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ServiceNow: Product Positioning & Customer Stickiness

ServiceNow Engineer & Architect at Wayfair

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Executive Bio

ServiceNow Engineer & Architect at Wayfair

The executive has 10 years working with IT service tools, starting at EMC working with ITBM, owned by VMware, and ServiceNow. He is a ServiceNOW engineer and architect and has led implementations and digital transformations at Dell and Wayfair.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

As an investor, I have looked at companies in the past that have tried to do what ServiceNow has been doing, and my interest is in you as a practitioner.

ServiceNow tells this story about workflows – that is their marketing lingo – but I would like to understand what that means to you. Why would you use ServiceNow over the competing solution? What is the value add from implementing ServiceNow and how pervasive is that with a new organization, in terms of applications that are delivered to internal or external end users?

There are two sides to this question, the first is ITOM or IT Operations Management focus, which is the early part of my career I was talking about; the discovery, mapping, CMDB and understanding your application and infrastructure landscape. ServiceNow plays in that space and have many tools, offerings and products that they try to solution for that side of the house. The second is the internal processes for employee support, which is what I have focused on at Wayfair and where I will go into many aspects of where the value is.

But first to touch on the ITOM side where they are also succeeding well. With ITOM, ServiceNow 10 years ago was focused on CMDB and having all your infrastructure cataloged and organized within the tool so that you could use it for other IT processes, such as raising a change request and understanding the infrastructure which could be impacted. If something goes wrong, you know how to stack trace it and say where did this change originate and how do we revert back to where we used to be so that things are working again while we resolve whatever broke our machinery? That is where they traditionally played and there wasn't much competition in that space at the time. There was competition but they weren't at the same value statement level that ServiceNow was delivering.

Competitors have caught up in that space and the CMDB has become less important in the landscape of ITOM, because of the surgence of other tools like Datadog, PagerDuty and even Jira in that space. The ITOM space has switched to a DevOps focus, which is less about infrastructure and more about how quickly I can speed up a developer's output. They focus on the individual developer and say they can push X lines of code every week which is their velocity. My velocity is 300 lines of code per week but how could I get them to push 600 by working more. They are succeeding in that space because of the implementation partners they have fostered.

The most critical part of ServiceNow's success is the community that they built around their tool. They have a forum where many participants talk about solutions they have built or problems they have. From that forum they have conferences, road shows and interactive workshops. They source from their community and build content around it for implementation partners. I know people who left Wayfair to become a ServiceNow implementation partner, and have become very successful and grown quickly in the DevOps space. There is a long runway for ServiceNow in the DevOps space because of the flexibility of the tool, integration capabilities with their APIs and configuration capabilities.

They rolled out a new tool called IntegrationHub which comes with pre-built spokes, which is simply a technical word for pre-built integrations. If you want to use IntegrationHub and you have WorkDay and ServiceNow, they give you these out-of-box integration so you no longer have to spend development time. That is the value they are building with the integration in the employee support space, but that also bleeds into the ITOM DevOps space. They integrate with Terraform, Datadog, SSCM and all the other configuration or alert management tools you can think of. They ensure they have relationships with the people and that those integrations are always ready for you to work on. The journey ServiceNow as a product is going on, is a low code, no code journey. Have you heard of that?

Yes.

That is not simply marketing, it is iterative releases of a product where they bring out new features which are very heavy on the code side and are less about the interface and configuration options. You need someone who understands both the back and front end to implement that technology. Several versions later, it will have a completely different interface and will be configurable requiring a system administrator with less skills and lower wages, and who can do the same thing a highly skilled worker did several years ago, in less time because they configure rather than code.

That code, low code, no code journey is very helpful when you are recruiting and trying to sell the tool. We have created a citizen developer contingent within Wayfair, which we didn't have at Dell EMC. We had programming-oriented people say they would like to control their destiny and not wait for timelines and build in ServiceNow, and we facilitated that at Dell. Wayfair have a citizen developer program where our developers moonlight as consultants part time, training computer science-oriented folks to build things in ServiceNow. That citizen developer program takes technically minded people and gives them all the tools. You can code, do configuration and do no code things, but it also allows us to go to organizations within the employee support space like our talent partners, who are traditionally not technically oriented, and push out the realm of responsibility for maintaining, which is the most cost sink.

When building products, maintaining a solution is where you put all your money after you build it and after the capex project cost, to support that tool. If you give that support to people who cost less than developers on the ServiceNow platform, you save money and shift responsibilities. ServiceNow gives you tools to monitor and control that experience with the roles and access a person has in the tool, all while sitting from behind this administrator wall and not worrying that the tool will be taken down from an errant keystroke from someone who doesn't know what they're doing. That journey is extremely powerful to help us push out responsibility from small to medium sized teams to our business partners, where they feel empowered to own their space and come up with new ideas to iterate on their user experience.

The hard thing about having a ServiceNow team is that you and your partner care about the user experience, but you may not be able to talk, understand or know the same things, and what you put into production is a combination. If you take out the person who builds it from being from a different team and you have all the knowledge of what the user experience is and what you want it to be and you can build it, our talent partners are happier with that. That way, they don't bug our engineering team to update a form which is small potatoes. Spend your own time doing that and we will spend a month training someone who will train their partners, and it is simple enough to understand.

That is an extremely powerful part of ServiceNow and Jira, which also has a footprint in Wayfair, where it is primarily used for DevOps. Wayfair chose not to go with ServiceNow for DevOps due to political reasons. Jira is configurable for the end user and is a strong competitor to ServiceNow in several ways. Jira is cheaper but you get what you pay for. If you are a small to medium shop, I could see you having a use case to buy Jira and dealing with all the issues and support costs, then grow out of it and move to ServiceNow as your company scales. Any Fortune 500 cannot use Jira for workflow management as it neither user configurable nor user friendly.

ServiceNow ties everything in with their service which is their Amazon store front for any internal services you want to consume. An example would be submitting a form and having the workflow do the work for getting that request to the teams to fulfill it. I would invest in Jira and ServiceNow because they both operate in the same space successfully. Jira is a lower cost option and is younger than ServiceNow, so it is not as polished. I would not recommend it for Wayfair because it simply does not scale. It is harder to administer, change and integrate, which is ServiceNow's main selling point as an administrator, because when you have a tool that grows in popularity, everyone wants to submit data to or take data from you. You only have to worry about the other tool because ServiceNow integrates with everything.

When you say that to people, they come back asking why they use this other tool and if there is an offering from ServiceNow which will replace their current tool. That is the journey happening at Wayfair with the immaturity we started at, going across the business partners identifying home grown tools, processes and third-party tools to integrate with ServiceNow, which is always working on taking ownership of the employee support space. An example of that is when Amazon sells a third-party coat, then develop a better coat and sell it for cheaper on their own store. That is what ServiceNow is doing. Nuvolo does facility space management so you can make desk reservations in an office and someone else can sit at that desk the next day if they reserve that space. They have functionality to handle space and work orders. If your refrigerator is broken you can scan a QR code and submit a work order.

ServiceNow evaluated and almost purchased Nuvolo. They invested in the company, started to see facilities management take off, in terms of revenue and market share, and are now developing their own option for facilities management. I am already offering it to my stakeholders even though I know we have a two-year contract with Nuvolo. ServiceNow is developing their own option and it will make it a lot easier if everything is already in one tool. I am selling Nuvolo because it's easier as an administrator and our business partners trust us. The fact that ServiceNow is branching out from its traditional ITSM landscape and going into tangential areas will help them sell because integrations are the largest cost for support and building. If you don't have to integrate with other tools because everything is within the same environment, you save money off the bat.

In six months when you ask me to cross this data with that data, it will only take me a week, versus three months when the tools are separated. The value compounds as you onboard more products, which is what Wayfair has realized and why the momentum of this tool has taken off on the employee support side. When I joined Wayfair three years ago, only IT were using it. Now we have talent, procurement, legal, facilities and finance, all using the product because we have convinced them of the value the engineering team can deliver and the product has in terms of the low code, no code.

This has been very helpful as an overview. I appreciate you talking about it because it has given me a good view of the capabilities of ServiceNow's platform. In the past, multiple tools were used within an organization and they were all disparate. There were attempts to connect them by companies like TIBCO and webMethods who made connectors, but those were the analogs for what ServiceNow did better later on. Those point-to-point connections between various systems often broke and were expensive to maintain. ServiceNow has created a scalable platform whereas those guys never did, and the scalability comes from it building integrations.

Correct me if I am wrong, I would love to hear your thoughts on why ServiceNow is more scalable and a better integration platform than the historical tools. I understand it is a combination of being based in the cloud, so you update your integrations with other platforms once, as they change or upgrade, rather than on a customer-by-customer basis upgrading the connectors between disparate systems. The entire value for ServiceNow comes from that IntegrationHub, which is hard to recreate for another solution because it takes time and scale. Once it is built out and has many customers using the solution, other systems are responsive to you because you have a large base of mutual customers. Does that sound right?

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