Servicing IT: ServiceNow CEO Fred Luddy (Part 5)

SM: I talk with a lot of CIOs. They tell me that 25% of their architecture is cloud computing. How does the role of the service desk evolve in that scenario?

FL: As these customers start to move more and different apps into the cloud, they still have to manage those applications and the vendors. 

SM: How do you handle that process?

FL: It’s about managing the cloud from the cloud. If people decide that they are going to put a bunch of their development and testing infrastructure into Amazon EC2, then they use software like ours to manage the deployment and retirement their EC2 instances. It goes hand in glove. There are still management challenges from an incident, problem, and change perspective. There are still issues with outages and configuration changes. Our software fits in great with that.

SM: If I’m using a CRM solution and it goes down, then as a IT shop I have no control over that. If it is a vendor-side problem, how does your software help me?

FL: You would have users of the CRM system who are going to call your central IT help desk. Those people are going to turn around and talk to your vendor to find out what the issue is. They would manage it in conjunction with the SaaS-based vendor. Once the service is resurrected, they would want to do problem management with that vendor. It requires the same amount of managed work. The difference is that the people doing the work tend to be at a different organization.

SM: Can you talk about your competitive landscape? What was it like when you started, and how has it evolved over the past two years?

FL: When we started our competition was either home-grown databases such as Excel and Access or SMB solutions such as TrackIt, which was sold by Intuit. Today our competition is primarily BMC, Hewlett-Packard, Computer Associates, and IBM. In all of those cases their products are very old technologies. We call them Soviet-era technologies. They were built in the 1980s or early 1990s, and they look like Soviet-era technology. They have the feel of a Soviet military airplane. It’s unappealing to anyone who uses Facebook at night. These people come back to work and wonder why they have to deal with that.

We are competing with established corporations that have significant relationships with their customers. We are showing our prospects and customers something that we think is several orders of magnitude different from what our competition is selling, and our competition has reacted. I think of the quote from [Mahatma] Gandhi that says “first they ignore you, then they laugh at you, then you fight them, and then you win.”Our competition first ignored us, and they laughed at us, saying that we were just a cute little thing for small companies. Then they started to find out that we were taking a lot of their customers, and so they started fighting.

When they adjusted, they did the things we wanted them to do the most. They took their client/server products and hosted them at a data center so that they could call it a Software as a Service solution. It was nothing more than a client/server ASP solution. Prospects see through that instantly.

We think it is wonderful because our competition has validated our market approach. If you look at our competition and our revenue, our revenue is probably equal to the daily pretax revenue of the Hewlett-Packard Corporation. We are clearly buzzing around their ears. Nonetheless, I think these companies have taken notice of us, which is good for the marketplace in general. We have introduced a new way of doing things that has broken up the oligopoly.

This segment is part 5 in the series : Servicing IT: ServiceNow CEO Fred Luddy
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