on where you’re installed, you ask the question that you want to ask, the system gives you an answer in its natural language format. You’re looking for a video, you’re looking for a piece of content, you’re looking for research, you’re going to get a natural language answer. That’s a game changer.

Are you encountering any scepticism or even cynicism among CIOs about generative AI? They’ve been hearing about AI in business applications for years.

McDermott: Some, yes. But what I’ve found is the ones that you are encountering the scepticism from are the ones that are protecting the old ways of doing things. But when we explain to the CEO: if you’re in X industry, and you have not solved this business process problem that offers you the biggest opportunity to transform, and you’re wondering why no one’s ever dealt with it before. Well, that’s the problem, I want to help you solve. And we then go into a use case that’s very specific – we don’t talk about big things; we single out a use case – and we show them the art of the possible.

I know that customers can be loath to speak to the press or get up on stage – in case they say too much about what they regard as competitive advantage. ServiceNow customers seem a bit different.

McDermott: Our customers can’t wait to get on stage. You can’t keep them off. When we did our Knowledge event in Vegas, there was State Farm up there, Pepsi Cola, Starbucks and so forth. I had customers coming to me asking: “What is it going to take for me to get up on that stage next year?”

It’s how you excite them, to make them want to be the stars of their own show. This is in many ways show business. A lot of people think that this is just this tactical grind in the enterprise, with tech that’s helpful and necessary, but not exciting. I think it’s just the opposite. I think it’s showbiz. And I think the show is all about their biz, and what they want to show about their biz. Which is why I came out of a board meeting, and on a napkin, I wrote down “the world works with ServiceNow”. Starbucks works with service now. When Starbucks works, the world works. That was the brand campaign – just simple, on a napkin.

I was struck by something you said it in the news briefing before Knowledge 2023 in Las Vegas: “no one has to lose for us to win”. Can you explore that complementarity idea a bit?

McDermott: All those [market] participants, whether it’s Oracle, SAP, Salesforce, or Workday, and we can go on and on. I’m not replacing them. When ServiceNow comes in, we’re not replacing them. The core systems that do the core transactions in the enterprise stay there. Because the customer doesn’t want to rethink what it took millions [of dollars] to do. But the customer wants to have an action layer with a much different user experience, so they can automate the way the work flows, to get things done, especially in a highly collaborative economy, where people are working from everywhere.

I’m not going in with an idea that they should replace those systems of record. And if I were these companies, I would say: “How do I team up with ServiceNow?” because in many cases, they’re going to make my clunky software look a lot better. And I’m an example of that – in ServiceNow, when I first started, I said: “What do we run here? What are our systems in the company?”, and they would say, “ServiceNow”. The reality is we have SAP for Financials, we have Workday for HR, we have Microsoft Office 365 and Dynamics on the CRM side. But every single person in the company sees ServiceNow.

Now, what ones would be replaced? There’s an app out there for everything, but nobody wants every app. So, the 1,000 points of dim light, with these point solutions that don’t add value, that mean you’ve got tech crawl all over the place, for the last x number of years, the customer can turn those off.

I had one company in the banking industry shut off 256 applications and get in front of the analysts to say they’d just saved $50m. I believe that there’s probably six, maybe five, systems of record that are worth having in an enterprise.

I want to ask you about exponential thinking. I was watching you on stage at K23, and I was thinking, “What’s Bill McDermott talking about now? What is this?”

McDermott: It’s a basic concept that if you we take 30 steps, we’ll go 30 metres. But if we take 30 exponential steps – 1-2-4-8, and so forth, we go a billion steps: equivalent to 26 trips around the world. We change everything by thinking differently. You have to see things differently, before you can do things differently. And I think we’re at the phase now where the technology is on our side, where these large language models, as an example, allow for exponential thinking.

You really riled me up with one of your questions on the CIO. The CIO that wants to protect the way it used to be is going to be very suspicious and against the possibility of exponential thinking because they are so cosy in the normal way of thinking. They want to go 30 metres.

I really do believe a lot of companies have cut the soul out of their cultures. And I believe that culture is the number one reason companies sustain success
Bill McDermott, ServiceNow

The world is going for exponential. Yes, there will be concerns: “How do I protect this? How do I ensure digital trust? How do I secure the other thing?” That’s proper, but not to change and take advantage of these massive new technology breakthroughs is negligent. And that’s why we resonate with the CEO. CEOs have to change – 85% of the projects today in technology do not deliver a positive ROI.

Those projects require skilled people. Your RiseUp programme has an ambitious goal for training people on the ServiceNow platform, right?

McDermott: We’re going to upskill a million people in the global economy by 2024, and we got about a year left to do it. We’re up to 400 thousand now, so I just feel like we’re doing it right. And that’s no guarantee that we will continue to do it right, which is why I wake up every day hungry. There’s no complacency in my mind ever.

And that’s from all your work experience hitherto? Including SAP, Gartner, Siebel, and Xerox?

McDermott: It’s really interesting. I’m a work in progress. I haven’t had my best day yet. The good news is, even though I haven’t had my best day yet, I’ve had a lot of experience in this industry and a lot of experience running companies. And the world is changing so quickly. The impact on people, whether they’re your employee, your customer, your shareholder, or your partner, they’re going to rely. And I think it really helps when you have the temperament and the heart for people, because that’s the only way to win.

As we have continued to hire, protect people, train people, build futures for people, whether they’re inside or outside of the company, I have a feeling that when we get to stormy seasons, waters and challenges, the people will always rise up for us, because they want us to win, whether they’re inside the company or outside the company. I really do believe a lot of companies have cut the soul out of their cultures. And I believe that culture is the number one reason companies sustain success.

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