FEATURE Salesforce CEO and chief “SaaSquatch” Mark Benioff boasted concerning the wins his firm’s ITSM product had final quarter within the phrases a proud dad makes use of to speak concerning the artwork work his youngsters taped to the fridge.
“I particularly liked 5 clients who received to depart the purgatory of ServiceNow, like Sunrun, Cornerstone, CoolSys, and there’s others, too, that we’re not allowed to say,” Benioff mentioned throughout Salesforce’s final earnings call in February. “However I’d point out them anyway. They’re leaving ServiceNow now for the brand new Salesforce IT service product, which is about apps and brokers serving to you handle all of your ITSM.”
The six-month previous Agentforce IT Service has 200 complete signups, which, to place that into some perspective, is about one tenth of 1 % of Salesforce’s complete 150,000 clients.
ServiceNow has 8,600 ITSM clients and controls 40 % of the ITSM software program market, in line with the newest figures from IDC. In actual fact, ServiceNow has six instances the market share of its subsequent two main opponents, BMC Helix and Atlassian.
So, even for the outspoken Benioff, title checking a competitor and crowing about 5 wins was uncommon spice for the normally number-heavy and sonorous earnings studies. ServiceNow CEO Invoice McDermott took observe, and deliberate to tweet about it, he mentioned, however held off and responded days later throughout a presentation on the Residents Know-how Convention on March 2 the place he known as Benioff’s feedback “unhinged.”
“I assumed to myself, ‘My God, you already know what’s going on right here? Have we actually gotten that far beneath their pores and skin that they’re doing any such a factor?’ ” McDermott mentioned.
McDermott disputed that Salesforce had taken all 5 of these firms. 4, he mentioned, had been nonetheless ServiceNow clients. He mentioned Salesforce did take out one, which represented a $42,000 loss for ServiceNow – which reported $13.2 billion in topline income final yr.
“The opposite ones are nonetheless doing enterprise with us. Most of them are renewals that haven’t even come up but,” McDeromott mentioned. “I would like you to know that simply because someone says they did one thing would not really imply they did it.”
The Register spoke with executives at ServiceNow, Salesforce, analysts with IDC and Forrester, and a big ServiceNow associate to unravel what’s driving this renewed rivalry. What we uncovered isn’t just a battle of ITSM merchandise however a combat over the way forward for how IT issues are solved within the enterprise and past.
ServiceNow’s edge: Management and orchestration
“General, I’d body this much less as a clear head‑to‑head ITSM battle and extra as a collision between two completely different fashions of enterprise management,” Charles Betz, vp and principal analyst at Forrester advised The Register.
“Salesforce is betting that engagement and AI-driven interplay develop into the first organizing layer, and that deeper IT fashions might be reconstructed as wanted. ServiceNow is betting that AI makes management planes extra necessary, not much less, as a result of poorly ruled autonomy is an actual enterprise danger. What’s genuinely new this time is that each arguments are actually believable in a means they merely weren’t in earlier Salesforce ITSM efforts.”
Harsha Kumar doesn’t view this as a “two horse race” both.
Kumar is the CEO of NewRocket, a ServiceNow Elite associate identified for work in banking, telecom, monetary providers, danger workflows and the usage of AI.
“I actually don’t assume it is ServiceNow versus Salesforce,” he mentioned. “The chance and the risk is how do you leverage brokers that are actually doing a number of the work with AI? So it is not simply the workflow orchestration and it is not simply the system of document. Clearly Salesforce is a system of document for buyer interactions and buyer information. ServiceNow clearly is the strongest with regards to service requests and servicing present clients and so forth. Each of them have some information which is the system of document, however past that, ServiceNow can be an orchestrator. It may orchestrate workflows throughout numerous techniques of document: could possibly be Workday for HR, could possibly be SAP for ERP, could possibly be Salesforce for buyer information.”
And with 22 years of institutional information about IT workflows throughout the biggest clients in each vertical, ServiceNow is leveraging them to create guardrails for its AI that may confirm the correctness of actions being taken.
“Whereas AI thinks, workflow acts, and that’s our distinctive aggressive benefit that at present,” McDermott mentioned the identical day he took Benioff to activity. “As we’re having this dialog, we now have 85 billion workflows in flight, within the Fortune 2000 doing virtually 7 trillion transactions, so deeply embedded, deeply sturdy, increasing platform with a deep, thrilling moat that continues to develop and prosper.”
ServiceNow’s Jeff Hausman, EVP & GM of Know-how Workflows, advised The Register that these workflows are sticky, with 98 % of the corporate’s 8,600 clients renewing their contracts, a testomony he mentioned to the great worth supplied by its merchandise.
“We constructed this class. For 22 years we now have been serving to clients to get worth and to guarantee that they’re getting what they want out of IT service and IT service response,” he mentioned. “By way of what’s occurring available in the market, look there are continually going to be numerous completely different organizations and firms who take into consideration how they assist buyer. And over time, I might say the shoppers have voted with us and stayed with us, which is why we’re a frontrunner.”
Salesforce: Assembly customers the place they work
Betz mentioned Salesforce is coming at ITSM as a system of engagement and assembly customers the place they already work – in Slack for instance. He mentioned that enables them to summary away a lot of the complexity round submitting tickets, and use conversational AI so folks can resolve points “with out actually understanding or caring that it’s ITSM.”
“That resonates proper now as a result of most staff don’t need an IT course of, they only need the issue to go away rapidly and with minimal friction,” he mentioned.
This isn’t the primary time Salesforce has tried to promote an ITSM answer. Betz mentioned previously, Salesforce tried to compete immediately with ServiceNow on “ITSM mechanics – ticketing course of protection, ITIL-style completeness,” however that landed their merchandise squarely in ServiceNow’s sweetspot and none lasted lengthy.
“It’s true they’ve had a number of failed makes an attempt, and plenty of longtime ITSM of us roughly rolled their eyes at this newest one,” Betz mentioned. “That mentioned, I do assume they’re extra motivated this time, so I’ll give them that.”
Main the hassle for Salesforce is Muddu Sudhakar, senior vp, Agentforce IT Service and HR service. He arrived at Salesforce in August however he has been driving methods inside a number of the largest tech firms because the Nineties together with IBM, Dell, VMware, Splunk – and ServiceNow, the place he was a senior vp and normal supervisor main a crew of 1,000 staff.
Sudhakar labored on the ITSM product beneath legendary former ServiceNow CEO Frank Slootman and at present he sees a ServiceNow platform that has remained largely unchanged from that point.
“The workflows haven’t modified. There’s no hybrid workflow. Every part is rules-based. The CMDB is guidelines primarily based. There’s no brokers in that. They’re the Goliath. We’re the David,” he mentioned. “It’s not simply ServiceNow. The entire ITSM market has not innovated in 25 years. That’s the larger image.”
Sudhakar mentioned what makes this time completely different for Salesforce is that they have constructed the answer internally and organically to satisfy the AI second, so customers can speak in pure language to start to resolve tech issues.
“Do you actually wish to open up a ticket and await someone to unravel it? No. You’ll go right into a instrument and say ‘I’ve a community situation.’ ‘Repair my password reset.’ That conversational, agentic method, the legacy guys don’t wish to supply it,” he mentioned. “They don’t wish to disrupt themselves. There’s no incentive for them to do it.”
Not simply massive enterprises
But, even when Salesforce had been to poach all of ServiceNow’s estimated 8,600 ITSM clients, and declare the highest spot within the ITSM market, how a lot will it transfer the needle? General, ServiceNow’s income is predicted to be solely about one-third of what Salesforce has forecast for this yr.
“It depends upon the way you slice the TAM,” mentioned Kishan Chetan, EVP and GM of Agentforce at Salesforce. “We’re clearly taking ServiceNow clients, however I believe the way in which we’re that market isn’t just a ServiceNow take-out play. It’s a play for the complete market, which incorporates mid market, which incorporates SMB, and it contains enterprises as nicely. So it’s a broader play.”
Chetan sees ITSM as a $50 billion market, which incorporates these downstream clients. That makes ServiceNow only one very massive impediment to getting there.
Along with having their CRM product and repair cloud platform inside the identical enterprises that use ServiceNow for ITSM, Salesforce has a broader set of shoppers within the midmarket and SMB that it may well goal with its Agentforce IT Providers product.
“Let’s concentrate on Salesforce clients,” Sudhakar mentioned. “Should you’re not a Salesforce buyer I received’t name on you. So all day lengthy we will keep within the Salesforce ecosystem and we will promote this product.”
That is the place Salesforce has a bonus, mentioned Snow Tempest, analyst with IDC, and the place ServiceNow’s complexity and class turns into its foil.
“Salesforce will also be current in some not-as-large enterprises. And ServiceNow they’re identified for being within the high of the highest, in enormous organizations. There’s extra competitors in ITSM generally amongst smaller enterprises, and midsized organizations. There’s plenty of different distributors competing in there.”
In different phrases, to be able to develop, ServiceNow nonetheless has to win fights in opposition to BMC Helix and Atlassian, whereas preventing off Salesforce. In the meantime Salesforce has a path to take share downmarket, and due to Slack, CRM and its cloud platform, it already has a relationship with a lot of these clients.
“Salesforce has a repute for scalability and Salesforce has a declare to go after these markets,” Tempest mentioned. “They know these clients. They’ve these relationships.”
In an effort to be efficient, Chetan mentioned what he actually cares about is “our clients getting up and working quickly.”
Salesforce’s ITSM clients have been capable of go dwell in a speedy 45 to 50 days, Sudhakar mentioned. ServiceNow’s ITSM might be put in and working a corporation in about the identical time, 4 to 6 weeks, in line with Kumar, the ServiceNow marketing consultant.
Reining in rogue brokers
However within the period of deriving belief and worth from AI, the pace to integration isn’t the one choice maker.
Forrester’s Betz mentioned ServiceNow is making the argument for extra management and governance inside ITSM as a differentiator for AI. He mentioned that they’ve spent near 20 years constructing operational fashions of the digital property — configurations, dependencies, change, danger, incident, compliance — and turning these fashions into executable workflows.
“Their view is that, as you introduce extra autonomous and semi-autonomous brokers, that amassed logic turns into the guardrails that maintain AI from doing one thing unsafe or destabilizing at scale. So despite the fact that each firms are speaking about AI brokers, they’re fixing very completely different issues beneath,” he mentioned. “A method I usually put it’s that Salesforce begins from the consumer and works backward into IT, whereas ServiceNow begins from the system of labor itself after which tries to enhance the consumer expertise on high of that. AI doesn’t erase that distinction; if something, it sharpens it.”
Hausman mentioned ServiceNow’s “AI management tower” offers it the flexibility to offer governance and safety for brokers, to know permissions and insurance policies and audit trails and monitoring on a steady foundation, for full life-cycle visibility throughout each mannequin that has been included right into a buyer’s system and each agent that’s really doing work, whether or not it’s ServiceNow’s personal brokers and even these tied into third events.
“That’s what enterprises have to really feel assured within the potential to make use of these new capabilities in the precise means,” he mentioned.
Rahul Tripathi, senior vp and normal supervisor of service operations at ServiceNow mentioned new AI capabilities inside their ITSM platform like Autonomous Workforce – which might resolve 90 % of inbound tickets with out human intervention – have prompted ServiceNow to redefine how they have a look at ITSM.
“That’s the reason we’re calling it service operations now, not ITSM anymore, as a result of ITSM and CMDB, the core information are all the identical, like angles to the identical drawback,” he mentioned. “So that’s what we’re leaning on and if we ship them proper, then completely we’ll proceed to develop. And naturally, if we don’t, then we now have no proper to be available in the market.” ®
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