Technology Business Research, Inc.ServiceNow vs. Salesforce Showdown: AI Adoption
In this week’s episode of “TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms,” senior analysts Catie Merrill and Alex Demeule join host Patrick Heffernan to examine whether ServiceNow or Salesforce currently holds the stronger position in AI adoption. This discussion kicks off TBR’s Vendor Showdown Series. In this format, TBR analysts assume the role of head of strategy for one of the companies they cover and use TBR research and data to build a competitive intelligence case for that company’s position in the market.
“Both companies, I think, have a lot in their corner. You know, when we talk about the right to play, I think that they both have the right to play in this new world. We talk about what’s going on, like obviously what happened in equity markets with the SaaS-pocalypse back in 2025 through the beginning of 2026. You know, obviously so much of the opportunity is moving to the model layer, but we talk about complexity, and complexity brings in more money,” said TBR Senior Analyst Alex Demeule.
“These vendors, I think, are in a position to sort of navigate that complexity on behalf of buyers and being an intelligence broker that’s capable of stitching together what is increasingly becoming a really broad market and being able to sort of cut through that noise and be able to be the ones that are actually figuring out how we take this large language model capability and turn it into the outcome,” said Demeule.
Episode highlights:
- Changes in revenue per employee and operating leverage for ServiceNow vs. Salesforce
- Weaknesses seen within the companies and across the technology space
- 2027 predictions for ServiceNow and Salesforce
This episode is now available on demand across all major streaming platforms. Listen and learn today!
ServiceNow vs. Salesforce Showdown: AI Adoption
TBR Talks Host Patrick Heffernan: Welcome to TBR Talks: Decoding Strategies and Ecosystems of the Globe’s Top Tech Firms. Where we talk business model disruption in the broad technology ecosystem from management consultancies to systems integrators, hyperscalers to independent software vendors, telecom operators to network and infrastructure vendors, and chip manufacturers to value-added resellers. We’ll be answering some of the key intelligence questions we’ve heard from executives and business unit leaders among the leading professional IT services and telecom vendors.
I’m Patrick Heffernan, Principal Analyst. And today we’ve got the first episode of TBR’s Vendor Showdown series, where we take our newest AI research portfolio and apply it through the lens of competitive intelligence. Today we’ll be looking at ServiceNow versus Salesforce with Catie Merrill and Alex Demeule, both Senior Analysts for TBR’s Cloud and Software Practice.
How the Showdown works
Welcome to the TBR Showdown Series, where our analysts take on the role of the head of strategy of one of the companies that they cover. And they’re going to use TBR’s research to make a CI case for why their particular company, in this case, has the best or the better right to play in the market.
And so, I’m joined by Catie Merrill and Alex Demeule, and we’re going to talk about ServiceNow and Salesforce. So that’s the Showdown. That’s the head-to-head ServiceNow versus Salesforce. So, what I’m going to ask in round one is that they each make their case for why ServiceNow and why Salesforce have a better right to play in this space. And then in the second round, we’ll ask for a weakness. They can talk about the company they cover; they can talk about the space overall; they can talk about whatever they want in the weakness. And then in the third round, I’ll ask them to make a prediction about their company heading into 2027. All, of course, within the context of what AI is doing, both within their company and within the broader space, the disruption that adoption of AI is causing these companies and causing all of their clients and their ecosystem partners. And then at the end, we’re going to declare a winner.
Round 1: Making the case for ServiceNow and for Salesforce
So, with that, round one, Catie, why don’t we start with you? Let’s make the case for ServiceNow.
Catie Merrill, TBR Senior Analyst: Sure. So, I think looking in the context of our AI disruption research where we’re looking at HIRI, which is the Human Intensity Reduction Index and changes over revenue per employee and operating leverage. So, we do have ServiceNow ahead of Salesforce in our HIRI metric. They’re still trailing below their peer group, but that’s largely a function of operational maturity if you look at some of the big names that they’re stacked against. But then bigger picture in our AI business model matrix, that’s where we’re looking at a couple different things. So, disruptions in commercial model, partner model, sales operations model, and R&D, which is interesting because we’re not just looking at how AI is impacting the cost structure per se, but how it’s impacting their ability to innovate faster and get to market faster. So, looking at those four areas and then positioning them where they’re placed currently in the AI space and where they’ll be in the future based on our own conversations with customers and our own research.
So currently within that matrix, we have ServiceNow leading its peer group and slightly above Salesforce just for the current position. And we can talk about the future, but that’s really, again, several factors are feeding that, but I think simply if you just look at their growth profile, they’re growing much faster than their peer group, at least organically, 20 percent plus subscription revenue growth. And then we also look at the role the platform plays in their ability to expand in these new markets. And that’s always been an advantage for ServiceNow, but in the AI era, I think specifically, it’s really allowing them to expand heavily and capture growth in these new areas. So, it’s both vertically in the stack, so not areas that influence AI per se, but areas that enable AI, which are really the bottlenecks that we continue to see. So, that’s security, observability, AI governance. And then it’s also letting them expand horizontally as well into these different business functions. And I think the hot topic one is, of course, CRM and ServiceNow has big ambitions to expand in CRM as well. And that has implications for a company like Salesforce.
Patrick: Excellent. All right, Alex, you’ve got to make the case for Salesforce.
Alex Demeule, TBR Senior Analyst: Yeah, absolutely. And I think that these two names right now are it’s just a really interesting dichotomy to cover because historically these wouldn’t be names that we would be sort of juxtaposing as competitors and when we’ve seen this AI era, this massive pivot from two vendors that predate this AI era and how they’re both trying to come from their historical domains into what is now becoming a more similar opportunity for them, that being sort of this layer on top between the application layer and the model layer that can be that agentic execution and agentic management. And I think that the thing that has always come back to me with Salesforce and how they’re positioned ahead of this opportunity, is just that I feel that the strategy that they- the strategic pivot that they really took towards the end of the 2010s, we’ll say, back when they’re acquiring MuleSoft and then Slack, they’ve really been able to bring together a really strong portfolio of still somewhat disjointed apps. And I think that’s something that I could talk about during this weakness segment. But they really capture and hit a lot of the parts of that AI value chain in a way that I don’t think that ServiceNow is necessarily able to match, at least today.
So again, Slack being this sort of digital HQ, and that was something that Marc Benioff was calling it back when they were acquiring Slack. Slack as a conversational interface is one, an established interface that has a robust install base. And two, as we’ve seen AI come into the fold, Slackbot was one of the first parts of Salesforce’s AI product story that really hit its stride in seeing sort of rapid adoption. And part of that can be down to sort of how they’re pricing these and sort of offering limited capabilities within free tiers and stuff like that. But a lot of the feedback that we’ve kind of seen out in the market has been relatively positive for Slackbot, especially when we compare it to some of the other still emerging platforms that Salesforce has. So, I think that what they’ve been able to do with this UI that is becoming a bigger part of that AI value chain, it does set the stage for being able to capture that control interface. And I think that the downstream opportunities from that are where it flows next.
And the other side of this kind of gets into more recent acquisitions with Informatica. And when I talk about sort of this broader portfolio that Salesforce has been able to put together, Informatica was kind of that sort of closing deal that brought it all together and bringing in that data management piece. You know, both Salesforce and ServiceNow are marketing themselves on the context that they’re able to bring to AI. And so, the ability to bring context isn’t necessarily a differentiator, but where that data is stored and how close that is stored to the agentic execution layer, that does matter. And with Informatica, Salesforce gained a mature offering that already had its own mature install base. And it’s an install base that captures both Salesforce data and non-Salesforce data. And so that ability to come to market with a UI in Slack that’s integrated across different application vendors and can be used for managing agentic tasks and then being able to bring in data across Salesforce and non-Salesforce estates, it really does give Salesforce a really well-rounded platform position from which to get into more of the reasoning engine and the more Agentforce related tools that are really what they’re after long-term. And this starts to get to be a bit more speculative because I think that in both Salesforce and ServiceNow’s case, the financial metrics and the reporting, it’s still a small amount of their overall revenue. And we’re still dealing with a case where these are emerging platforms. And so, a lot of it right now is coming down to figuring out, I guess, as you put it, the right to play and who has put the pieces together in the right way to go after these opportunities.
Patrick: Excellent. So, as we wrap round one, what I’m hearing is we’ve got the leader in terms of TBR’s metrics, looking at AI disruption and where it’s heading and the leader in terms of growth. And we’ve got on the other side, we’ve got a company that’s been acquiring like crazy to build up this very broad platform.
Round 2: Looking at weaknesses
Round two. Alex, this time we’ll start with you. Give us a weakness that you see, and you kind of hinted at it already with Salesforce, or a weakness across the technology space entirely. Something that will have an effect on what Salesforce is able to do.
Alex: Yeah, Salesforce’s challenge in Informatica, I think, was a response and an acknowledgement of this challenge. So, Salesforce, obviously, they’ve been an acquirer for a very long time at this point. And a big criticism has always been, the disjointed nature of this increasingly broad portfolio of solutions and trying to create a through line and bring that into a cohesive platform portfolio is something that has plagued the company for a long period. I think that Informatica, it starts to get into sort of that data governance and trying to overcome a lot of those challenges and bring into structuring data under similar formatting, creating that sort of unified data pipeline across these different application suites and being able to-
Patrick: Let me stop you there before you go too far on how great Informatica is at solving that problem. Let me frame it a different way. So, when thinking about this and looking at our research on Salesforce, the breadth of capabilities that you talked about with all the different acquisitions, Slack and Informatica and the rest, leads to complexity, which means longer deployment engagements, which makes it cost more and potentially delays consumption. So how does, in addition to Informatica, how does Salesforce, or more importantly, is it just too complex for its own good? Let’s put it that way.
Alex: I think it is complex. I think that this is sort of the trade-off of complexity rising alongside breadth. And so, Salesforce’s strength does create that weakness. I think that it’s a weakness and an issue that is not a- ultimately, I think when it comes to AI, I don’t think that it’s a Salesforce specific issue. You know, like this summer we’ve seen the talk around Forward Deployed Engineering. And I think that ultimately is a response to, you know, and again, I don’t want to overstate the role of a Forward Deployed Engineer, but I think that what we’ve seen in sort of hearing from vendors is that this understanding that AI capability has come a long way in the past two years, but that’s not necessarily translating into outcomes at the end user all the time. And so that comes down to the complexity issue and AI kind of forcing this ahead and forcing all vendors to confront how do you take this technology that touches on a bunch of different parts of the stack and how do you deliver it in a way that delivers reliable value generative outcomes every single time. And so maybe it’s a non-answer, but Salesforce and everyone, Salesforce is focusing on bringing in more Forward Deployed Engineering. It was their hottest role of 2025. It’s an area where we look at the ecosystem where they’re expanding very broadly in terms of how they’re trying to get services participants on board and bringing that all together to sort of bring in field learning to be able to improve the way that they deliver this complex portfolio. So, I think that it is a weakness for Salesforce, but I don’t think that that’s a weakness that is specific to them. And I think that it’s something that a lot of vendors are dealing with right now.
Patrick: All right, fair enough. I’ll buy that. And now, Catie, ServiceNow, give us either a weakness or maybe play on the idea that there’s weaknesses across or challenges across the entire space that ServiceNow has to deal with.
Catie: Sure. So, I’ll start ServiceNow specific. So, it’s actually also the strength that I said before, which was the platform that lets them expand into all these areas. And they can capture a lot of growth in a lot of different ways. But I also think it’s diminishing their ability to be this neutral layer within the stack. They’ve historically done that very well. And I don’t think we’re seeing that. I don’t think they can sustain that as much as they used to. So, I think there’s areas in the stack where they could be partnering better from a technology perspective, but it’s not just about who you integrate with and from an engineering perspective, but from a go-to-market perspective. So, it’s kind of this trade-off between how much do they really want to control and how much do they want to let partners take over. And I think it begs this broader question with ServiceNow, the platform has been so key to their success historically, but is there this future where they kind of get absorbed into the application layer. And so, I think ServiceNow needs to decide, right? Do we really want to compete at the platform? Where are we competing at the platform? And where are we competing at the application? So, I think I would say that’s something they still need to figure out and become more definitive on strategically.
More specifically for a weakness and a challenge. So, Alex hit it on the head. I think with data governance, I think we can all agree Informatica was a big strategic win for Salesforce. I think as we head into the last quarter of 2026, context is the center of every vendor message. Every vendor wants to be the context engine or the system of context, whatever you want to call it. And Salesforce certainly enables that with Data 360, but ServiceNow does as well to a very similar extent with Workflow Data Fabric. So, in my opinion, a stronger message for Salesforce is not about context, it’s about trust and putting trust in the data that feeds that context. And that’s where Informatica comes into play. And they’re a master in their craft. I think a challenge too though is there’s still a large legacy component with Informatica. So, there’s still a lot of MDM modernization work that needs to happen. And it’s all going to come down to execution. I think it fills a big piece of the portfolio, like Alex mentioned. But whether Salesforce can really sell it with the rest of the portfolio is still a big question, right? So, there’s still- that execution still needs to happen.
Patrick: Yeah, you anticipated my question about sort of ServiceNow having that workforce and governance platform just kind of like everybody else. So how does it maintain any pricing power because it’s just like everybody else? And how does it attract its ecosystems, partners best opportunities, not just the opportunity to partner, but the opportunity to partner where it’s going to be most beneficial to both parties.
Catie: Right. And I think that’s something we’re looking, we’ll be looking at that for ServiceNow and whether they can execute in 2027, because we’re not just looking if they can cross-sell and upsell more SKUs, but whether they can drive usage on the platform and attract partners not just implementing ServiceNow Now Assist, but are they building on the platform and using the platform to drive managed services opportunities? I think that’s what we’ll be looking for within the partner ecosystem. And can ServiceNow and Salesforce, right, as they both implement similar strategies at the platform layer, can they make it compelling enough for partners to do that?
Round 3: Predictions for ServiceNow and Salesforce in 2027
Patrick: Excellent. All right, round three. Now we’ll start with Catie again. You hinted at it already. You mentioned 2027 and what you expect. So just give us a couple of ideas, a couple of predictions for where ServiceNow is going to be in 2027.
Catie: Sure. So, I think we will continue to see their HIRI metric rise. Their growth profile looks very strong, especially with these new pricing and packaging changes. We may continue to see some tuck-in acquisitions in certain areas. I think data and analytics, the pressure is going to be on for them to expand in that area. But they also need to do it in a way where it’s not this kind of building block approach that we talked about earlier with Salesforce. And they’re making sure it’s really integrated into the platform layer in a way where they can expand appropriately across the stack. And so, I think we’ll see HIRI rise too as they’ve been pretty clear that they’ll start the new year with the pre-acquisition headcount. So, I expect a pretty steady rise in HIRI. And again, I think the thing we’re just looking for is if they’ve been, I think both companies have been messaging to the market for several months now about these agentic use cases and driving consumption on the platform, but I don’t think we’ve really seen that from either one, you know, meaningfully anyway. So, I think that’s what we’ll be looking for in 2027.
Patrick: Excellent. Alex.
Alex: Yeah. And yeah, I think that on the Salesforce side, there’s already been- it’s still a small base as far as we talk about agentic driven revenue, but I think that some of the metrics that they’ve shared in the last earnings call, especially around what existing customers, like customers who started using Agentforce early on in the adoption cycle, how their usage has trended, doubling. That’s been a very positive metric. And so, I think a lot of what they’ve been able to share around how existing customers are doing with the platform has been very positive. And I think that sort of points towards a new logo and existing logo growth trajectory. And so that’s more of a sustainable growth trajectory. And so, I think that some of the growth rates that we’ve seen from Agentforce, which have obviously been high given the small base, I don’t see those tapering off anytime soon.
One of the things that I think extend across a lot of these players that are sort of targeting the agentic execution layer is how they’re partnering with model labs. One of the things that I think Salesforce has been a front leader in is being really aggressive into opening up integrations. You know Claudforce, that was a really big announcement coming into their 2Q26 earnings call. And that kind of points towards a world where we see more and more doors open between these software incumbents and these new model labs that are rising pretty dramatically.
I think that we’ll also see a lot of movement in terms of growing model diversity. So, one of the things that I’ve been talking about for a long time now, and maybe it’s a wrong take that I should be reconsidering, but just the role of smaller language models and open weight models and how these vendors that are going after the execution layer can be an intelligence broker. Like how do we solve the cost curve in AI? And I think a big part of that is going to be coming from coming to customers with the best model for the job at the best price. And I think that when you’re talking about ServiceNow and Salesforce and their position in front of these large install bases and the opportunity that they’re going after, being a vendor that can expand those options and have domain-specific models that are tuned to the tasks that they’re serving, that’s going to continue to be something that they’re targeting and expanding while they grow new ties with the model labs and the larger leaders now.
Patrick: Excellent. And you brought in Claude, you brought in the model to the small language models, which I’m a huge fan of, so all right.
Determining the Showdown winner
And now we get to declare the winner of this Showdown, this company Showdown. And I think I’m going to try and say this a way that doesn’t sound as maybe direct and painful as I’m hoping it will be. Look, in the short term, I think Salesforce, it’s hard to argue with a strategy that is acquire stuff that makes you better and grow faster and expand your breadth and complexity. And yeah sure, complexity might slow things down, but it also brings you more revenue eventually. And just that they’ve jumped on the Forward Deployed Engineers model, as Catie pointed out, they’ve got context with Informatica. I think in the short term, it’s hard to argue against Salesforce. But in the long term, I always come back to liking a company that does what it does well and sticks to what it does well. And if you’re ServiceNow, as Catie, sorry, but as kind of boring as they sound right now, but they’re still executing well enough to be leading across the metrics that we have. So, I got to say long term, my bet will be on ServiceNow. Any complaints about the ruling?
Alex: That’s interesting. Because when we were talking about this, we were the opposite.
Patrick: I wouldn’t be surprised.
Alex: So, like, both companies, I think, have a lot in their corner. You know, when we talk about the right to play, I think that they both have the right to play in this new world. We talk about what’s going on, like obviously what happened in equity markets with the SaaS-pocalypse back in 2025 through the beginning of 2026. You know, obviously so much of the opportunity is moving to the model layer, but we talk about complexity and complexity brings in more money. These vendors, I think, are in a position to sort of navigate that complexity on behalf of buyers and being an intelligence broker that’s capable to stitch together what is increasingly becoming a really broad market and being able to sort of cut through that noise and be able to be the ones that are actually figuring out how we take this large language model capability and turn it into the outcome. And obviously, they’re not even alone in that. The Forward Deployed Engineering model kind of takes that an extra step forward.
Patrick: Right.
Alex: And one of the things that I always come back to with ServiceNow is just their proximity to the IT service department.
Patrick: Yeah. The people that actually live with the decisions that are made about IT budgets, that are made about AI,
Alex: Right.
Patrick: The people that have to implement the AI-enabled solutions that somebody higher up in the chain decided they had to have, the people that have to actually manage the sort of rogue AI or the bring your own AI that’s happening across enterprises, ServiceNow is a lot closer to them, which to me, long-term is the better play. But Catie, do you think short-term ServiceNow is a good play as well?
Catie: Yeah, I think right now, if you ask the winner, we have ServiceNow very marginally above Salesforce.
Patrick: Yeah.
Catie: And long-term, I think we have in our matrix, we have Salesforce slightly ahead of ServiceNow. I think I think we’ll be looking at culture and their ability to kind of stay focused in a certain area. I think that’s one thing. Yes, Salesforce is acquiring and putting different pieces together, but they’re very good at what they do. They’re focused on, they are a system of record, but they’re putting the data underneath it. ServiceNow, I think, and I think with the messaging, we see so much around AI governance and for sure, but we don’t hear about data governance and data governance is still the key enabler to AI governance. I think we have to figure out the AI models have proven they’re incredibly capable, but how do we turn that capability into something that can scale at enterprise levels and do so in a secure and trusted way? So, I think, yeah, it just comes down to focus and again, deciding where they want to play. Do they want to be the platform? Do they want to be the application? I think that’s kind of, that focus is something I think we’re going to be looking for from ServiceNow.
Final thoughts
Patrick: Excellent. Well, thank you both very much for participating in this head-to-head clash. I think it’s actually kind of perfectly fitting for my role here at TBR that the two analysts come in, have this head-to-head discussion, and then immediately disagree with my judgment at the end of it. So that’s beautiful. Thank you both very much.
Next week, we’ll be talking about TCS versus HCLTech with Kevin Collupy and Kelly Lesiczka.
Don’t forget to send us your key intelligence questions on business strategy, ecosystems, and management consulting through the form in the show notes below. Visit tbri.com to learn how we help tech companies, large and small, answer these questions with the research, data, and analysis that my guests bring to this conversation every week.
Once again, I’m your host, Patrick Heffernan, Principal Analyst at TBR. Thanks for joining us and see you next week.
Technology Business Research, Inc.
Technology Business Research, Inc.