Smart SaaS

Company:        ServiceNow

Started:            2004

Located:          San Diego, California

Geography:     Global

Market:            IT Solutions

Products:         Cloud-based services that automate enterprise IT operations.

Key Customers: AGL, Bosche Siemens, CERN, Emory University, Equinix, Harrods, John Lewis, Juniper Networks, Lawrence Berkeley National Laboratory, NHS, PWC, REI, Sony Pictures Entertainment, Staples, University of San Francisco

Website:           Service-Now

Blog:                ServiceNow Commentary

Twitter:             @servicenow

Recent News:

Enterprise Holdings Selects ServiceNow SaaS for Global IT Services Automation

ServiceNow Files Registration Statement for Proposed Initial Public Offering

Eric Fisch of Equinix Named the Latest ServiceNow IT Hero

I asked Craig McDonogh, Director of Product Marketing at ServiceNow, a few questions about his business and view of the SaaS market in 2012 and beyond.

Did you start out as a Software-as-a-Service company?

Fred Luddy founded ServiceNow after serving as the Chief Technology Officer at Peregrine Systems from 1990-2003 and became very familiar with the IT and Service Management industry during his career. After years of building and selling solutions to the IT community, he really understood the pain of deploying traditional IT management products.   IT decision-makers were constantly being faced with the reality of doing more with less, shrinking budgets and Fred felt that delivering IT products as an Internet-based solutions would be the right way to go. Early on, many companies viewed using Cloud-based IT management solutions as just a crazy idea.

This was a classic ‘cobbler’s children’ scenario because IT struggled with the tools that they were using and Fred could see this dilemma especially since he was coming from the vendor’s perspective.  With this realization, he thought that building a SaaS company for IT Management that offered a platform for automating many types of IT services was a really innovative idea.

Back in the late 1990’s, for many IT professionals the concept of the ‘Cloud’ was typically buying a server off eBay and then putting it in their closet.  When Fred started ServiceNow he need to change this perception and was constantly driving up and down the Pacific Coast Highway in Southern California trying to get his friends to try his new Cloud-based product.

ServiceNow started as a bootstrapped company for many years because Fred was such a strong believer in the vision of a Cloud-based IT management solution and most investors weren’t interested in the concept.  Finally in 2005, he was able to get JMI Equity to make an initial investment of $5 million and that helped to jump-start the company’s growth phase.

With this investment ServiceNow as able to generate a series of early wins in the SMB market. Once ServiceNow gained momentum around its SaaS solution it wasn’t too long before the company started to get pulled up into the enterprise market with customers like TIIA CREF, Edmonds.com and Deutsche Bank.

Why do your customers buy from ServiceNow?

Customers are buying from us for the same reason they are buying iPhones and iPads, because these products are easy to use and they like the experience.  Our products are designed to be engaging and don’t require a lot of training to use them.

IT Management solutions over time have been built with almost too much functionality, but ServiceNow has been designed to reflect only what our users really need.  ServiceNow can be tailored to our customer’s specific requirements because there is a lot of flexibility built into our products to allow them to be configured at a relatively granular level.

In past, most IT customers didn’t get what they wanted in the first place because most IT tools weren’t able to map to their specific business requirements. ServiceNow wanted to provide a tool set that was very flexible. Because IT professionals like to get their hands on the product, we put an open demo of our product on our home page just so they can play around with it. We also offer ServiceNow through a standard subscription and this licensing approach allows customers to access all 24 of our current applications, including new ones that are developed and released.

We offer Big SaaS to our enterprise customers who have complex data compliance issues, local data security concerns or are in regulated industries like financial services.  Our architecture is not a multi-tenant architecture, it is a protected infrastructure, because we didn’t want to risk the co-mingling of our customer’s data.  We provide high-levels of security in our data centers and across our platform.  ServiceNow is relatively bullet proof when compared to other Cloud providers regarding how data is managed and along with our operational processes inside of our data centers.

Many of our customers come to ServiceNow because they are facing an imminent upgrade of their existing on-premise IT Management or Service Desk tool and it is going to potentially cost them millions of dollars and it a complete re-implementation of the product.  So they often start out saying, why not look at all the new solutions on the market, especially if there is no loss of functionality?  This is when they start looking at SaaS solutions including ServiceNow.

What do you see as the key trends emerging in the SaaS industry?

Several major trends are the growth of mobile, social, and the local Cloud capabilities in the market.  All types of workers are now using the Cloud and social-based products in their personal lives, and they start wondering, why should my work-based applications be so different?

For example, Disney employees only have about 30 seconds to make their customers happy. This means that making customers happy with their experience is very important because they are now key influencers in the market. Disney employees now need to listen to customers because they are turning around and sharing their experiences with your brand.  This means that their IT must evolve quickly to deliver mobile and social tools to enable their employees to provide a superior experience, which is transforming IT infrastructure into more of the company’s overall business infrastructure.  IT can no longer just be good at managing transactions or break-fix processes; they need to do a lot more for the overall business.   We believe this is a great opportunity for ServiceNow.

Another trend is Social IT.  Customers are looking for greater user self-service capabilities when working with internal IT which is transforming them into a true partner in the business.  All of our customers are looking better ways to interact with their internal users.  This trend is especially impacting the CIO’s team because they know that according to Gartner by 2015 nearly 50% of all IT Management will be SaaS-based, so the ‘big shift’ to SaaS is underway.

Mobility is also an important emerging trend.  IT now needs to support the Bring Your Own Device (BYOD) movement, and it really should be called BYO3, because most employees now have three devices that IT needs to support; their laptop, phone and tablet.  IT management needs to support these BYO3 workers on any of their devices and still need to be able to manage their infrastructure whenever, and wherever, they are located. The ServiceNow platform has definitely been designed to support this type of IT mobility.

 
What is your market outlook for 2012?

Our market opportunity continues to grow as we are seeing a convergence of three major areas where ServiceNow can really help our IT customers;

• Employee Self Service – Making it easier to interact with a wide variety IT services
• Automation – Improved ability to automate key business processes which can eliminate errors
• Consolidation – Provide tools that eliminate redundancy inside of IT and beyond

All of these market changes continue to position ServiceNow as the emerging Platform-as-a-Service (PaaS) provider for IT.  At our user conference last year, Knowledge 11, we saw the appearance of many user-designed applications, including those for IT but also new applications for other areas of the business built on top of the ServiceNow platform. Users are now using the ServiceNow platform to build solutions that extend well beyond IT, like HR self-service applications, and we will definitely see more of this as we move into 2013.