McDermott will support ServiceNow’s ambitions to fill enterprise application gaps left by vendors like SAP

On Oct. 22, 2019, ServiceNow announced Bill McDermott, who resigned from SAP less than two weeks prior, would be taking over John Donahoe’s position as CEO at the end of 2019. McDermott’s experience in the enterprise software space will inform ServiceNow’s innovations in and around business applications from SAP and its closest competitors.

McDermott’s knowledge of the enterprise applications space is key

At its core, ServiceNow has a very different software portfolio than SAP, but considering the strategic objectives ServiceNow recently laid out, McDermott is well equipped to steer the company toward continued leading financial performance. As ServiceNow aims to engage more deeply with Global Elite partners such as Deloitte and Accenture, and to develop solutions that fill enterprise software gaps as it has with mobile onboarding and financial close automation, McDermott’s enterprise applications experience is a good fit. In addition to his global partner and enterprise customer relationships McDermott brings a deep and unique understanding of the “gaps,” or workflow disconnects, around enterprise applications that ServiceNow has identified as its key growth areas.

That said, it is a toss-up whether McDermott’s guidance will help ServiceNow avoid innovating into competitive overlap or steer the company directly into applications competition. With his knowledge of the functionality and gaps in broad enterprise applications suites like SAP Business Suite for HANA (S/4HANA), McDermott can direct ServiceNow’s innovation to either fill gaps or directly compete on specific functions. With that uncertainty, this appointment should put SAP, Oracle and Workday on high alert through 2020, as McDermott’s influence becomes more clear.

Notably, ServiceNow has been undergoing other executive changes, with former CFO Mike Scarpelli leaving to follow Frank Slootman (ServiceNow’s CEO before Donahoe) to Snowflake. McDermott has indicated that ServiceNow and Donahoe have already given McDermott the leeway to influence the CFO replacement process, and there is opportunity for McDermott to further shape ServiceNow through other executive appointments.

Core to ServiceNow’s capabilities, the Now Platform has long been overshadowed by the applications built on top of it. ServiceNow’s dilemma with the Now Platform is not how to enhance the capabilities, but how to brand the portfolio in such a way that the platform becomes as ubiquitous with the ServiceNow brand as the early IT workflow products have, while still capitalizing on the company’s ability to innovate into ― and capitalize on ― niche solution areas.