ServiceNow’s AI spending spree: Providers must rethink their approach for 2020 and beyond

The plaque on Bill McDermott’s new ServiceNow office is barely up, but his team hasn’t wasted any time opening the war–chest and going on a spending spree. ServiceNow has announced two acquisitions in as many days—the AIOps firm Loom Systems and conversational artificial intelligence–startup Passage AI. While McDermott’s predecessor would have kicked off many of this year’s deals, all signs point to 2020 being the year of artificial intelligence (AI) for the workflow management giant. For the service provider community that HFS tracks, this is both good news and bad news— they’ll need to make sure their ServiceNow services practice roadmap readily aligns with the mothership. 

2020 is the year of AI for ServiceNow, which means intelligent-automation-focused partners must find value to deliver elsewhere 

To an extent, the good news for providers is that ServiceNow has historically taken its time with acquisitions. The acquisition of Enterprise Mobility Management firm SkyGiraffe in 2017 is an example of the gradual and focused nature in which ServiceNow goes about integrating acquisitions—in this instance, a careful reengineering of SkyGiraffe’s core technology to embed within the ServiceNow platform. For the huge community of services firms reliant on ServiceNow for business, this honeymoon period is likely to be welcome. The company has only just gotten over the rapid departure of CEO John Donahue, and we anticipate a significant push from McDermott on big deals to help the firm reach its ambitions of joining the $10 billion club.  

Shortly after the announcement of the change in leadership, the head of a major services practice told us they were unsure what the future held, and McDermott’s track record with SAP filled them with the optimism he’s been known for engendering in his team and partners. An element of concern lingers, however, largely focused on the uncertainty changes in leadership have traditionally brought to ServiceNow—in particular, the relative importance the new leadership places on partners and products. 

In a similar vein, it’s not clear how these acquisitions will impact the provider ecosystem, particularly those that have relied on their intelligent automation prowess to add value to engagements and lure in clients. HCL’s DryIce, for example, is often a highly valued addition to ServiceNow engagements undertaken with the provider, which may be less compelling once AI technologies are embedded in the core. IBM Watson and the raft of other intelligent automation solutions providers bring to boost the value and revenue generated from ServiceNow engagements are all, to varying extents, under threat as ServiceNow continues to embed these as core capabilities in its toolset. 

Loom Systems, for example, adds to the arsenal an AIOps-powered log analytics solution capable of preventing IT incidents before they impact customers. An AIOps-powered log is a capability many providers lean on to build on engagements through predictive analytics and proactive incident resolution. Passage AI provides ServiceNow with the capability to engineer chatbots in multiple languages, and it also includes automation capabilities that ServiceNow can embed in its platform to create “a conversational interface to submit tickets, handle queries, and take direct action through APIs.” Many of the leading providers in the space champion a similar solution. 

ServiceNow’s commitment to innovation has, to some extent, been a double-edged sword for the provider community. The clear product roadmap and commitment to innovation have helped the firm become the platform of choice for many major enterprises. It also means providers have their work cut out for them if they’re to continue adding value to engagements. It also calls for continuous investment in training and talent for providers—who are increasingly doing battle in a punishing talent war. 

Talent and upskilling partnerships must remain high on ServiceNow’s agenda 

Challenging the core value proposition of their partner community isn’t the only issue with these tech-heavy acquisitions. If the ecosystem is to develop alongside ServiceNow and continue to nurture and provide the professional services, design, and development capabilities clients rely on, then the mothership must invest as much of its time and resources on upskilling talent and partnerships.  

ServiceNow does have a strong track record of embedding new digital technologies into its platforms, making their utilization by clients and partners alike relatively easy. But the game for the leading partner ecosystem is very different; many thrive on complex client environments that need them to think outside of the boxed solutions. Which means providers will now need to bolster their AI and machine language (ML) teams internally to take on a modernized toolset from ServiceNow. Ensuring its partner ecosystem is well furnished with impactful certifications and training will be a vital part of that process. 

The Bottom Line: On ServiceNow’s march to dominate the workflow market, providers must make sure they stand to benefit from its commitment to innovation rather than fall by the wayside as more capability is built into the core platform 

Ultimately, the two recent acquisitions spell an interesting period for the firm and its partners. ServiceNow continues to invest heavily in its platform, an approach that has seen the firm dominate markets and move well outside of traditional service management engagements. Building AI capabilities in the form of integrated conversational chatbots and proactive incident resolution is a natural step for the firm, but ServiceNow must remember to extend its recent spending spree to upskilling talent and partners.