Enterprise

ServiceNow’s path to $15 billion runs through partners like Microsoft

With no plans to acquire other companies to hit $15 billion in revenue, CEO Bill McDermott is focusing on expanding ServiceNow's partner network.

ServiceNow’s path to $15 billion runs through partners like Microsoft

Over nine years at SAP, Bill McDermott earned a reputation as a dealmaker after spending tens of billions of dollars to acquire 38 companies. Now, as CEO of ServiceNow, he's keeping that reputation intact; but the strategy looks a bit different this time around.

McDermott has made it his mission to grow the company's revenue to $15 billion in the next five years, more than triple the $4.5 billion that ServiceNow recorded in 2020. However, instead of buying other firms to juice the books, he insisted in an interview with Protocol on Tuesday that his company can reach that milestone organically by relying heavily on one key pillar: partnerships.

Since coming onboard in November 2019, McDermott has struck deals for at least 16 new or expanded partnerships with companies including KPMG, Siemens Energy, IBM and Qualtrics. He's also doubled down on critical joint initiatives launched by his predecessor John Donahoe, namely a major partnership with Microsoft. And outside of simply reselling or using the respective products in joint deals, ServiceNow has made financial investments in partners including CareAR and Celonis.

"When you have a born-in-the-cloud company … like ServiceNow, the idea of partnerships is dramatically different. The days of these multiyear, high-risk, tough-to-get-the-value-out-of projects were an artifact of the 20th century," McDermott said.

The plan appears to be working. Seven of the largest global partners have "already committed to ServiceNow practices that are $1 billion in revenue or more," McDermott told investors and analysts in May. The company declined to disclose the partners.

And as ServiceNow continues to expand outside of the IT department, more partnerships are likely. McDermott wants to "be in every industry in the next couple of years at a pretty, pretty deep level." But given the explosion of software geared at specific job functions or industries, the market is becoming increasingly competitive.

To stand out, ServiceNow plans to team up with other companies that are specialized in areas like healthcare or banking.

For example, when the company introduced a new product to help manufacturers better monitor for potential cybersecurity incidents, it partnered with Siemens Energy. And ServiceNow teamed up with KPMG for a new tool introduced on Tuesday intended to aid enterprises in their environmental, social and governance efforts.

"In every industry, we very often will have a customer that also becomes a partner," McDermott told Protocol.

Partnerships in enterprise technology are nothing new. But as companies continue to embrace web-based applications, they're becoming even more important. And it appears to be a race among the megavendors to expand their ecosystems by teaming up with buzzy upstarts, and even potential rivals, to co-develop products and form joint go-to-market strategies.

Salesforce, which is fast becoming one of ServiceNow's fiercest rivals, launched a partnership with AWS that is often compared to ServiceNow's efforts with Microsoft. But McDermott, who regularly touts that no other companies have to lose in order for ServiceNow to succeed, is keeping the door open to any potential partners in the future.

"Some companies do work more closely together than others," McDermott said. "We are open to anybody."

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