Image Source: ServiceNow.com

ServiceNow recently raised guidance as it announced quarterly results, and continues to benefit from customers’ investments in digital transformation.

Over the past few years, ServiceNow has worked hard to expand its total addressable market from IT service management (ITSM) to a broader platform opportunity, building out functional capabilities to support customer, employee, and industry workflows. Moving to expand a TAM is a strategy for growth that other software companies have pursued with varying degrees of success, particularly when they are trying to expand their appeal from the CIO’s office to other lines of business leaders. It requires more than just building new contacts: account managers and internal customer champions have to learn to speak the language of sales, marketing, HR, and operations; frame benefits in business (not just technical) terms; and, in the case of ServiceNow, and make the case for why an additional platform investment makes more sense than the incumbent tools (and relationships) of those business leaders. We’re watching three key areas where ServiceNow is investing that will impact its ability to continue to expand its market opportunity.

A roadmap for TAM expansion: ServiceNow Impact

ServiceNow’s Impact solution, launched last year, includes value realization dashboards, real-time performance metrics and alerts, and information and recommendations on how to increase the value delivered by the ServiceNow platform. Impact helps customers understand, measure, and realize value from their ServiceNow investment by providing real-time metrics that link platform key performance indicators (KPIs) to business outcomes, on-demand experts and training, and personalized training and coaching.

As companies look to rationalize cloud spending, vendors will be challenged to prove the value of every dollar spent, and Impact gives ServiceNow a valuable differentiator, providing champions with a script for the business conversation based on real numbers, and a relatively straightforward way to help champions and ServiceNow account managers identify and quantify platform expansion opportunities.

Skills for expansion: ServiceNow RiseUp

Another challenge for ServiceNow is training enough resources to support its expanding customer footprint, and upskilling its existing champions to speak credibly beyond IT workflows. ServiceNow is investing here, too, with its free self-paced RiseUp program. While the program is relatively new, ServiceNow says more than 73K professionals have already gained some sort of credential through the program. We’ll be watching RiseUp closely to see what kind of skills users are gaining and how much of its focus is on business versus technical skill building.

Differentiators for expansion: AI

At its recent earning call, ServiceNow announced expanded generative AI capabilities including case summarization and text-to-code, adding to its portfolio of generative AI capabilities already in the market. Obviously generative AI has captured companies’ and investors’ imaginations, and it’s telling that in addition generative AI code-generation tools ServiceNow have been focused on delivering capabilities focused on specific customer, employee, and industry workflows. Additionally, ServiceNow announced a new partnership with NVIDIA and Accenture to accelerate development and adoption of generative AI capabilities. The Lighthouse program will focus largely on customer and employee-related workflows (as well as code generation), giving ServiceNow more of an opportunity to put their CX and EX expertise feet forward with customers interested in the potential of AI.

ServiceNow is obviously in a very competitive and rapidly evolving market, particularly where generative AI is concerned. Its technical chops in AI are considerable. We’ll be watching how its upskilling and Impact investments prepare its champions – and ServiceNow itself – to continue to capitalize on an expanding TAM.

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