Servicing IT: ServiceNow CEO Fred Luddy (Part 2)

SM: What were you doing at Peregrine?

FL: I was the chief technology officer from 1990 until the end of 2003. We built software for the help desk and service desk market. The company grew from $4.5 million a year to $500 million a year. We acquired a lot of companies before Peregrine Corporation had to declare bankruptcy due to accounting irregularities. That was another wake-up call in my career. It happened after I had been working there for 13 years.

In 2003 I saw a phenomenal opportunity to build software that was totally different from what I had done before. It was different in the way I could deliver and charge for it. I started ServiceNow in October of 2003, and I built the initial software myself. We started selling a product over the Internet in early 2005.

SM: Can you explain what your goal was for ServiceNow?

FL: I would like to tell you I had a brilliant business plan which I executed perfectly, but nothing could be further from the truth. I just knew that the Internet delivery of applications was very simple to use and was going to be a huge wave. Salesforce.com was becoming very popular, and things like myYahoo! and iGoogle were starting to appear.

Internet deployments were obviously a wonderful way to do business and a great enabler for a significantly larger group of people than client server software had been. When I started ServiceNow.com I had no idea what area we would attack. I clearly wanted to do something involving forms-based workflows. It turns out the whole service desk area was a wide-open opportunity for us given our Internet posture and delivery model.

SM: How do you define the service desk? Are you talking about the help desk?

FL: Most large corporations will refer to it as a service desk or IT service management.

SM: In that context, what software did you provide? What part of that service were you addressing?

FL: There are a set of practices called Information Technology Infrastructure Library (ITIL) which have four disciplines: incident, problem, change, and configuration management. Incident means something is broken and needs to be fixed immediately. Let’s say your laptop won’t boot up. The problem is, why did the laptop break? A change is how you fix the particular piece of technology so that the incident does not ever happen again. Those are the core disciplines of how most large IT organizations approach problems in this day and age.

SM: Your customer is not a help desk then, it’s an internal IT help desk. Is that correct?

FL: Correct. It is not a customer service help desk for washing machines or anything like that. It’s definitely for internal IT.

SM: You decided to build a software and deliver it over the Internet in 2003. How long did it take you to put something together that you could start selling?

FL: I had 12 customers during production, which was in the beginning of 2005. It took us 18 months and I had no employees. I had one $800 computer, worked out of a Teleco closet, and had a borrowed IP address.

This segment is part 2 in the series : Servicing IT: ServiceNow CEO Fred Luddy
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