 ServiceNow Knowledge 4T is sponsored by ServiceNow. Here are your hosts, Dave Vellante and Jeff Frick. Good afternoon everybody. Beautiful day here in San Francisco. We're at Moscone South walking the building. Look right. We're right there. Great setup here at ServiceNow Knowledge. Really a lot of buzz going on here at the show. Transformation of IT. One of the huge themes really at this event is transforming IT from a cost center into a value producer. I mean, it's something that CIOs have talked about for decades. You certainly had the alignment discussion, but the value piece has been elusive. And so that's something that we are really starting to see take hold within the ServiceNow customer base. It's actually feeling quite real. Mitch Kenfield is here. He's a managing director at KPMG. It's a topic, Mitch, I know that's near and dear to your heart. So welcome back to theCUBE. Good to see you again. Thank you. Hi, Mike. I was here a year ago. And to your point, I think just in that year's time, the number of clients that are coming to us around this concept of value around not just cost, but that's a different part of it. But value of the products and capabilities they provide is just exponentially getting bigger. I love how Frank Slum's keynote this morning really put down I would say a challenge to IT, even though he didn't pose it as a challenge, is you must transform and become a producer of value or else you're going to be a dinosaur. He didn't say those words. I mean, it was his customer base. But Frank, you know, over the years has been pretty controversial, right? He sort of trashed help desk in the early days. He mentioned that today. He got a few booze. But I love the message. And so my question to you is when you go into your accounts that are transforming their IT, whether it's with ServiceNow or not, I mean, ServiceNow seems to have this really amazing platform. For those that are sort of focused on IT, you know, service management, going beyond help desk into enterprise service management, can you discern a difference in terms of the way the company has run, the culture of the company, the relationship between IT and the business? Yeah, absolutely. And I think if you look at the technology organizations we work with, there are still a good majority of them, I would say, that still operate in kind of in a supplier mode, right? Our customers ask us for things and we go figure out how we will produce those and then we supply them and then we support. I mean, there are numbers that say, you know, the typical IT organization still spends 70% of its collective budget on keeping the lights on of things it supports, right? Well, then you transform that and you think of a different model and you think, well, if they were truly operating as a business unit, you know, imagine a business unit that spent 70% of its effort just maintaining the things that it already gave to products. It would go out of business, right? It wouldn't know what its customers need next year and it wouldn't understand how to improve the value of that. And so there's a smaller number of our clients have started, but most of our clients understand the journey, if you will, in this transformation of how do we truly operate in a different way? And an interesting kind of way that we talk to our clients about it is if you look at a CIO and you said they were a CEO of a business, right, what would they do differently? And, you know, the focus they would put on their customers and products and research and development would be a lot different and therefore you go back to the value term and it would be driven by that. Okay, so let's take that. I like that analogy, the CIO as the CEO of his or her business. If you're walking into that job, oh, hey, you're now the CEO of my IT department, what's the first thing you're going to do? You're going to say, okay, well, how are we doing? What's the business look like? Let's look at the numbers, you know? Let's talk to the people. Are our customers happy? You know, what are they telling us? It's the first thing you do, right? You maybe say, okay, on paper, what does it look like? And then you try to validate that and understand where the dissonance is. So are CIOs doing that? Are they qualified to do that? Are they trained to do that? And what are you seeing with the ones that are actually doing that? So I would say they are trying to do that. Qualified, I think some of them have a mindset shift, if that's a good way to say it. But then if you look at the other aspect of this, do they have the information necessary to do that? Do they have the environment and their organization from a processing perspective? Do they get intelligence? It's interesting. We use this term business intelligence and what organization usually helps implement that? It's the IT organization, right? But most IT leaders, most CIOs don't have intelligence on their own business unit in terms of their true value and metrics and true kind of quality of products. And so I think our clients at that level, I mean these are obviously senior executives and so they understand where they need to be, but getting there is tough for them. And it's both tough from an organizational shift and from capabilities and data underneath. Has the DevOps culture, what's forcing them to change? Because if you go into the development side of the house and they're all building applications, they've got charts and graphs and meters and red lights and green lights and yellow lights and a lot of automation of a DevOps development model, but then the organization supporting it doesn't have the same instrumentation. So what are the drivers beyond just purely I need to do a better job or I'm going to be out? And I think it goes through a few things. So again, if you kind of take that as a business kind of structure and the customer group is changing, the expectations of the customer groups are I want products faster. In other words, you can't take six months to do all these formal requirements and build stuff and then spit it back to me. That's not fast enough. There I want to be able to change things. So I can go to this provider and then grab this one and so on. The quality expectations never go down. Financial expectations never go down in terms of the dollars they want for that. And so really we believe that the IT organization, as we know it today and have known it for years, it's going to have a hard time surviving if it doesn't, to use your words earlier, transform, right? It doesn't do that mind switch and really connect those dots and look from a true business perspective of all the way through R&D to product, manufacturing, how am I building the things I'm providing, those services, all the way through support and have that end to end kind of running the business perspective. We think they're going to have a hard time. So I want to come back to this analogy of running IT like a business. So if I'm a CEO, I'm going to come in, I'm going to say, okay, how are my bookings doing? So show me what we're doing, what we're selling by product. So what's my product? My product is my service catalog. Absolutely. Okay, so who's buying what? And what's my pipeline look like? So that's my project portfolio. And how are we doing on R&D? I guess maybe that's my project portfolio. Are we on time, are we on budget? What's my P&L look like? So now it gets interesting. My P&L, okay, it's my income statement, my revenue minus my expense. So okay, revenue. That's a foreign concept to IT. So IT will use the parlance value, but then how do they value IT? So how do they value IT? So that's a great question. And that's where you really tie in the financials of running the business, right? And you tie in the financials of, just because we provided the thing you asked for, doesn't mean that we're doing a good job of that, because then you have to look back at your revenue or the budget dollars coming in. And am I provisioning and leveraging that investment in the best way possible, right? And am I putting those to the right things? In other words, back to your analogy from a business perspective of kind of my R&D arm, am I bringing in dollars that's my, and am I spending those on the things that are most valuable to my clients and most needed by my clients? And then can I have the optimization aspects underneath to show that it would be, if it were a business, my profit margin, if you will, would be up? And so I think in many of our, in most of our technology organizations, we have a financial budget, we build stuff, and at the end of the year, we make sure that we're kind of in that range of accurate, right? As opposed to I spent the right things on the right results. And I spent this thing too much here for too little result and truly treating it in more of a service by service review. If you were the real CEO of the company, I wonder if this happens, why wouldn't you go in and say, okay, you're now Amazon? Okay, you can resell Amazon if you want, but that's part of your service portfolio, whatever. But you're is now selling services, you know, everybody calls it charge back. Maybe just eliminate that word charge back. You're in business. Sell your services, charge your services, compete with the rest of the world. Here's your P&L go, your profit center. Wouldn't that totally flip the mindset of the CIO? I think it would, and I would tell you this, while we're not seeing that as a wholesale change. No, nobody does that. But we're definitely seeing the competition on case by case situations, especially as technology. We're seeing competition of, okay, well, I could get that through this provider or I could do that myself. Tell me why I should use them. So that kind of competition is definitely there, which again drives this need to be able to accurately explain your costs, accurately promote your value, because otherwise why shouldn't that true CEO, that true business leader find it somewhere else? And that's a valid question. I mean, do you have examples of anybody doing that? Absolutely, so especially when you think more with SaaS technologies, mobile technologies to oversimplify it and cloud technologies, there are definitely, I won't say simpler is probably the better way, options for a business unit to go somewhere else and get that service completely compartmentalized outside of a traditional IT organization. And it goes back to, so if I'm running the IT business, there's a competitor out there that I've got to figure out a way to be competitive with and compete with and manage. Excellent, okay, let's see, last question. So you've got this vision of sort of the service now is putting forth, I think you called it off camera, the ERP of IT. They're talking about enterprise service management. What is that vision and where do you see customers? Yeah, so I would tell you this, so we started a year or so back and realized that we were helping our clients with parts of this transformation, if that makes sense. We were helping them implement a service now solution for managing services and we would help them implement a solution for their portfolio and so on. But what we really needed to bring to our clients was an integrated offering that says over a period of time we can help you with this transformation. And then what we realized is we need to underpin that offering with a core environment and then we use this term ERP for IT not to scare people but because a true ability that facilitates workflow and collaboration and facilitates inside and information from a data perspective to run that business and we see service now as being that kind of core underpinning blue with some of the partners that are here as well playing into that role. So again, back to rewind so that if you're running that business unit, that IT business in it, you have an environment that helps you make decisions. All right Mitch, we'll leave it there. Thanks very much for coming back in theCUBE. It was great to see you again. Appreciate it, thank you very much. Good luck with everything. All right, keep right there buddy. We'll be back with our next guest. This is Dave Vellante and Jeff Frick. We're live from Moscone, great back. Thank you.