Scaling Global Organizations in the Age of AI with ServiceNow Chairman and CEO Bill McDermott

00:00:00The cost to replace an enterpriseplatform in this SAS apocalypse thatpeople talk about is an extraordinaryexpense. Let's take that cost, and thenlet's take the cost associated [music]with the human capital doing thatinstead of something else cuz the[music] platform was doing the work foryou. And then let's add up the cost ofthe GPU factory and the [music] tokensthat will materially affect theirbusiness model. And so for a simpleapplication on our platform, it would be10 times greater in cost to try toreplicate it with a language model.People that run businesses understandthat people [music] make mistakes. Theynever will forgive software for making amistake.

00:00:50>> Hi listeners, welcome back to No Priors.Today I'm here with Bill McDermott, CEOof ServiceNow, and the closest thing wehave to a rockstar in enterprisetechnology. [music] We talk aboutleadership in the age of AI, whatenterprise customers actually want, thedifference between SAS platforms and theSAS apocalypse theory, and the next 10years of ServiceNow. Welcome. Thank youso much for being here.>> Thank you for having me, Saara. Thankyou.>> So um I want to talk about your careerand leadership and what's going on withServiceNow, but I want to start at thebeginning. Um I read Winner Stream lastweek.Uh and you It's an amazing book. Youtalk about the deli you bought when youwere 16.Uh first of all, that's a very strangething to do. Umbut it is such an amazing story. Can youtell me a little bit first about yourthought process, and then we can talkabout how you managed it?>> Yeah, I don't um I don't deserve toomuch credit for umyou know, doing a strange thing buyingthe deli cuz I was really trading inmultiple part-time jobs. Mhm.Uh at the time I was stocking shelves,pumping gas, and bussing tables.and so I had a chance to consolidate allof that into the delicatessen and haveone job where I could spend all

00:02:06of myhours and for a kid going to high schoolthat kind of made a little bit moresense. So I got lucky.I bought the business for 5,500 notes,7,000 with interest. If I make thepayments, I keep it. If I miss apayment, they take everything away fromme. So it was a pretty cut and drymoment. And I think the the biggestthing that I've learned in my life andespecially thereis it's all about the customer. In theend, the customer and the customer alonedetermines whether you win or lose andit's a very simple equation. If you keepthem coming back, you got a good chanceand if you don't, you lose and you know,back then one of the most interestingparts about that store was knowing yourcustomer and knowing your base and Ireally had, you know, three maincustomers. You know, one was the bluecollar worker like my dad as I said inthe book was rich on Friday and deadbroke by Sunday morning.There were the senior citizen this andthis was the early days of DoorDash, Iguess because they never wanted to leavetheir house and we delivered and no oneelse did.And

00:03:21the hard part was getting the kidsto walk a block and a half past 7-Elevento come to my storeand these were the early days of videogamesand Asteroids and Pac-Man and you know,you tell that to people today, most ofthem never even heard of these games,but kids would stand there for hoursplucking their parents' quarters intothose games and that's how I got them towalk a block and a half past 7-Elevenand come to my store.At the end of the a long day, one of theyoung people said to me, you know, whenwe want to have good food,be treated with dignity and respect, andplay video games, we come to your store.And when we want to steal stuff, we goto 7-Eleven. So,if you take care of your customer, youknow who your customer is, and you givethem what they want just the way theywant it, no matter what business you'rein, you've got a really good chance. Andthat's all I did.And it put me through school,including college, and it got me mystart. And I have to tell you, the EQthat comes with dealing with 500customers a dayis worth a lot.And I have a feeling the world could use

00:04:36a little more EQ right now.>> I learned a great deal not managing adeli, but at least being a hostess inOutback Steakhouse.>> See? You can relate, right?>> Well, you just you know, the repeats ofdealing with a lot of different types ofpeople.>> Yeah.>> Um so,it's still like amazing and strange tome. You talk about this set of customersthat youyou know, understood and tried to serve.Like, were you just sitting there in thedeli observing them before you boughtthe thing? Like, how did you even figureout these are people?>> worked there first, you know, and whathappened was the ownerwas going through some personal divorcecircumstances and wanted out.>> Mhm.>> And I was the guy that was always thereanyway.So, he tried to sell it. It was only a1-year lease. You never owned the landor the building, so he was selling a1-year lease.The lease was owned by Sun MarkIndustries, which is Sunoco gas station.>> Mhm.>> And they could throw you out anytimethey wanted. So, only a kid who didn'tknow any better would pay anything forit. So, eventually, that's how the dealgot put together. I said, "I don't haveany money,but I'll, you know, take a note from youand pay you back with interest. If Imiss a payment, you get everything back.

00:05:52What was really interesting about thestory is I didn't have any money.Um, but what I did have because I workedthere is relationships with all thesuppliers. So, I got them to give me thefirst order on consignment. I said, Iwill always pay you back. This is not afavor. This is a chance for you to getyour shelves filled up with your stuffthat I'm going to sell for you, but inthe end, I'll always owe you that firstdelivery.>> Mhm.>> And probably they charged me too much onthe margin, but I didn't care. I was inbusiness and that's all I wanted was ashot. And that's all I've ever wanted isa shot. And I'm so honored that in mylife, I've had the shot. And when youhave a chance, you can really bring thewinner within you out. And all peopleshould ever want is an opportunitybecause an opportunity is a gift. Andit's something that you should reallycherish and every time you get one, makethe most of it.>> That resonates. I um, one of the thingsI love about being in venture is you'rein the business of giving people shots.>> Exactly.>> And uh, entrepreneurs like yourself they>> Yeah.>> especially when they get to be verysuccessful, they value it for a reallylong time.>> Well, I deeply

00:07:07admire what you do and Imean, can you imagine being the guy thatcame from the corner store that went tothe corner office and I think about yourgreat job that you do in the ventureworld and how unbelievably creative youhave to be and the benefit of seeing allthese young entrepreneurial companies.It's something I've always had a greatdeal of interest in. So, like I shouldreally be doing the interview of youright now, Sarah.>> Absolu- absolutely not. Um, when you uh,uh, okay, so it starts with starts with,you know, your your part-time jobs inthe deli and then this amazing career insales and leadership in SAP andServiceNow. Um one more piece on theleadership uh front before we go toyou know, talking about the companythat's happening in the tech landscape.So, in the book you talk aboutresilience and ambition and disciplinedexecution.>> Yeah.>> When [clears throat] did those ideascrystallize in your head as the way youwould lead? And thendo you do you think that changes todaygiven how dynamic the landscape is? Anduh I was just talking to the uh leaderof you know, tens of billions of dollarAI company. And they're like, we have toupdate our strategy every month. Like,we have no idea what's going on. Um andand so, uh how do you how do you thinkabout operating today's environment?>> I had the

00:08:22great pleasure last night ofuh meeting with uh about 800uh business people that were in townfrom Brazil.>> Mhm.>> And we were talking about leadership.And they took me back to my uh book,When is Dream. Uh a lot of them listenedto it. Um which is fun cuz I I actuallyread it uh kind of straight through inbetween business trips. And I'm glad Idid because it it had the authenticityto the book I had hoped for.Um but it was wonderful being with them.And they really wanted to talk aboutleadership. And I think leadership isthe uh the greatest profession in theworld.And in this environment we're in today,which is changing and it's dynamic likenever before. And it's fast like neverbefore. I tell them, it is fast, butit'll never move this slow again. So,this is the way it's going to be.>> That's kind of stressful.>> Yeah, it is in it it is in one way. Umbut it's inspiring in another. You know,we have to learnto get like real inspirationfrom the challenges that are in front ofus. Because if we're able to cope withthem, and especially

00:09:37if we're able toovercome them, we get superpower. But, Igo back to the original job being aleader, and you know, getting my firstbreak with getting my job at Xerox.And, you know, Xerox back then was theGoogle of its era.>> Right.>> And, it was just like such an honor.And, you know, I go back to thatoriginal interview a lot in my mind, andI think about the opportunity of gettingthat shot.And, you know, I'm getting geared upto leave Long Island. My dad drops meoff at the railroad tracks, and youknow, I'm just turned 21 years old,and I guaranteed my dad I was cominghome with my employee badge in mypocket. And, there's somethingimportant about that, because my dadsaid, "Billy, you're a good guy. Don'tput all that pressure on yourself.">> Mhm.>> And, I said, "No, no, no, I guaranteeit."And, I went into New York that day, and I was readingannual report on how that CEO, DavidKearns was his name, was reinventingthis corporation under the qualitymanagement principles given to the worldby Deming.And, at that time, as you know, most ofthe most valuable companies in the worldwere from Japan.

00:10:52Um, and they were actually selling avery high-quality productfor a lesser price than Xerox wasbuilding a lesser quality product.>> It's hard.>> Hard to do, right? And, so this isexactly the time I'm joining thecompany, but I was so inspiredby this guy who wanted to transform thatcompany that by the time I got into NewYork, I wanted to be the next DavidKearns. But, I had to go knock on colddoors for a living to get my shot.So, on my last interview,I'm so psyched up, cuz I'm meeting withthe big boss at 9 West 57th, overlookingCentral Park, andI sit on a bench next to another friendthat's in buddy todaywho's waiting for an interview.>> Mhm.>> And he's been waiting for a long time.I said, "What are you doing waiting?" Igo over to Joanne Siciliano who's areceptionist and I said, "Look, I I hadall day. I'm not going anywhere. Pleaselet Mr. Fullwood know I'm waiting and Ireally look forward to our meeting."I was instantly invited into his office.And this is the essence of it all. As Ilooked overat Central Park on the 38th floor in 9West 57, I realized then as I realizenow

00:12:08it was not an interview.It was a battle for survival.Because if I get that job, I'm incontrol of my own destiny.It's my shot.And it's up to me to do something withit.So at the end of an interview, he saidto me, "Bill, it's very interestinginterview. You're interesting young guy.The HR department's going to get intouch with you in the next couple ofweeks." And I said to him, "You know,Mr. Fullwood, I don't think youcompletely understand the situation,sir."And he looks at me with a tilted headlike, "What's this kid up to?" And Isaid, "UmI haven't broken a promise to my fatherin 21 years and I guaranteed him cominghome tonight with my employee badge inmy pocket."And he really like kind of tilts hishead now like, "What's this guy up to?"And um you know, he goes, "You know,Bill McDermott, as long as you haven'tcommitted any crimes, you're hired."Now,I hadn't committed any crimes. Ofcourse, I told him that and Idouble-checked that you really mean itand I'm hired. And he goes, "Yeah." So Igo over there and I, you know, he's kindof sitting the way you are. I pick himup, hug him a little bit, put him safelyback in his chairand I run past the receptionist Joanne

00:13:24and get down uh um 5th Avenue and headover to Sixth Avenue to a Bun and Burgeror payphone and I call up mom and dadand I say, you know, break out theKorbel. Got the job. Now, people don'toften know, especially in SiliconValley, what Korbel is.>> I'll admit I do not.>> It is [clears throat] like the cheapest,worst champagne you've ever ever had inyour life.>> Okay.>> But in Long Island, where I come from,that's Cristal. So,the point of the whole thing,25years later,Emerson Fullwood asked me to give aspeech at the Rochester Institute ofTechnology to students.And in introducing me, he said, the onlytime that he had ever broken policyat the Xerox Corporation was the day hehired me. I didn't know that.And what I found remarkable about itis that he remembered that,and he knew what he was doing when hedid it, and thought it was worth it. So,we have to put tremendous careinto people.Tremendous

00:14:39attention to detail when itcomes to, you know, uniqueness in humanbeings and what they are capable ofdoing.And without him, I wouldn't have gottenmy shot.And I never forgot that. And today, whenI have CEO meetings, he still comes tothem.And he's my friend for life. So, I thinksomehow in the mixture of thingswith AI and today's society, we'relosing a little bit of the human powerthat we all have to connect with eachother and do magical things together,and just make sure we rememberAI is to serve people>> Mhm.>> and to make the human ambition greater,not to take it away from us. And so,that's uh my feeling on, you know, justhow things have changed,but in many ways, the essence ofleadership, human connection,peopleare just more important now than ever.>> I know I said I was going to then askyou about service now, but I have to askyou a little bit more about this.>> Let's do it.>> Do you think it's possible to

00:15:54coach orto teach people that type of agency thatyou have?>> Yeah, I do. Um I think that, you know,someone asked me last night, you know,that similar question, and I said, youknow,I'm a person like a lot of other people.I was a very shy, quiet, laid-back kid,and really came into my own throughwork.>> Mhm.>> And, you know, those part-time jobs Iwas telling you about, and the desire tobe somebody in this world and know thatmy only way out, I wasn't going to makethe NBA. I loved basketball, but Iwasn't going to make the NBA.>> Yeah, me neither.>> Right. So, I said, you know, what whatcan I control?>> Mhm.>> I can control how hard I work. I couldcontroldesire to do something and make adifference. I can control that.And so, I got a lot of confidence fromwork.And, you know, other people might getconfidence from something else, andthat's fine.But, I think it's so important to beconnected to work, especially work thatties to people.>> Mhm.>> Cuz when you know how to deal withpeople,and in the deli I had 500 of them a day,you start to get a good

00:17:10feelingand a good understandingthat if you really listen,if you really careand you're really there, present and notjust going through the motionsthere's people that want to connect withthat kind of person.>> Mhm.>> And so I really do believe that you canteach that, but you do have topractitioneryou know, thoseumideas, you have to um be a part of theprocessand I think so much is done today on thethe beautiful mobile phone in your handthat it's replaced you know, the humanside of the connection. I like you, I'vegot one in each pocket and I value thembecause they make me more productive andhappier because I can do those things.Butwe really do have to train people.Um we have to make them do it.Um where they actually have to simulateand be trained and be certified andunderstand and be coached well so theyhave the confidence to get out there andbe in front of other people where theycan lead and make a difference.

00:18:25And I'mconvinced that they can do it. Yes,there are differences. Some people aremore skilled at it naturally, innately,no question but more people are capableof more things than they realize.>> That's very encouraging. Uh one thingthat also struck me as soon as I askedyou the question about like leadershipin the age of AI was your immediatereaction. I said, you know, somethingthat's a veryuh common sentiment. It's the the paceof change is scary. And your immediatereaction was like, well, it's alsoinspiring. Right? It's a very likepositive attitude umfor especially for you know, someonerunning an amazing, incredibly adorableplatform company where you're alsofacing more questions than you havepreviously.>> Sure.>> Um how do you think about like, youknow, in getting everybody at yourcompany or encouraging other people tohave that type of reaction to change?That it's all an opportunity.>> Well, for one, I agree with you that alot of people are frightened of changeto begin with. The era of AI hasdisrupted every industry, everybusiness,every person, and everybody needs toreally rethink

00:19:41everything.And it seems to be coming all at once.So, my approach to that was to lean intoit. And one of the ways we did that hereis put together a white paperon the blueprint for agentic business,which I'll happily give you a copy oftoday. Um,and train them>> Mhm.>> on, you know, what is the differencebetween a language model and anenterprise platform.Not saying better or worse, they're bothimportant. They're both extremelyimportant. And one actually makes theother stronger. But if you don't knowwhere one begins and one ends,it really is kind of confusing forpeople. And that was a big unlock.>> Mhm.>> I literally had CEOs tell me that thatwhite paper actually let them see theworld totally different. That there weremany things in it that they didn't knowor didn't realize. One such examplewould be,you know,um, let's take an example that's real.Every company today has a compensationissue. So, okay, we have acompensation issue on aisle seven in XYZCorporation.The language model will do a great jobof telling you,

00:20:57"In a compensation situation like this,please consider step one, two, andthree." Excellent. Does it inmilliseconds. Fantastic.Only problem is it doesn't actuallyclose the case.>> Mhm.>> So, now in aisle seven, we got to havethe data,the context,and we'll have to go in and out ofseveral different iterations ofdepartments cuz let's assume it's asales person in aisle seven, and oh bythe way, that's connected to the HRdepartment. And because it might be aproblem,probably finance is involved in it orlegal or compliance or risk. And now wehave data and a workflow that's gonethrough many different iterations,databases, and functions to come backand remediate the issue and close thecase.>> Mhm.>> That's what a workflow platform likeServiceNow does.And it was also important to have AIthink.Workflow acts.That's an unlock for a lot of people.>> Mhm.>> Another case example would be,hey, hey, you know, I'm a bank.I've got 15,000

00:22:12of my own engineers.My CEO's under pressure from the boardto come up with AI use cases.The board meeting's coming up in 60days,and I got to look like I got all mystory straight on what we're doing toinfuse AI. You agree that that's acommon thing, right?>> Very common. Yes.>> Very common thing.Okay.So, one thing would beAI and some of the AI um code out thereis fantastic, and it can write new codevery beautifully and set up the engineerfor success and get things done at aspeed never before done in the world.It's also truethat that net new code comes at a costbecausethe cost to replace an enterpriseplatform in this SAS poc ellipse thatpeople talk aboutis an extraordinaryexpense to try to match what some ofthese really important enterprise[clears throat] platforms do.>> Mhm.>> Cuz you'd have to rebuild it.You're getting a model. I'm going towrite code now. So, I'm rebuilding yourmodel.>> Mhm.>> Let's take that cost.And then let's take the cost

00:23:27associatedwith the human capital doing thatinstead of something else cuz theplatform was doing the work for you.And then let's add up the cost of theGPU factory, the business modelassociated with the language modelcompany, and the tokens that willmaterially affect their business model.We've actually done the math on this.>> Mhm.>> And so, for a simple application on ourplatform, it would be 10 times greaterin costto try to replicate it with a languagemodel.>> Hm.>> Now, the other thing about that is if Igive you the language model and it makesa mistake, you call me up and you say,"Hey Bill, the language model made amistake." And I say to you, "Thelanguage model works." And you say,"Yeah, it works, but it made a mistake."Well, it's probably right, but it's notdeterministic.And incidentally, it doesn't have thecontext of all the data that hasmaterialized in the company and ourrelationship for a couple of decadesnow.And so, what we're learning too ispeople that run businesses understandthat people make mistakes.They never will forgive software

00:24:42formaking a mistake.>> Hm.>> So, we're kind of in a situation whereat a very small fraction of an ITbudget, a premier platform is a bargain.And to combine that with AI and thethings that AI can do, you get the bestof both worlds. You get more innovation,better integration, and a betteroutcome. Try to build it yourself at a10x higher price, and then you have aproblem. And I just tell you that themodel works cuz I just gave you themodel.You don't have someone to call to fixthings.>> I I I think a lot of theSAS apocalypse discussionignores the basic fact that I don'tthink most businesses want to buildworkflow software for everything they dointernally.And I do think they want somebody to beresponsible for it. And I think it takesa lot of energy to go gather thatcontext today. It is not an automatedthing. And maybe it'll become moreautomated, but but that all resonatesfor me. I I will have to ask you youknow,umSo, LLMs they can in the traditionalinteraction mode, they give you ananswer when you ask a question, right?Now you have

00:25:58long horizon agents, maybeyou have computer use, people can useapplications with these models. Doesthat change your thinking at all?>> No, I think we lean into it. You know,our our perspective is these languagemodel companies are fantastic. Andthey're very important, and they'regoing to do fabulously well. Um we saidthe same thing with the hyperscalers.You know, it wasn't that long ago thatpeople were like, "Hey, you know, whywouldn't the hyperscalers just eatsoftware?" Because everything is goingto go to workload in these greathyperscaler companies, and they aregreat companies.>> Yeah.>> They're fabulous companies. And so, ourperspective was we have to bethe AI control tower for businessreinvention that integrates with all thehyperscalers,with all the language models, and allthe systems of record because they, too,are important companies and the datathat resides in them is very important.So, if we can be that fabric thatconnects all those nodes, now we canhelp you runa true agentic business. And on top ofthat, we made the move into security notbecause we're going to

00:27:13do all things insecurity,but because US is the world's largesteconomy, China's number two, andcybercrime is number three.>> Mhm.>> It's a $1 trillion a monthproblem.And so, we feel that being able tointegrate to all the good securityplatforms, but manage IT and OT, whichis the operating technology, with Armisnow becoming a part of ServiceNow,we're going to give corporations theability to have a full purview of thewhole landscape. And so, for example,in operating technology, you know, itcould be networks with devices attachedto it. It could be manufacturingwith various tools that are or aren't ona network, where AI can or may not evensee them. It could actually be medicaldevices in a healthcare situation. Um itcould be a world's prestigious bankmanaging critical infrastructure,um which includes the people, places,things, but also the building and thethings in it to have all of that in oneautomated AI platform

00:28:29for this reinvention of your business,it's pretty compelling. So,it's all there now.And I really like see such a futureand such growthin all of these businesses, our core andwhat we've extended it to because we'rea native AI company. Even the platformitself now is autonomous.And you know, you've seen what we didwith Moveworks, the agentic front doorto the enterprise, and Vezza, which ishuman and non-human identity. And nowthe security move with Armis on top ofan unbelievable core. By the way, weintegrated these businesses in 20 days.20 days. So, a lot of companiesdon't have the engineering power to saythey can do hard things quickly.>> Mhm.>> Um but you know, we're blessed with somereal talent here.>> It's very impressive. I have uh soldcompanies toyou know, large enterprise softwarevendors where it takes like a year and ahalf of rebuild to get some value out ofit.>> Totally.>> Yeah.Um uh uh I think it's a really uh goodhistorical reminder that people forgetthat there was this fear about thehyperscalers as well, which as youmentioned, have become very important toall of our businesses.

00:29:44>> Totally.>> And yet um have not replaced the needfor, you know, workflow software andplatforms.>> Yeah, as you said, you know, actuallyare very good partners, you know, and onthe uh back of uh ServiceNow franchise,get billions in workloads into thoseclouds.>> Mhm.>> And they're all such great companies,but they all tend to do different thingssuper well. So, for the customer to havechoice is also a great idea. Just likethey'll want choice on the languagemodels.And us not staying in the way of thatand giving choice, but acting as thatcontrol toweris a huge competitive advantage ordifferentiation, which whichever yourperspective might be.>> Do you think there's any segment in umenterprise software that is at risk fromgenerated code and agents?>> I think that it's truethat there will beum companies that will be at risk. It'salso true that they theoretically shouldbe more valuable because of the data andthe context around that data.But if there was a risk, I believe it'smore departmental>> Mhm.>> companies.

00:31:00So, if you think aboutcompanies that do something that spanmultiple departments or are a serioussystem of record, that is very hard toreplicate, they're safe. And they'llthey'll be a part of the future. Ifyou're serving onefunctionand what you do is not tremendously highvalue add and it might not even be ahigh up on the priority list of a a CEO,um I think that that would be the thechance wherethe vulnerability equation really risesquickly.>> Mhm.>> Umwe're fortunate in the sense that we goend-to-end on a horizontal and north tosouth on a vertical, up and down thestack and across the enterprise. And Ithink that's a pretty huge moat. And uhright now I I believe the last time Ilooked at it was more than 85 billionworkflows are in flight as we're havingthis podcast and we got 7 trilliontransactions happening on that platform.Um and it's representing the mostimportant brands in the world. Andthat's not only something we're proudof, but it's also a seriousresponsibility

00:32:15cuz those companies can'tmiss. And that system always has to bethere for them and fortunately it is.>> You uniquely have run two companies thatare just clearly platform businesses,SAP and ServiceNow. Um and do you have adefinition in your mind of what makessomething a platform business? BecauseI grew up as an investor in the age ofSaaS.>> Yeah.>> And and you know, rise the cloud andeverything. Uh and it is it I I think itwas wonderful for innovation that youcould build likesort offeatures that turn into companies,right? Software workflows that were umsort of tangential to uh system ofrecord, for example.>> Yep.>> Umuh ServiceNow originally began with likeIT service desk as the workflow, but howdo you how do you think about like howthe positioning is?Uh and the actual work is very differentnow, and then like you know, how how yougot there.>> Yeah. I think that had we only um donewhat you rightfully point out, which hadbeen an ITuh service company as an example, thatmight have been a system of record forthe IT department. But I think when CEOslook at a corporationand they say, "What

00:33:30are the needlemovers?"Those are the companies that, since youmentioned it, too, that I work for,um you know, one is running thefinancial systemof global corporations of mass scaleand multiple currencies, geographies,industries.Um and it's really kind of thornyum to and complicated to even thinkabout removing something, especiallysomething that's probably been masscustomized for the unique attributes ofthat business.>> Mhm.>> Um so, the investment scale was great.The switching costs are very high.I think you would consider that aplatform.And I would say the same is true in acertain sense for a company likeServiceNow, um but for a differentreason. Yes, it's a system of record forall the things IT and the services thatit provides,but it's even bigger than that in thesense thatall of the other systems of recordintegrate with it. So, now you haveroughly 800 of the more substantialsystems of record that integrate intoit. And because of our in-memory opensource data platform, so it's built onthe open source technologies,

00:34:45but its speed, its scale, its ability toingest data, we could take as much asyou give us.But similarly, you might say, "Okay, youknow, I'll give you your core IT and OT,and I hope I get the holistic end-to-endprocess, but you know, I have datalakes, I have hyperscalers, I havelanguage models.What about in the flow of work or abusiness process?What can you do for me if I don't wantto put it in ServiceNow? Oh, we make azero copy."And then the transaction is complete,done and dusted, nothing moved, therewas no risk associated with it, and itworks. So, I think that is amission-criticalum platform in the execution of work.And the basics of getting things done.What's unique about it is you can changethe business process instantaneouslyusing the AI tools that are resident inthe platform. So, if you want to build anet new application, you can do so. Ifyou want to see how the business processwould change in a knowledge graph, youcan do so, and you can see how thatchange impacted

00:36:00the processes and theway work flows, and all the individualsimpacted in the corporation in realtime.Uh so, I think the the motion of that isvery, very hard to replicate, both onthe history of it, the bandwidth of it,and also what we have designed in termsof the system's capabilities. It's uhit's very unique.>> One of thethings that makes workflow platforms sosticky is theum the organization beginning with ITuh learns how to deploy workflows on it.And as you said, maybe they're do theycan do it even more instantaneously now.>> Yeah.>> Umuh the cost to implement new businessprocesses, integrate, customize hasalways been very high for enterprises.Um is that decreasing with AI? Um isthat an like a advantage for you, aconcern for you?>> It's a great question. It's actually abig advantage because we were alwaysquick to implement.>> Mhm.>> You know, nobody has time for multi-yearprojects.>> Okay.>> You know this. And uhthe customer wants to get the valuereally fast. And with autonomousplatform like we have

00:37:16now,um we have major customers, big ones,that are going live in less than 30days. Big ones.And so, think about it. You know, if yougo back, as you mentioned, you know,think about the financial crisis era,and the scale even then of SaaSapplications, if they could have beenimplemented in less than 30 days,everybody would be doing a rain dancewith happiness.Um it took months.And to think that you can do things, bigthings, complex things in less than 30days, in some cases even faster. Um andit's all modular, so you can get yourquick wins and just keep going. Um youknow, some people thought that the SIs,you know, would be hurt by this, but thedifference is they actually have manymore projects now that they can do muchmore quickly.>> that's what you're saying.>> Yeah, I'm saying much more quickly.Everything is happening much faster. Thecustomer's ROI is better. I'm a big, youknow, proponent of a native AI company,and everything we do is about being anative AI company. Every change we makeis because of AI.And some of those things, you know, theychange business models, they change umthe way humans actually work

00:38:31in thecompany. For example, you know, 90% ofour customer service cases now aremanaged by agents.>> Mhm.>> And, you know, that that means like only10% are actually involving people. Umand so there's a lifting and a shiftingand a changing of the guard in terms ofwhat people do for the critical thinkingand the judgment calls that they have tomake instead of the tactical, you know,work of just grinding out details. And Ithink that makes people happier in thework, but it also does change the work.>> Um if you were to fast forward 5 years,like what do you thinkis different about the employee base atServiceNow or even like the work beingdone?>> I think that in terms of an employeebase, I think you're going to see thatthe net new added head count will bedramatically reduced.>> Mhm.>> And that's because the company will befar more productive. The agents arereal.>> Mhm.>> And they will take on a tremendousworkload. So where to keep up withgrowth in a growth company likeServiceNow, you have to hire thousandsof people in finance and HR and thesupporting functions and services justto keep up with it all.

00:39:46And now theagents are going to be able to do a lotof that. So you're going to invest inthings that really matterlike humans that engineer greatinnovations and that humans thatactually manage the relationship and theimportance of human-to-human connection,building trust,um making promises and keeping them, andenduring a relationship and the netpresent value of loyalty in thatrelationship. That's all going to behuman.Um but I I can see a company where, youknow, you don't have to really increasehead count to achieve that goal.And I do think that thethe bar got raisedin terms of differentiatingyour skill setand making sure what you're capable ofdoing can't be easily replicated by anagent. Um, not just at ServiceNow, butin all businesses. If an agent can do itas good or better,that's an easily easy economic decisionto make, which is why, you know,there'll be 2.2 billion of these agentsentering the workforce in the nextcouple of years.So, you know, there's going to be a lotmore agents than there will be people.>> When you think about you're justdescribing, you know, ServiceNow

00:41:01isgrowing about 20%.>> Yeah.>> Uh, a year.>> Yeah.>> Um, 13 plus billion in revenue trailing.So, massive business growing at scale. Ithink one of the things that's sointeresting about this um,SaaS-pocalypse narrative is uh, youknow,many of the companies as described areactually like doing really well onfundamentals. Um,what are the signals you look for inyour own business besides, you know,what customers tell you they want to dowith you?>> Right.>> Um, like quantitatively or otherwisethat say like, what we're doing in AI isworking.>> Well, the most important thing is we'veexpanded boundaries of the platform. So,we have a company that's operatingglobally.>> Mhm.>> We operate across multiple industries.And the companies that we serve, weserve everything from IT to the employeeexperience to our fastest growing uh,TAM, customer relationship management,obviously all the work that the creatorsdo, and security as I talked about. So,what I'm looking for is the adoption oftheAI control tower for businessreinvention. And are we the agenticfront door to the enterprise?

00:42:18Are we managing the humans and thenon-human identities?Are we connecting in the workflow datafabric all of the nodes that areoperating in an enterprise?Um whether it's a data lake, ahyperscale, a language model, a systemof record, all those things should gothrough the central nervous system,which is ServiceNow.And obviously, when I think about IT, weknow the people, we know the places, weknow the things. When I think about OT,we actually know the networks, thedevices that reside on them, thecritical infrastructure, the shadow IT,the disconnected controllers in the caseof a manufacturing company as anexample. So, this amazing real-timeinsight and visibility into how thatcompany is running and how we can makethat company run better. That's theethos of everything in terms of thecustomer relationship, that we knowmore, that we care more, and that we cando more for that customer than any otherenterprise company in the world. That'sthe game plan.And, you know, for my money,um what else do I look for? I look forthe AIand the assiststhat the agents are doingto help the humans in the companies

00:43:33weserve.And I want to see that the trend line ofthose assists and the consumption ofthat innovation is really goinguh right and up to the north side of uhtown because by doing that, you'vesolidified your position as superimportant to the way the companyactually runs. And not to mention thefact that the shareholder value creationtakes on a whole new meaning once youkick in that consumption model on top ofeverything else.>> When you um talk to like this amazingenterprise customer base that is deeplyembedded with you and then as you saidimportantly trust you and trust you todo more all the time. Um what is thestate of play in terms of you know, youdescribe a very forward-looking visionfor what AI can do to transformenterprises. Like where where are peopletoday? What are the first questions theyask you? Do they believe it?>> Yeah, I think that's a great um pointbecause most people today know that theyhave to do something with AI.But like in the case of Brazil as anexample,only 11%of the companies since that was lastnight's meetingum have actually gotten past theexperiment phase

00:44:49where they're doingexperiments.And so we're seeing now that companiesare going past the experiment phase intomainstream on building the agenticbusiness, on building the agents tocomplement the humans and I'm drivingbusiness model innovation andefficiency.That is now picking up steam.But you have to remember it's a verydiverse set out there.I mean in public sector,they're just basically now trying toconsolidate complexity and get onedepartment to speak to anotherdepartment so we don't have billions offraud getting through the cracks.Um other industries like health care asan example, we're now moving into themodernization phase. So the patientexperience isn't so miserable becausethe professionals that work there aregreat, but the systems have been holdingthem back. But if you look at afinancial services firm for example, umyou know, they're moving full full speedon what can I do with AI tofundamentally rethink how I run mycompany, to manage my head count better,um to get more done with a lot less. So,it's kind of based on industry,

00:46:05based ongeo. Different geos haveum, adopted it more quickly. The US isthe leader in terms of of consumptionand adoption of AI and they're movingfaster. I give you a flavor some of theindustries, but I would say that it'smore about um, modernizationas a standard. And the first movers noware moving out with AI and they'reaggressive and they're going for it.>> When you think about like what going forit means, are there a set of use casesthat are universal across companies oror are there different things thatmatter to the different segments?>> I think that they'reum,they're looking at their business model.>> Mhm.>> And what can AI do to change my businessmodel? The ones that are first movers orearly movers.Um, and head count is definitely on thetable.Um, obviously if you believe in theagent world,uh, and you do increase head count, it'sbecause you can see that the heads aresupporting the digital transformationand the inclusion of the agents andthere's more revenue to be gotten byadding them.>> Yeah, there's ROI on it. Yeah.>> Exactly. And they're not going to addthem anymore.Meaning

00:47:20people without a clear ROI case.And in many cases a lot of thesecompanies, especially if you look at theyears 2020to 2024,they hired a lotthrough COVID. Not a lot of people talkabout this. I haven't actually heardanyone talk about it, but when they didthe hiring and everybody had a hand inthis, a lot of it was virtual.A lot of it then was, you know, keep thepeople. We need the people.Um, you know, there's a crisis outthere.And now they've realized they've layeredup the companies. Um, some of the peoplemaybe didn't get as close a look as theyshould have because, you know, Zoom wasthe way to meet them, greet them, andhire them.And now with the inclusion of AI in thebusiness model and the innovation of thecompanies, it's kind of like, how do weget leaner? How do we get smarter? Andif AI does make us better, we should seethat in the ultimate profitability ofthe company, the revenue per employee ofthe company. And the company should haveexpanding margins, expanding orreaccelerating revenue, and should be amore exciting growth story than it was2,

00:48:353, 4, 5 years ago. So, there's highexpectations for AI can do.>> What is the biggest thing that's changedin customer conversations for you aboutAI over the last year?>> Right now, I think it's justtell me what I need to know.Um, it's not like, let me come in anddiscover your problems.>> Mhm.>> Or let me bring you a solution cuz Ihave one in my pocket and I can't waitto share it with you.Um, it's like,you know my business. If you don't knowmy business, there's no conversation.But let's assume you know the business.Be very prescriptive.Tell me very specifically,at the macro level, depending on thelevel you're talking to, how do Itransform the company in keeping withthe CEO vision or the management team'svision?At a departmental level, you reallyunderstand whether it's sales, it'shuman capital, it's engineering, or it'stechnology or CTO and its orientation.You really understand the landscape andyou have veryquick solutions that can get up andrunning and deliver the value in ahighly predictable manner and it's AIdriven. Like they have to have AI in

00:49:51there because they know the AI is theforce multiplier. And so, I would saythe danceum has gotten brief.The execution is where they want tospend their time. Get me there fast.>> Uh pretty impatient set of customers,but they're uh sounds like they'repretty decisive given the parameters.>> Real decisive and and real fair.>> Yeah.>> I mean, you know, very open-minded. Ifyou can help me, do it because I needthe help. Everyone will tell you theyneed the help. They're not telling youthey have all the answers. So, it's ourjobagain to know more about this than theydo. Otherwise, the why do they need usin the room?And then, you have to have a positionthat you takethat brings something unique andvariable to the equation. I always tellpeople, if two people are in the sameroom at the same time with the sameopinion, one of them is redundant.>> Uh I want to um uh well, I want to closeup with like two um maybe more personalquestions.Uh you have a lot to cover withServiceNow, but you're also just aninterested interested guy. What inspiresyou or makes you curious in in AI orelsewhere in technology um outside ofwhat you're doing with ServiceNow?>> Well, I'm fascinated

00:51:06[clears throat]by so many things.Umwhat really interests me in technologyis how it will truly improvethe world, the human condition.Um it could be an environmentalconversation. It could be what we'reseeing happening in outer space. Itcould be uh a global corporation uhtrying to do unique things in a world innew places that they've yet to conquer,but they can do so with technology nowand AI.And they can simulate a presencethat might not actually be physical, butit could be unique, virtual, and new.There's new routes to market. There'snew channels, there's so many new thingsthat could be done. So, I think thatthis is the era where everything reallydoes evolve and possibilities existwhere they just weren't wasn't possible3 4 5 years ago. Um so, I find that, youknow, it goes back to the quote that Iput in the in the book. Um since youmentioned what is dream.When the great Robert Kennedy once said,you know, some men see things as theyare and say, "Why?" I dream things thatnever were and say, "Why not?"So, I always try to look at things that

00:52:21didn't exist or don't existwith the application of technology orjust a great dream.What's possible?>> Uh and then in terms of just the the theday-to-day in between your yourdreaming, um what is the day in uh thelife of Bill McDermott as ServiceNow CEOlook like?>> Well, it it's uh it depends on whereyou're physically at at the timeum based on what you're doing becausethe time zones are all different. But,if you're inuh California, which we are todaytogether,um you know, you start your day off. Umit really easy to understand this withEurope.You migrate yourself then to the UnitedStates and you wrap up with Asia.Um so, you always have to keep the tempoaround the time zones and what'shappening in the global economy. I justtry to be a global person and be aleader that's involved in all dimensionsof the company in any time zone in theworld. So, that's one one aspect of it.>> And you're talking to your teams therehearing what's going on with customers,what's going on with>> Today today I've been in two out of thethreewith the regions of the world and I'llfinish up with the third. And absolutelyI want to hear what's going on withthem. What's going

00:53:36on with the customer?What's going on with the business?What's going well? What's not goingwell? Um based on you know, wherethey're at at any one moment in time Ican seeand I feel thingsvery deeply and I'll offer mysuggestions. I try not tomake the decision for everybody but I'lloffer my suggestions just onobservations and then you know, we havean open honest riffingrelationship on ideating on somethingand then ultimately we get some placequick. You know, there's no time toscrew around. We got to get to the pointand move on.A lot of time with customers, you know,I feel thatI really get grounded with the customersand understanding what they're trying toaccomplish and how I can help them.And you know, a lot of people talk aboutyou know, sales and you know, the ideaof running corporations.It's all based on the customer and thecustomer alone. They determine whetheryou win or lose.And if you never lose that in yourheart, you're closer to success thanfailure.The other thing is I listen to theemployees, you know,for example, yesterday I started

00:54:51my daywith 17 conversations with 17 quotacarrying reps.>> Wow, that's a lot. Okay.>> 17>> Mhm.>> And I got 72 on my calendar this month.72>> Okay.>> And it's inspiring because anytime youneed tofeel likefeel goodtalk to the people that are closer tothe customer and you realize just howgreat your company is, how great thepeople are, how smart they are and andyou know, they have so many good ideasand they're doing so many good things.You know, one woman said to meyesterday, you know, she was most proudof the health checkof her customer. She told me all aboutthe customer. The health check is ourheuristics around customer satisfactionto performance to the system and soforth. And it just inspired me. Andthen,you know, always try to do, you know,one-to-one, one-to-few, and one-to-many.And last night I, you know, wrapped upmy day with um 800 executives fromBrazil.And it was like amazing. And they wantedto, you know, talk about leadership andmany of the things that, you know, youwant to talk about. And I thinkeverybody is in uhin

00:56:07the mode right now wherethey want to learn. They want toexperience what you think and um theywant to grow. And they are uncertain.And to some extent, you know, they don'thave all the answers. And sometimesthey're even afraid. And I explained tothem,you know, don't look for the escapehatch.You know, this is the moment>> Mhm.>> when leaders really matter.Because as the waters get choppy, youknow, we see who's tough and who's not.And when the tide goes out, you want tobe fully dressed.And even if things don't look so good,you'll figure it out. If you're fullydressed, then you're ready for thebattle.And I think that um this is bringing outthe best in real leaders. And I live forthis moment.>> You seem like a leader for that moment.And I I love the confidence that youhave that um other leaders want to meetthat change, too.>> Thank you, Saadia. [music]>> Awesome. Thanks so much, Bill.>> It was an honor meeting you and uhspending this time with you. Thank youvery much.

00:57:10>> Find us on Twitter at No Priors Pod.Subscribe to our YouTube channel if youwant to see our faces. Follow the showon Apple Podcasts, Spotify, or whereveryou listen. That [music] way you get anew episode every week. And sign up foremails or find transcripts for everyepisode at no-priors.com.