ServiceNow Rethinks What it Means to be a CRM
ServiceNow has long been a top player for back office automation and in particular IT, HR, Finance, Ops and Service. Since 2005 when they launched their flagship product, ITSM (IT Service Management), ServiceNow set their foundation as a leader in back office operations. In fact today, they hold over 45% of the ITSM market share, with more than 8K customers, including 85% of the Fortune 500.
So why is ServiceNow taking on the CRM space?
In early 2024, ServiceNow began talking about themselves as a CRM company, or more specifically a CRM alternative. At this year’s annual ServiceNow Knowledge conference, CEO Bill McDermott doubled down on this message in his keynote declaring that CRM was broken, and that ServiceNow was the solution.
Many saw this announcement as a direct hit on Salesforce and HubSpot, two of the top contenders in the B2B CRM space. With so much street cred in the Service Management space why venture into well tried CRM ground?
The ServiceNow Opportunity in ITSM, CRM, and Beyond
I think ServiceNow is smartly approaching the holistic customer journey. Focusing on end-to-end workflow automation and connected digital experiences across the entire enterprise, they are up-leveling their messaging to highlight that back office activities and behind the scenes services do play a critical role in the management of customer relationships.
Our definition of Customer Service Management (CRM) is broken and ServiceNow has rightfully jumped on this. Customer relationship management (the actual definition of CRM) should encompass more than just a data base for prospects and customers in the sales /renewal cycle. Every marketing touch point, support call and invoice is a part of relationship management. Each of these touch points play a role in the acquisition and retention of customers, yet few companies are making this connection.
ServiceNow does have what I see as a strong advantage over Salesforce on this connected digital journey and automation story. ServiceNow is a single platform with modules or specific products for each use case that were built to communicate and work together. The majority of Salesforce portfolio growth, on the other hand, has stemmed from acquisitions:
- Tableau = Analytics Cloud
- Demandware = Commerce Cloud
- Pardot = Marketing Cloud Account Engagement
- ClickSoftware = Field Service (part of Service Cloud)
- Exact Target = Marketing Cloud
Most Salesforce customers will admit that since these clouds are not built on the Salesforce platform, the communication and integration between all of them can be clunky. Inherently the single platform view of ServiceNow helps remove silos. Communication flows more freely between teams that may live and breathe in different areas of the ServiceNow platform based on their departmental use cases.
On top of the single platform advantage of ServiceNow, the company has announced a handful of enhancements that help position them as “an AI-first alternative to legacy systems”. Enhancements to ServiceNow’s CSM (Customer Service Management) and FSM (Field Service Management) products are supposed to include more sales-related workflows but will it replace pipeline management, reporting and campaign monitoring like Salesforce or Hubspot? I’m not convinced.
But are they challenging the notion of what is a CRM? Definitely.
The Role of AI in ServiceNow’s Strategy
Agents and AI-based enhancements are part of every modern platform’s approach to simplifying workflows, increasing efficiency and streamlining customer communication. At this point, AI needs to be woven into every story of technical enhancements, especially if we’re talking about connected experiences. I would say the unified platform approach gives ServiceNow an edge here. Since their inception, ServiceNow has positioned themselves as a workflow and automation company – this makes it incredibly easy to slide into the story of AI.
At the core of ServiceNow’s AI strategy is Now Assist, a suite of generative AI capabilities integrated into the Now Platform. Now Assist is designed to support various functions across the enterprise, including: conversational interactions, content creations, code and flow generation, search, voice integration and more. Since these capabilities are embedded across various ServiceNow products on their unified platform, I can only imagine the possibilities for efficiency, silo reduction and improved user experience are prime.
ServiceNow’s Stronghold in Service Management
As a marketer, I love a rebrand, but all in all I think ServiceNow replacing established CRMs is overstated at the moment. I do think this new positioning strengthens their hold on the Service use case vs. Salesforce Service Cloud. Still, this doesn’t overshadow what Hubspot and Salesforce are doing on the pre-sales aspect of CRM.
What I appreciate about this messaging shift for ServiceNow is their expansion of the definition of customer relationship management. Marketing and Sales are just the beginning of a customer relationship. It doesn’t end or get easier when the contract is signe – it only involves more people. Those that support post-sales aren’t usually in a classic CRM (finance, IT, support).
The post-sales experience, retention and happy customers is where ServiceNow is doubling down on their messaging. This should be taken seriously by legacy CRM companies. Customer relationship management should include the post-sale experience vs. focusing solely on prospect relationship management. This approaches pushes businesses to think critically about Customer Lifetime Value, not just the value of new contracts.
ServiceNow’s Focus on Partners and Broader Audiences
ServiceNow’s strategy is not all about just a new messaging direction. The company is putting more investment into the ServiceNow Store (their cloud marketplace) and partnership programs, which have been a strong point for Salesforce and Hubspot ISVs.
The ServiceNow Store, the marketplace where ServiceNow customers can buy ancillary apps, has received a glow-up in the past year. With the addition of a number of ex-Salesforce hires, ServiceNow has put more time, energy and focus into their partner program to entice ISVs to list and co-sell alongside ServiceNow. While still not transactable like hyperscalers marketplace such as AWS and Azure, ServiceNow is pouring more into their partner programs at a time when ISVs in the Salesforce ecosystem and Salesforce themselves are diversifying onto hyperscaler marketplaces.
Today, customers can purchase Salesforce solutions and seats on AWS. This allows those with cloud consumption credits to use those for Salesforce purchases via the AWS Marketplace.
Similarly, ServiceNow has also jumped in offering a number of ways to engage with ServiceNow through AWS, Azure and Google cloud marketplaces. These partnerships enable ServiceNow to deploy its platform in a preferred cloud environment and take advantage of committed spend.
Why would these large platforms with their own marketplaces care about engaging with cloud partners? The answer aligns with why so many companies in general are gravitating towards cloud marketplaces.
- Larger audiences
- Easier procurement
- Bigger deals that close faster
- Build in compliance and security
The Bottom Line
ServiceNow is not replacing your CRM today in terms of how you track pre-sales activities. The company is, however, challenging the definitions and expectations on what a CRM can and should be. Competition is good for the consumer. I’m looking forward to seeing how ServiceNow’s shift ripples through the legacy CRM landscape.
