 Live from Las Vegas, it's theCUBE, covering Knowledge 16, brought to you by ServiceNow. Here are your hosts, Dave Vellante and Jeff Frick. Knowledge 16, everybody. Hashtag No16, check out crowdchat.net slash no16. We got a crowd chat going on. Frank Slutman is here as the president and the CEO and not so invisible hand of ServiceNow at the helm. Frank, it's great to see you again. Always a pleasure. So, nice job on the keynote this morning. 11,000 plus, actually closer to 12,000, I believe. Yeah, we're about 12 registrations. I tweeted out again today, EMC World was 10,000 this year, so you're bigger than EMC World, at least in attendance. Imagine what it's gonna be when you're a $24 billion company. But anyway, congratulations. Thank you. Great to see you again. So, yeah, so you must feel good about where you're at. We were at the Financial Analyst Meeting yesterday. You laid out the vision. You guys are on track for 16, still focused on $4 billion by 2020. We know a lot can happen between now and 2020, but you gotta be feeling pretty good about the TAM expansion, the product portfolio, the customer acceptance. Give us the update. Yeah, we do feel good. I laid out yesterday for the capital markets, the folks, our framework. Phase one was our zero to a hundred. That was really when we were a startup. Fred Lutty was the CEO of the company. He was reaching escape velocity. The night came in 2011. That was phase two. And we really focused on scale and discipline and really delivering on the promise that had been created. And the company went from a hundred million to a billion dollars last year. But now, we've entered phase three. And phase three is a billion to four billion and we're changing. We're changing from a single product, single market, single channel company to one that's multi-products, multi-channel and multi-market. And it's a transition. We're not assuming that ladder, wrench, repeat is going to take care of it. So we're raising ourselves to another level. We're questioning what we're doing just to keep everybody on their toes. And then you're a keynote this morning. You talked about the estates, the first greatest state. The ERPCRM Oracle SAP and the second greatest state popularized, of course, by Salesforce. Others before Salesforce, but Salesforce really won. And you guys are laying out a vision for service management across the enterprise. And you touch deeply into those other estates. Describe that strategy and how it's going to affect customers going forward. Yeah, our deep belief is that the way we manage work is going to change under the influence of technology and what's possible. Hasn't been that long that we sort of got wired to our inboxes and email became our reactive, reflexive way of doing things, right? There was a time before email. Well, there will be a time after email as well. And a lot of work is going to be defined into workflows. And then the reason is we don't need to reinvent the wheel over and over and over again, every single time we do something. You know, when we define workflows, we have the opportunity to plan for work. We have the opportunity to monitor work. We can analyze work. We can figure out what it costs. We can figure out how well we're doing. These are, and this is where efficiency comes from. Essentially, companies will become clouds. They will all become software companies, right? And they all are going to start to manage themselves like that. So the future of roles and enterprises and institutions and jobs, it's less about being in the process as it will be in terms of defining and building the process and then managing the process. Now these are profound fundamental transformations of how we work. And you spoke on the keynote too about kind of the different point of view with an engagement model when you come from an ITSM type of background versus some of the other interactions, specifically contrasting CRM in the way that engagement method works versus ITSM where, yeah, you solve the problem, help the person get up off the floor. I love your, I follow that, I can't get up, example. But then really get to the root cause and now the good position you're in as that methodology moves beyond just the core IT people to people doing IT functions in all different roles in the company. And this is our heritage. We've always taken the service management model. It's basically an engagement model, an engineering model because we need to do root cause analysis. Why are we talking in the first place? And then the fix and change model, it's a holistic process. If you just have an engagement model, that's not that satisfying because we're just trying to relieve the pain of the moment but we're not prosecuting the underlying cause. And even if we knew the underlying cause, we're doing nothing about it. Hence people keep coming back with the same problem over and over again. So it's not so much about just managing the quality of the service. It's about managing the underlying quality of the core product that we're providing whether that product is a product or that product is a service. So a few years ago, I said, I thought you were on a collision course with Salesforce and you kind of bristled at that and said, oh, you know, we're just doing our thing but your TAM is now so large. I mean, you're becoming a very large software company. You're in rarefied air. So essentially everybody's going to have you in their line of sights. That's good. In the other hand, you know, it's an interesting position to be in. So what are your thoughts on that from a industry landscape perspective? It's a huge market. You know, we're not super fixated on a confrontation with this player or that player, but we have philosophical conviction that doing customer service, you know, our way is the right way to do that. And when things move into IOT, Internet of Things, it's becoming way more important. It's not enough to say, hey, my device is not working. You know, can I reset the device? Can I see what's going on in the device, right? People have to become way smarter as a function of the software technology that we have and just saying, well, you know, I'll take your call and try to figure out what's going on, right? In these days, you're already, when you have a connectivity problem with AT&T for your Wi-Fi services and so on, they can already tell you, you know, what the health is of your device and what the problem domain really is. And we're going to go way further in that direction. I mean, when somebody shows up, your refrigerator is busted. Somebody shows up at your door. That person knows nothing, right? Until they literally open the door and they start looking around, right? That's going to change because they will already know and they'll have the right parts with them, right? If parts are actually involved or they can fix it remotely. So that's where service models are moving. Well, you're celebrating your 10th year anniversary now and the interesting thing about service now is you started in IT. You call them your peeps. Your fundamental assumption is that IT is touching everything, right? You're making that bet. That has been a tailwind for you. And it's quite a bit different than some of the other software companies that you see going forward. So. Well, IT's not just touching everything, it is everything, right? Like you said, yeah. SaaS companies, the cloud of the cake. I mean, there's more SaaS companies coming out of general business than there is the technology business. Do you see that trend? You know, I think, by the way, Salesforce, I commend them for this vision. They've always said, every company becomes a software company. That is absolutely and profoundly true. We're all becoming clouds. And we're literally running as hard as we can to catch that ball downfield. That's what this is about. You guys have built an incredibly viable business now with real momentum. So as you look forward the next 10 years, talk about sort of that vision that you see of service management going beyond IT into other functions of the company, as well as growing the ecosystem. Yeah, so, you know, our vision and our approach is about looking at work, right? We're not managing records, whether it's HR or financial records. It's not about the records. It's about the work. If you take a company like Salesforce, they're focused on the customer. We're focused on the service. The service is the unit of work. So we have a unique focus on zooming in on that unit of work and structuring, defining and managing that. So to us, everything looks like a service, right? Every application, every task, every request, everything we do has a beginning and an end and as an opportunity for structuring, automating, analyzing, monitoring, all those kinds of things. So our future world, you know, will still have email, but so much of what we do on a day-to-day basis will be structured in systems. And by the way, our life as consumers, we're already living that way. You just don't notice it because it's natural. I mean, Uber is a structured workflow. Even Facebook, in many ways, is that way. Making a reservation is a structured workflow. Ordering something at Amazon, structured workflow. And it lights out light speed, right? That's where the world is trying to go. And as you think about growing this company to the next phase, lots going on. You're making acquisitions, you're bringing in new talent. The ecosystem is really an interesting item here because we saw Accenture pick up Cloud Sherpas this year. We saw fruition and CSC. And so you're seeing the big guys now take notice. That's got to make you feel great. Talk about the ecosystem a little bit. Yeah, it's definitely an inflection in our world when people are not just saying, put me in coach. You know, I can do this. But they're starting to, you know, put out real capital and buying companies. Now there's numbers behind service now. And we're not just an opportunistic thing in their business, but we're an ongoing business. And they're doubling down. They're not, I mean, there'll be many acquisitions of a lot of our service partners and also of our technology partners. So we have 170 partners here. This is really good because we don't want our customers to sort of feel like I'm dependent on service now for everything. We want them to have many choices, not just in deployment partners, but also technology integrations, you know, value added software products. They shouldn't be depending on for everything on us. In terms of M&A, it's been selective. I mean, you're not, you know, we see these larger legacy companies, they live off of M&A because they can't innovate. You guys doing a lot of innovation internally. But take a minute to talk about M&A and in particular, we're interested in how you integrate companies. You don't bolt on to the platform. You essentially replatform, you rewrite. Talk about that a little bit. Yes, our M&A strategy has been focused on talent and technology. Talent builds the technology. The technology without the talent is not very useful. You know, in the short time, you'll run out of gas on that. So it's always the combination of the people and what they have built, but you're correct. We don't integrate technology that we acquire. We take it apart and we reimplement it on our platform. That is a core, core commitment that we make to our customer base that we are not going to saddle you with the problems you've had for the last 30 years where you are constantly testing and retesting integrations between these assets versus that asset and have whole steps dedicated to sort of keep the patchwork operable. We take that on, right? You don't have to worry about it. You turn on a service, it will work with everything else. And our customers early on recognized that we were different in that regard. It's very expensive, it's very time consuming, but when we go to buy an asset in a talent pool, we first look at, can we replatform it? And secondly, does the technical team that comes with it want to do that? Because if somehow they're not bought in on that strategy, we don't want to go there. All right. I wanted to shift gears a little bit and talk about your customers. You guys have a very special relationship with your customers. And Dave and I in the queue, we go to a lot of shows. And there are a few people that elicit the excitement within the room like Fred does when he comes on stage. And we talk a lot about, when the founder's still involved in the company, it's really important. That, I still remember the first time I saw the cakes in 2013, like what does it do with the cakes? And still Chris Pope posts on LinkedIn five cakes a day, I think he doesn't follow them. You'll see cakes from all over the world. What are you hearing from your customers as you guys go to this next phase? Because you've had a really special relationship. You've gone beyond just when Fred was running it. You've taken it to a billion, now you're going to four. What are the kind of the feedback and the engagements that you have out in the field? So I'm sure you talk to customers all the time. Yeah, I do a lot. We're a very intensely customer phasing company just culturally. But we're incredibly dedicated to their success. I mean, we believe that the value of our company is sort of summed up in the aggregate in terms of how strongly our customers feel about us. Forget all the financial metrics. It's how strongly your customers feel about you is the ultimate value of your franchise. The cakes, it's a celebration when service now goes life. It is. People feel like we let them out of jail. I mean, they have pinatas with the name of the product that they're replacing. I haven't seen the pictures of the pinatas. Yeah, we have cakes and pinatas. So they go from one generation or two generations ago into a very modern transformational empowering platform. The empowering thing is really important because they are now in charge. They are able to make changes on a daily basis that before they could do nothing. They were dependent on a bunch of people that they could never get access to to make changes for them. It all goes away. That's the essence of what service now provides. This concept of, I love this customer discussion because I love initiatives that are born in the customer and I think Siam was one of those. I think it came out of Europe. I'm not exactly sure. Talk about Siam, what it is and how it relates to your business. Siam feels to us a little bit like the next installment on ITIL, sort of the evolution of ITIL because it's not just service management. It's service integration and management but they had a very precise definition and framework around it. What we did with ITIL is also what we're doing with Siam. We're really expanding the scope and sort of adapting it to a much broader context because we think Siam, if you take its narrow definition, very useful, very productive and we have lots of customers that are pursuing the Siam strategy but we're saying what Siam says, which is no, we're going to reorganize our entire enterprise in terms of our service assets anything that produces a service whether it's an organization or a system or a group of people, whatever it is, as well as everybody that has to have access to these services and those are not just people, they're also systems. So they reconceptualize what it is to be an enterprise. It's very visionary and very, very transformational because you won't recognize enterprises and institutions in the future. They'll be so different. The people won't no longer be on the inside of the process. They will be on the outside of the process. Jobs are changing. It's going to have profound influences. There will be lots of jobs, but there will be new jobs and a lot of the old jobs are going to go by the wayside. And you're obviously in Silicon Valley and I know there's a lot of work being done about this is probably not the way we're going to communicate in the future. You guys have this theme of new way to work. Today in your keynote, you talked about IoT. You threw that buzzword out there and you said, I know before you start rolling your eyes and you guys have a play actually in IoT. Again, as Jeff said, we go to a lot of these conferences. You hear this similar thing, digital transformation, IoT. Your play on IoT is around wearables and really driving some platform innovation to your wrist. Do you have the watch on? Is that the? I don't know. I had it. You guys announced a wearable today. I said, I think I just, I tweeted. I think that service now just announced a watch, a wearable and somebody said, yeah, we did. And so what's that all about? Well, we've been able to deliver services on a watch ever since the Apple Watch came out because we're a platform. We've been able to do this literally from day one. We're just trying to inspire our customers to figure out how do you really use a watch? One of the struggles that Apple has with a watch is what's the killer app? It's not replacing Fitbit. That's just not enough. What's the killer app for a wearable? And we think real-time and predictive business metrics at a glance, because that's what it is. On the phone, you really have to work the device. This is at a glance, right? And we are really trying to get to this real-time, predictive mode of doing things, because it's just so much more productive. But as I said in the rap of the keynote, right? There's a lot of sizzle, people laugh watches and with bang stuff. What enables the watch, and that's really what we think Apple needs for its strategies, what enables that watch to become a productive business device? And it's the underlying repository of data that's continually being updated. That's what makes the watch powerful. So how did this come about? You guys, obviously, like you said, you had apps for the watch, you enabled that, but it wasn't good enough, or you just didn't fit the use case well enough? So you said, hey, let's go build it. Yeah, there is a design aspect to it. And as you heard during the keynotes, what do people do? Typically, we just shrink down to UI from the bigger form factor onto a watch. And that's always the first generation. Yeah, my phone on a watch. Yeah, it goes like, well that's not it. So and then we go back to the drawing board and we really, really think through the usability of that form factor, which is so tiny. One of the things about knowledge is the content from the customers. So I want to ask you, how do you spend your time here? Yesterday was the financial analyst meeting. Today you're in the general session in the keynotes. You got a CIO event going on. You had a partner event going on. How do you, you know, are there three Franks? How do you spend your time? We're just passing around. No, it's, you know, I couldn't be more thrilled that we have so much going on at this conference. And in years to come, you know, there will be vertical industry conferences going on because we see that as the next evolution, next phase of our evolution is that verticalization is happening already because we have so many big customers in single verticals, whether it's financials and pharma and retail. Those folks can get so much benefit from associating with their counterparts in the same line of business, especially when the value moves from IT to broader enterprise, that becomes very pertinent. So we're in the middle of figuring out how to sort of enable ourselves. We've enabled ourselves as a multi-product organization. That was the whole phase three transition. But the verticalization is something that's sort of next in our evolution. I mentioned my last question for you. I mentioned Silicon Valley. Obviously, you're part of a really, a set of rising stars, Anil Bhushri. You know, Scott Deeson saw him the other day, seeing some real innovations coming. At the same time, you're here and a lot of these things are real nervous. You don't sound nervous. You sound really hopeful. What's your outlook for the near and midterm? It's interesting. We had our financial analyst yesterday and you know that the capital markets crowd is very nervous. They always are trying to decide if they're in or out. And sometimes they do both before noon. I can't run the company that way. Most of the decisions that we make on a daily basis are not with a quarterly orientation. They go on for years and years. So I can get that excited, you know, about the ebb and flow of the business on a very short-term basis. You know, we're last to the mast. We're going to go down with the ship. We're committed. We're not in or out. We're in. We're completely in. So our mindset is that we're fine to be on the ship and running it, right? In January, the capital market sold us off and in April, they came back in. We're the same company, right? So there was no reason to be that excited, either to the downside or the upside, right? This is a marathon. Companies get billed over long periods of time. Yeah, you don't seem like you're on that 90-day shot clock. Of course it helps when you got a great customer base. You got a great team. Frank Slutman, thanks so much. First of all, for having us at Knowledge, we love this event. It's one of our favorites. And thanks for coming to theCUBE. It's a great beater. Thank you. Great to see you, Frank. All right, keep it right there. Everybody, we'll be back with our next guest. Right after this is theCUBE. We're live at ServiceNow Knowledge 16. Right back. 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