 Hi everybody, we're back, this is Dave Vellante and we're here for day three of the Knowledge Conference. I'm here with my co-host, Jeff Frick, and this is theCUBE. theCUBE is a live mobile studio. We come to events like this and many, many others. We did 27 events last year. We'll do around 40 this year. And we're here at Knowledge. It's the ServiceNow Big User Conference. ServiceNow is a company that participates in the SaaS market, but unlike most SaaS vendors, it doesn't sell to so-called shadow IT. It doesn't sell around IT. For instance, Workday sells to the human resource professional. Salesforce sells to the sales and marketing professionals. ServiceNow sells to the IT professional. And what they're trying to do is transform information technology in a way that people can run IT like they run a business. People around here call it the ERP of IT. Jeff Frick and I have been talking to numerous customers. This is about 4,000 people here. The vast majority are customers. They're more than customers, they're groupies. It's unbelievable. The CEO of the company, Fred Lutty, we were at the big KPMG party last night. I would say there were probably, Jeff, what, 2,000 or 3,000 people there. And when Fred Lutty walked in, it was like Steve Jobs walking into an Apple event that was just unbelievable. It was. He's clearly the personality of the company. And there's obviously a lot of people here that are new, but there's a real hardcore contingent that have been with him, I think, for a lot of the ride. Because, as you said, he comes in and it's handshakes and hugs and long lost friends. So he's definitely a driving force. And I think if you've got an opportunity to watch the two interviews that we did with him, unfortunately we didn't capture his keynote, you can really get a sense of the guy. You can get a sense of really his devotion to developers and developing, because that's really what he identifies himself with, as well as kind of his humble nature and really a healthy, enthusiastic respect and desire to see competition and innovation, even in his own industry. But Dave, the thing that impresses me the most time and time again is, and we've talked about, to transform and to deliver things, you need people, processes and technology. And it really does feel that this technology is enabling these IT professionals to kind of get a breath of fresh air in their careers, to really convert themselves to be part of the business and not just be service providers inside their own company and to take this thing and arm themselves to compete with AWS within their own company for their own internal customers and create stores and branding and promotions. We heard from some of the guests yesterday in terms of their transfer cost analysis and really getting into the business benefits and the costs that they're delivering to their internal customers and then of course a number of them branching out and starting your own company. So again, I think it's a good indicator of the health of the technology when you look at the infrastructure that builds around it and people willing to bet their business on that technology. Yeah, so when you see a company like ServiceNow, they'll be doing about 400 million this year, they have about $300 million in the bank, they're a public company, they're growing, they grew last quarter at 80 plus percent, 81 percent, they're projecting 60 to 70 percent growth in the coming quarter. And so when you see a company like this, and it's run by Frank Slutman who we know, we saw as the CEO of Data Domain, he knows how to drive value, he knows how to grow companies. When you see those dynamics combined with an incredible passion within the customer base, one has to ask yourself, how big can this thing really get? Now we had Mike Scarpeleon yesterday who's the CFO of ServiceNow and I asked him, how big is the total available market? And he said that, well the total available market for IT service management is four billion and we think it's at least double that. So he was pegging the market and he said this is probably a conservative estimate at eight billion dollars from a TAM standpoint. I think personally it could be a lot bigger than that. It's hard to tell how big this can be as we heard from Fred Luddy yesterday. He started out by building a platform, an architecture to have this single system of record that could do anything. And of course as you all know, the problem with a platform that can do anything is people will say well, what am I going to do with it? And so he went out and built an IT service management application because he had experience in that field from his time at Peregrine. He knew that business and so he built that as a sort of a prototype example and what happened was people saw it and said, can I buy it? He said, yeah sure and he started selling it and then of course it took off. I mean it's just an incredible story. So the question then becomes, okay how big can this thing really be? Because what people are doing is there, any process oriented or forms oriented application, customers are beginning to use ServiceNow to build out that application. So it's sort of IT out. So everything that IT touches on out and so you can think of things like real estate, the travel, certain logistics capabilities, anything that's forms driven or email driven. Companies using email or things like Lotus Notes for collaboration and workflow management. ServiceNow is actually a really good fit for us. So it's hard to say how big the TAM is for this. It could be absolutely enormous. Now there's some things that we discovered. We've been, all week we've been trying to find people to say something not so glowing about ServiceNow. It's kind of getting repetitive here. So we did find a few little items here. Now let me sort of break those down and Jeff you and I can talk about it. First of all it's the ROI of ServiceNow. It's kind of a no-brainer but to actually quantify it and explain it to a CFO is not necessarily a no-brainer because there's a lot of costs associated with the processes, developing the processes and ripping out all the old processes. So the way IT works is you've got a zillion processes to do asset management or project management or portfolio management or change management and problem management et cetera, et cetera, et cetera. Incident management, help desk. All these separate processes and separate databases built up. So to tear those down and cut them over is an expense. And so a CFO's going to look at that and say well it ain't broke, why fix it? So we talked to some customers last night who were passionate about ServiceNow but they can only get it into small pockets within the organization. They can't push it out company-wide which is the right thing to do. They want to do that but it's hard for them to get the CFO to see that. So that's an example. The ROI, well it's sort of obvious, there's a lot of soft dollars involved in that. Making IT better, the theme we've heard here is the cobbler's children, get no good shoes and so that's sort of the case here. So selling it to the CFO is somewhat challenging. The second thing we heard is that when ServiceNow went public, they really started to push on the services side of the business and professional services which they used to sort of bundle in for free is now a four-pay activity largely. So we heard a couple of customers saying that's something that we're going to look elsewhere for. So we're not necessarily going to go with ServiceNow. I'm not sure ServiceNow sees that as a problem. I think they're fine because they're trying to build up an ecosystem. But I mean those are really some of the two of the things and I think the former is relatively big and I think that will crimp ServiceNow's ability to penetrate the market. Having said that, they're growing at 80% plus and there's a huge tailwind with this company. Yeah, I mean, back to your TAM comes. I just want to read a quick note I took from Fred because I want to get it right. His vision, we want to be relevant to every employee who carries an electronic device in the enterprise. Every employee who carries an electronic device. Yeah, so what's the TAM for that? Yeah, I mean, it's big. It's really big. So as Doug said from Sequoia, what he liked about Fred was the clearness of his vision and really the focus on that vision and Fred came up with that line. And again, watch it on demand on the YouTube channel. The guy's legit, he believes it. So again, I think that's a potential concern. I do think a little bit of the good news, bad news, every coin has two sides with Fred being such a significant part of the company like you've seen with Apple and Jobs and obviously Gates with Microsoft and Larry at Oracle. You know, when these companies are really driven and have a culture that's defined by their founder, which is great to be able to maintain that and keep that mojo as they scale the company and grow as a big public company. Lots of new employees. So every LinkedIn page for every executive we've had on today doing a little research says we're hiring, we're hiring, we're hiring. So I think that'll be a challenge as well. And obviously, as you said and quoted the Andreessen article, being a public company is a little bit different than being a private company. Everything is out there. The good news is when we had the services guy on and you asked him flat out, what's your SLA? What's your uptime SLA? And he didn't bat an eye, gave us a number. So their transparency in being a services company and being a cloud company, they're trying to be transparent and get right out there with it. Yeah, I mean, we definitely heard some sentiment from the ServiceNow people that, look, we're servicing IT. So unlike the companies that are sort of selling into the line of business, we're selling to the guys that are fundamentally running and supporting the business so we can't be down. Of course, they're obviously, they have some downtime but the figures were pretty impressive. It was 99.98, I think, percentage uptime. Now, many of you in the audience may say, oh, 99.98, that's no big deal. It is a big deal, here's why. When you hear things like five nines or six nines, we're talking about the light on the server or the light on the disk drive. When ServiceNow talks about 99.98, they're talking about what the user sees and I promise you, in most organizations, your user application availability ain't 99.98. It's typically much lower than that. We all know we're on the phone with a bank or a service provider or somebody in the travel industry and they say, oh, my computer's running slow today and they're waiting and they're waiting and they're like, oh, can I call you back? That happens all the time. That's what they mean by availability, what the end user sees. So that's a very high bar that they've set and I think that that's, I was impressed by their emphasis on availability and certainly security and, you know, from what we're hearing from the customers, while there was some initial concern about that, we're not hearing problems. I mean, you hear, you know, obviously Amazon is so, you know, well publicized and of course they're a lot bigger company but you're not hearing any of these types of disasters within the service now base. Yeah, and the other thing is we've talked about kind of the enterprise big three in terms of the SaaS applications work day and Salesforce, I haven't personally ever worked in the work day application, not in the HR business but I've been in sales, I've worked in Salesforce and, you know, you get those regular notices. We're going to be down, you know, Sunday from X to Y. Please plan accordingly. Yeah, plan accordingly and hope it's not the end of the month or the end of the quarter. But you know, that's a part of their business and the fact that enterprises have accepted that level of uptime and, you know, the benefit outweighs the downside kind of sets actually a bar that it sounds like it's easy for service now based on their client base to be. Yeah, so this is a hot company. This is theCUBE, SiliconANGLE and Wikibon bringing you the action from all the events around the industry. So today we've got more practitioners. So we're going to start off at 9.50. We're on Pacific time. So we're going to start off at 9.50 with Michael Glenn, who's with AgraPore. He's an IT practitioner, a ServiceNow customer. We're going to talk about some of the things he's doing with ServiceNow. And then this week, ServiceNow had a hackathon and essentially what they did is they announced something called App Creator. And App Creator is essentially a platform or a tool set to allow business people, business technology people to build applications. Now you can build this stuff in JavaScript if you want, but you don't have to. And so they had this big hackathon and I'm sure the guys doing the hackathon were decent programmers, but I'm sure some of them weren't programming blockstaffs. We went in there, we took the camera and we talked to a couple of the teams and it was kind of evenly split. Most of them were going old school, probably because the App Creator is so new and they already knew the old way to do it. So we'll find out. So you talked to some guys that were doing new school. Yeah, I said you guys go old school, new school and we'll run the clip at some point in time. And most of them said, we're going to go old school. Yeah, so we got the hackathon winner. We don't know who that is yet. So we'll find out what he or she built and what that's all about. And then we have Petra Zilstra coming on. She's the CIO of KPN. She was one of the nine CIOs that were up on stage with Frank Slutman at the keynote. So we're going to talk to her and find out how she's using ServiceNow and how it's affecting her business and talk a little bit about self-service. We're really going to try to understand how she justified bringing that into the organization. Obviously that was probably a top-down sell. And then at 11 o'clock, we're going to meet with Arna Josephsburg who's the CTO of ServiceNow. I met Arna in Waltham Mass a couple of months ago with David Floyer. David Floyer was on the phone and we went deep into the ServiceNow architecture and the vision. He's a former Microsoft technologist, very sharp guy. And one of the things we want to explore today is ServiceNow. Is it SaaS? Is it pass? Is it both? Where does it fit? What does that mean from an architectural standpoint? And where is ServiceNow trying to take this architecture from a technology perspective into the future and what kind of problems will it be solving down the road? And then that's going to be basically it for us, as we say. We're going to maybe run some other clips from the hackathon and we'll be here all day. Well, half a day today. So, Jeff, we'll be back right after this and we'll get into it with the customers and looking forward to that piece from the hackathon. So keep it right there, everybody. This is theCUBE. This is Dave Vellante with Jeff Frick. You can tweet us. I'm at D. Vellante. He's at Jeff Frick. We'll be right back after this word.