 It's what they find so interesting about it. It's just a calling like basically to be able to work out. Live from Las Vegas, Nevada. It's the cat, covering Knowledge 15. Brought to you by ServiceNow. Hello everyone, welcome to theCUBE. This is our flagship program. We go out to the events and I check the citizen noise. I'm John Furrier, the founder of SiliconANGEL. I'm my co-host Dave Vellante, co-founder of wikibon.org and we're excited to be in Las Vegas live for three days of wall-to-wall coverage of ServiceNow's Know 15, Knowledge 15, hashtag Know 15. Go to the crowdchat.net slash Know 15. Join the conversation. Our first guest is Frank Slutman, President and CEO of ServiceNow. Great to see you again. Thanks for having us. Thanks for coming on. Absolutely. Good to see you. The keynote was great. I mean, the world's changing. IT, cloud, VMware just had an announcement about native apps on the cloud. Customers are changing. Business models are changing. Talk about what you guys are doing. Obviously you had a big stock drop over the past week in value. Is that a sentiment of the Wall Street dynamic products? What is it about the business right now with cloud, specifically the business model for your customers? This flywheel, the SaaS models. What's going on? What's your take on all that? Well, I think that a lot of the high-flying cloud companies, and obviously we're one of them, you know, we're priced to perfection, right? And that's not an easy place to be for anybody. And we're not really focused on that. This is a marathon. Every quarter is one mile marker. You can't get too excited about one versus the other. We're really pacing ourselves. We're building an enterprise that's going to be here for a long time. And our focus is not just on modernizing what people are doing. It's focusing on transforming what people are doing. And the emphasis that we place on everything as a service, structure workflow, approaches, getting away from message-oriented ways of doing things like email is an enormous sea change, right? There's over 100 million PDFs out there, forms that people have to download and fill out that somebody else then has to scan and reenter, right? The world is ripe for this type of innovation. The technology is here. All we need to do is apply it. So I just want to say, you and I talked yesterday and I said if any successful $12 billion valuation company is going to have a day like Friday, but I've noticed post the financial analyst discussion yesterday, things have calmed down a little bit. So who knows, maybe it's a buying opportunity. I wanted to tie it into the TAM expansion that we've seen. When you first took this company public, everybody looked at it as a very small niche. And it took you and Mike Scarpelli and others a while to sort of educate Wall Street on the size of the potential. And we're now starting to see that come to fruition. You guys talk about expanding into the business side and now you're doing it. You talk about going into mobile, you talk about new innovations at the SMB. Why is it that you're so successful at executing at what you're doing? Is it the platform? Is it the people? Is it the customers? I wonder if you could describe that a little bit. What's the magic formula? We are fundamentally a platform company. That was not always well understood. Even before I joined the company and I talked to Fred Lottie, the founder, we were very well aware of the opportunity to expand just dramatically beyond the boundaries of the initial application set, which was the ITM set of applications. It's just how to do that. When you peel away the veneer, the rhetoric, the nomenclature, what you see is a workflow and orchestration platform. This is so broadly applicable. But these knowledge conferences are all about is to show people what is possible on this platform. All we have to do is take the worst of water, sort of drink, and then they go on their own. This is a place where people come to get inspired with the platform. As you've seen from some of these examples that we had on stage this morning, and people are now tackling CRM applications with service now. You know why? There's really no boundaries in terms of service management for us to tackle workflows and orchestrations like that. So the world is in our history and there's really no place that we can't go with this platform. All we got to do is empower and energize the audience that you have here. And the fact that they show up in such huge numbers is evidence that we're succeeding at that. Right? So one of the things I want to give you is for you to expand on that set. And more importantly, the customers that you have here, you run the queue before the cloud, you get all the events. It's the same kind of theme, Internet of Things, big data applications, they're changing clouds and innovator. What is it about the cloud and your platform and your customers in terms of the business models? What is it about the innovation that's going on right now in the marketplace with the business models are changing? What specifically can you highlight? Can you give some examples? Because you have a lot of customers here. We were just talking that companies are sending dozens of people here to this event. I mean, it's not just a boondog. This is some real work getting done. So there's a huge transformation we're seeing. What is it about the business model now that's changing? What are you guys doing in your platform? This conference is called Knowledge for a Reason. People come here to get knowledge, right? That's why we have the labs and training and all this kind of stuff. But the most important thing to understand about service now, what we did, what the innovation was all about is that we really lowered the skills profile and the skill demands to be able to access this level of function. And we really did that by an order of magnitude. This wasn't just a platform for programmers, people that really have procedural programming skills. We really took that out of the equation and people that have Excel-style skills, people that understand erosion columns and data types, that's enough to know to be able to build out the thing. Now, what happens in that process? We empower very large groups of people, in our case, IT people, to basically take control back over this platform. In prior generations of this class of software, they were always dependent on very small group of people that weren't very accessible and were very expensive to do things for them. Now they're doing it for themselves. That is what has unleashed this explosion of creativity and activity. Let's talk a little bit about your keynote. Everything as a service was your big theme. E-A-A-S is the new acronym. What is everything as a service? Number one, second question is, is there an analog to VM sprawl? Is there a potential for service sprawl? What are you telling customers about that? Are they asking you questions? But start with, what is everything as a service? What does that mean? Everything as a service means taking work, work in the sense of repeatable activities, things we do over and over again, taking it out of your own messaging, email, text, phone, and putting it into a structured workflow. We essentially invent that process once. We adopt best practices. We really tune and optimize that process. And every single time we do that activity, we do it exactly the same way. And we enforce the business rules and the logic up front. People don't have to think anymore. I always use the silly example in organizations, I lose my security badge or I mangled in the door. I need a new one. What do I do? Well, you know, I'm a CEO. I just ask my admin, you figure it out, okay? But everybody else starts roaming the halls, like where do I go to go to the front desk? Maybe you know that thing. Employees have to have a place to go for their service needs, whatever it is. HR related facilities related. Maybe I have a parking issue and they should be able to search and navigate themselves to a place where they can make a request. And then that request is no different than sending a package through FedEx or ordering something on Amazon. Information is now following you. You don't have to go and chase it anymore, right? That is a big inversion of how we work. I mean, we often talk at service now about, we're changing how we work because we're going, we're getting away from the structure messaging from the structure workflow. That's what everything as a service is about. And I want to talk about that as regards to your keynote. But so the second part of my question, is there a dark side to that? Is there a risk of just too many services, service sprawl, or do you have service for that? Is there an app for that? Yeah. Talk about that a little bit. No, obviously during our keynote, we actually spoke explicitly to that point because the concern you raised is legitimate. People are saying, hey, deaf ops is great. Empowering all these groups to publish their own services, that's great. But now I'm going to lose control. I'm going to lose visibility. I'm going to lose accountability. I'm going to have compliance security problems and so on. What we do is we actually maintain the transparency, the visibility and the control while people are doing things. So it doesn't become the Wild West that we've had in prior generations of software. Frank, talk about what you're seeing in big data. Obviously, we've been covering that space. This doesn't seem to be its own little market. Certainly the Hadoop is some stuff going on, but companies are looking at big data, certainly data as an advantage in some of the things, whether it's IT and or in applications. What's your vision? What are customers doing with the data? Obviously, in IT data is great and everything's a service data is an abler. How do you guys look at that and how do your customers look at that? So our systems are very transactionally intense, but they're not data rich in the sense that we deal with enormous volumes of data. So it's a little bit of a different model. And during the keynote what I talked about is not like, hey, what's hiding in your data. We can't figure out what's going on the data by structuring the data, right? What big data tries to do, they're trying to figure out what's going on and unstructured data. Really, really hard to do. We structure the data, so hence it's very, very easy for us to analyze the dashboard exactly what's going on. But our focus is not so much on big data, it's on real-time data. The real-time dimension is something that is going to become huge because people are demanding real-time information. It's just not interesting to look at data that's 12, 24 hours old. And because we are sitting on live data, the ability to represent that so you can see your business in action, right? That is insanely exciting for executives and managers. I mean, network management is hot in the old days with the network a little bit now, and the way data's got that same kind of paradigm where you have active data, passive data, and by building them together, they can create values. Is that what you mean by real-time data? Yeah, I mean, the CIOs that we talked to, they said, look, where I want to get to is by my office, this wall-to-wall LED panel. So now I want to see every pocket of activity I want to see it executing in real-time whether it's good, bad, or indifferent, setting threshold, seeing exceptions. He says, I want to be, it's like watching the stock market. I want to watch my business that way. And that is what we're going to focus on. Very different from data oceans and data lakes and all this kind of stuff. We've already structured the data. We're not going to have the problem of big data. The three of us started our careers without email. And it was amazing productivity bump into our lives when we got email. But now email is this productivity killer. You talked about it in your keynote. You guys did a survey. You said, basically 40% of a manager's time is spent on admin tasks. And employees' time, not just managers. Your calculation I saw was manager, which is even higher salaries. But so how much of that can you actually reduce? And what are customers actually doing around that? Well, it can't be reduced by orders of magnitudes. You can't make it go away. I mean, people have needs. But being able to make those needs fully automated, very intuitive, very productive, is absolutely possible. I mean, two days a week, almost half time on tasks that have nothing to do with your job is absurd. I think this is almost a dirty little secret of business that we have invested in everything except our own internal workplace productivity. We're stuck in the 1980s, if not the 1970s. And who's going to put on that mantle? And we're always trying to drive IT to take on that mantle. Because who else? CEOs typically are focused about revenue, right? Image, you know, presentation, right? COO, CFOs, those are the people that should be driving the internal productivity challenge. I saw a guy who just- We just haven't made any progress there in decades. Yeah, and the acceleration now is significant. I saw a guy on email, Facebook say, I just finally give him my Blackberry. You mentioned iPhone in your keynote. He's still using the Blackberry. I was like, that's actually a great scandal, it's a blog post opportunity. But you mentioned iPhone in your keynote. We all had that moment of, this is changing the world, certainly edge of the network, smart phones. And we also here from customers want to be more Apple-like. So what are you hearing from customers? And when they say, I don't want to be like the 80s and 90s. I want to be more like Apple, meaning kind of like the iPhone and the innovation that they bring, what they brought to that. Or you guys have been using Uber as an example, or OpenTable as an example. That's that modern vibe for the customer. What are they trying to get to in an environment? What's their outcome? What are you hearing from customers? So the first aspect is the service experience itself. In other words, what is it like to do what you want to get done? You know, essentially we're a transactional platform. We're not a hang around platform like a social system. I mean, Twitter has no point, no purpose. It's just nice to shoot things out into the ether and help somebody seize it. Our systems are not like that. It's about performing a unit of work, something very specific. It doesn't begin, it doesn't end. And there's things that happen in between. So as a result, it's very different that way. Uber is also a transactional app. I want a hail cap. I need a ride. OpenTable is a transactional app. I want a reservation. There's a very specific endpoint to that unit of work. And this is where technology can be incredibly helpful to get you there faster. I use the golf example. You know, fewer strokes is better, right? And that's what people want. I mean, I have Uber a lot and I find that user experience mind blowing compared to trying to call or hail a cap. It's cheaper and it scales incredibly well, right? Because wherever you are or whenever you are, it seems to be there's cars around. It's quite impressive. It's almost like the App Store like model in the enterprise has been kicked around for a while. Is that service cataloging? I'll say Uber shows the real-time aspect of services meets demand in real-time. But in the backend, is it more service cataloging? Is it more App Store? How do you see that? In the backend, it's lights out, lightspeed, right? In other words, it's just like Amazon, right? Everything is the speed of light until I got to pick something off your shelf, right? The real world kicks in and I have to ship something. The same thing with FedEx. I mean, the information processing aspect of FedEx is what makes FedEx special. The fact that they have planes and trucks, you know, is not what your user experience focuses on. See how you've got minimal exposure to that. You're on your way to a billion dollars here shortly. You've laid out a plan for four billion by, I think, 2020 with the financial analysts. A lot of people say, well, one of these guys going to make money. You have indicated before, you're right now, after scale, after growth. I wonder if you could address that? We actually were profitable last year and we were... You could make a lot more money if you wanted to. But you're going for growth. I should have clarified that question better. You guys could be wildly profitable if you scaled down and just drove profits. We've always said, and by the way, one of the things that our business model really focuses on is making sure that the cash equation really works. So on a cash flow basis, we're doing extraordinarily well. Because it's a subscription model, the profitability equation is a little squishy. It's more accounting than economic, which is why the focus on cash... Our investors focus on growth and then the next thing they focus on is cash. And after that, they get to the really accounting representation of our business. So at some point, the law of large numbers kicks in and that's really maybe when the business... We put out a target model yesterday that was updated for the financial analyst, shows you exactly where the leverage is coming from. You guys do a great job with that, very transparent. So the platform piece I want to drill into on the... You said Amazon. Amazon does a great job executing and you're a great executor. You've certainly proven that with these successes with the company. But they're constantly innovating with new product announcements, a heavy of new announcements. Is that the new competitive advantage scale and stickiness through rapidly iteration of new features? Is that... Or is that just a one-off outlier with Amazon? Do you see the enterprise being more like that? That's where it's headed. I mean, you see that with Tesla, they've changed the car industry because there's constant updates to the cars. It changes the driving experience. And that model of rapid iteration is really the new normal. Back to the real-time thing, I guess it's really boring when you get an update every 18 months. We don't tolerate those kind of time frames anymore. Software and lag is not a good indicator. No, no, no. I got to ask you a final question. I know you're getting... We're getting to help you again. Very busy schedule. Thanks for spending the time with us. Absolutely. So you've had your competitive sailor been following your career and outside service now. You've got a boat called Invisible Anne. You mentioned data ocean, data lakes. I'm obviously a big fan of data ocean. I want you to share a perspective from what you've learned sailing and being successful at winning and sailing with how to navigate in IT as a sea level executive who has CEO, CIO, or some in the trenches. What lessons can sailing, your experience of sailing and running service now, what would you share with folks out there as they try to look at their digital transformation, IT transformation, what can you share? Yeah, there's a lot of analogs, if you will, between sailing and business because it's this multi-dimensional game that we play in sailing. It's about technology. It's about how good your crew is. It's how good your boat is. It's the weather. It's what the competition is doing. All those things you have in business. So people always wonder, why do you sail? It seems like another brutal contest. It's a bunch of things. Yes. And that's all true. It's very multi-dimensional and finding your high leverage entry point because it's very easy to be super busy in business and really not move the dial. So understanding where leverage exists, where opportunities are, that's really the art form. All right, Frank, great to have you. I know you're busy. We're getting the big hook here. President CEO of ServiceNow, here inside theCUBE Live in Las Vegas. This is theCUBE. We'll be right right next to the guest live. Three days of wall-to-wall coverage here at No 15. Join the conversation, crowdshaft.net slash No 15. You're right back.