Episode Transcript
[00:00:00] Okay, Good morning. Today I want to talk about the massive flurry of announcements from ServiceNow because they're going to affect it and HR in a very major way. ServiceNow is a $13 billion company, growing at 20 to 25% per year. They have dominated the market for platform of platforms, as they call it. In other words, software that sits between your current systems and your employees or your customers, positioning it as workflow management software. Originally coming from IT for IT service delivery and service management, but they've moved into application management, security, different areas of hr, and now it's all about AI. And what they've announced this week is very, very significant.
[00:00:49] So let me run through it briefly on the podcast, and then you can read about it in the article that I'm writing, and then the detailed technical, technical documentation from Ram Subramanian, our head of AI architecture, which will be available in Galileo. Now, to sort of start the narrative, the problem that ServiceNow is trying to solve, which is not a problem that exists yet, but it's a problem that most people understand, is the sprawl of AI agents in a company. Every employee can virtually build an agent themselves, and that agent could go out into the network and look for data and collect it and make decisions around it. What data does it get? Where does it find it? How do you control it? Who's responsible for the decisions that it makes? What are the rules around its behavior? How do you prevent it from deleting things that it's not supposed to delete? How do you make sure you get the right version of the data? Who's responsible for managing this agent over time? It's huge. And if you go back to my original analogy of the Microsoft spreadsheet, we never really had to control all the spreadsheets that people created unless they came from finance or, you know, travel and expenses, because they didn't really do a lot of damage if they were wrong. But this does. If this agent that you started on your little Claude or OpenAI system goes out and starts collecting data and doing things, it could make decisions or delete or mislead people to think things that are not true. And of course it wants to control this. So what ServiceNow's doing is, in a very significant way is launching a barrage of products to manage this. And they've really done an amazing job. They acquired a company called Moveworks that had built a very successful chatbot, very similar to Lena, actually, to connect systems to a chatting agent. And the CEO of MoveWorx, Bhavan Shah, is now running what is now called Employee Works, which is the reincantation of MoveWorx, now called auto Otto. Otto is the front end to what used to be called NowAssist and Moveworks. That is essentially the front door to everything agentic in the company, including all the data and applications that you need to do your job. What they're basically doing is saying all of the workflow tools that ServiceNow has been developing over the years are going to be lined up behind Moveworks, which is now called employeeworks, so that employees can access anything. And it's funny because when you, it's actually kind of hilarious when at their slides they position Workday and SAP and ADP as sort of little apps in the App Store because they really believe, and you know they're going to probably sell this successfully, that the employee experience should start with Auto, which you know, everybody wants. So I don't deny them, it's a good idea. But behind the scenes there's a lot more going on. The first which you're going to read about is this architecture called the Action fabric. And the Action fabric is the technology that monitors all of the agents and AI activities going on in the company. It is essentially uses the database technology and workflow technology the ServiceNow has had for a long time to monitor and monetize for them the management of your agents. Now, Workday calls this the Agent system of record and the Agent Passport. But that really applies mostly to workday related agents because Workday doesn't control all of the authentication for everything in the company, mostly just for data relative to people. So it's a little bit broader than what Workday is doing and it is manifested in this very extensive product called the AI Control tower. And the AI Control tower is an application that allows you to monitor, provision, turn on, turn off, control any agent in the company. And the fabric is open. So if you built an agent or you bought an agent from a vendor, the fabric would see it, you'd essentially register, register it in the map in the fabric. Again similar to Workday strategy, then the control tower would allow you to control it. Somebody in it could control it, or somebody in your functional area could control it. So for systemic HR, where we have HR 2030 architectures evolving and you have a bunch of tools from different companies, you have Galileo, you have an AI coach, you have an AI recruiting system, you have an AI, you know, pay equity management system, whatever it may be, all of these things would be visible in the control tower. And the control tower would help you through its own automation Keep them straight and track with each other. Now, on the data side of this, it's a mess because each agent has its own data system or its own data sources. So ServiceNow has built a very significant data fabric to connect data together. And they announced an autonomous data integration tool that will autonomously clean up data. So they understand that much of what it does behind the scenes, which we don't see, is make sure that the data is in the right place and you don't find things you're not supposed to see. And that when things are integrated, they're matched with various keys so an employee can find things that are relevant to them and not accidentally see somebody else's information.
[00:06:08] Well, that's typically done through lots of intermediary tools that it uses. ServiceNow has basically developed all of that. So the data fabric underneath these agents is also managed by ServiceNow. And they've announced something called the content or context, excuse me, context and engine that takes all of the data and the metadata and the data about the metadata, which might be skills models or business rules, or data in the existing payroll or HR systems or other systems you have, and puts it into a context level as a sort of rules layer so that all of the agents that you build or buy could use the context engine to understand whether they're behaving correctly. Now that's a big idea. Microsoft is doing the same thing with Work iq. Workday plans on doing this with Sana in some respect, I'm not sure exactly how yet. And then there's a tool from Gloat and there's other ones coming out, including one from Cornerstone, that do this. But ServiceNow is so big and they have so much, so many tentacles into it, it's likely to be a very successful tool. And remember that in the middle of all of these announcements, IT people are very risk averse. The best way to lose your job in IT is to have a security breach or a data breach. So they're more than willing to spend money on infrastructure and services to keep this stuff from, to keep bad things from happening, basically. So even though it might make your job a little bit harder to build and deploy the agents you want, they're doing it in the best of interest for your company. And then there's more. They announced the autonomous workforce and what they're essentially saying is we're going to help you build the autonomous agents that replace many of the jobs in your company. And they have names and they have titles. And so Galileo is part of that software offering. You can get Galileo connected to Otto through ServiceNow. So Galileo is essentially a digital HR business partner or digital HR consultant or digital self service agent as part of this solution. And they're formally creating financial models to help you cost justify the replacement of service cent or call centers to use these autonomous agents. So it's a very creative marketing move and it's very good for getting people off the dime here to move ahead with automation and AI projects and to add more. The financial folks and the CEO Bill McDermott also sat down in front of the financial analysts on Tuesday and Monday and said that over the next four years we're going to monetize this. So effectively we're going to double our revenue to $30 billion. So they're going to go from 13 or 14 billion to 30 billion in four to four and a half years. You know, it's possible it might happen because what they're essentially saying is that if you have a hundred people in a call center or a service center or some other function like HR business partners, whatever it may be, and you can automate 70 to 80% of the things they do, you could reduce the headcount by 50, 60, 70%. And that gives you lots of money to spend on AI credits. And so ServiceNow's monetization could double or triple from all these AI credits you have to buy and you could still be financially ahead. This is the argument they make because you'd be reducing headcount so much. So there's a lot of really important contemporary stories within this announcement and the demos and the integration stories are quite impressive. And the executives at ServiceNow are very impressive too. They really do have strong general managers and a lot of AI expertise. A lot of this has come from acquisitions. Your IT folks are going to be very enamored with this and more than likely you're going to be running ServiceNow in some respects, 90% of the Fortune 500 use it for it and then other things on top of that. In the HR domain. When you look at employee works, it's very attractive as a new way to think about the employee experience. Now, a couple of things just to consider here. Number one, this stuff's very expensive, so you're not going to buy any of these tools without quite a bit of a business case behind it. And if you have worked ASAP or another vendor already, you're going to get competing offerings from them on many of these types of problems. I don't think any of them have nearly the extensive agent control tower view of all the agents in your company that ServiceNow has, but Workday is essentially saying the same thing. So if you go out and buy a bunch of agents from different companies, you could register them in Workday, or you could register them in ServiceNow, or you could register them in both. And you're going to have to fight it out a little bit with your IT people. Which of these infrastructure tools you like the most. And if you're a Microsoft shop, you're going to use Agent365 because they're not sitting down either, by the way. In addition to those sort of competing opportunities or vendors, there's also Anthropic and OpenAI. The same week that all this stuff comes out, Anthropic announced a partnership with a bunch of private equity firms to build out a consulting and partnership program around enterprise deployment. Deployment and OpenAI the next day did the same thing.
[00:11:26] So everybody out there is trying to help you, quote, unquote, build the agents you need to replace all the infrastructure you have. I also noticed this morning that Dario Amadai decided one more time to try to kill the cloud software company and claiming that cloud software vendors that don't move to AI are dead. And you guys know my opinion about that. It's going to be a very, very slow death if it happens at all. Nevertheless, I am really impressed with ServiceNow. This is a company that is really firing on all cylinders, as the expression goes. Very financially successful. Their products are real. They're not just slideware or demos. The engineering teams are very savvy and very deeply skilled in this stuff. And their marketing and sales is just spectacular. I love listening to Bill McDermott, their other general manager. Very compelling. They understand the space, they have lots of customers. They have forward deployed engineers. They spend a lot of time with their customers. I told you, I was at a large bank that's using ServiceNow to help them build a global onboarding agent. You know, this is a company that could be a $30 billion company in three, four, five years. My old days at IBM when there was one big vendor that did everything. Maybe ServiceNow is the enterprise standard for building and managing AI agents. In the new world of IT, the other vendors are not going away and there's no way that each of the applications you want to build and deploy are going to be optimized around ServiceNow. And the products are expensive and they are workflow oriented and not really designed for end users. So this is not going to be the only infrastructure you use. But it's a very, very significant announcement. So two more things first of all, I'll be producing a pretty big article on this on the website. The second thing we're going to do is Ram Subramanian, who's our new head of a architecture, is going to start writing a series of technical white papers on all this to help you make sense of it. We're not going to put that out for free. It's going to be available in Galileo and for our corporate members. And so RAM is going to produce a really detailed piece on this that will also be out and I'll link to that. For those of you that have Galileo as soon as it's published. If you have any questions about this, please reach out to this this is all part of our HR 2030 initiative. We are happy to help you in your own company work through these issues and plot the agent roadmap for your company. Evaluate the technologies, evaluate the vendors and get your planning teams together to take advantage of the new world of agentic HR and HR 2030. That's it for now. Talk to you guys later.
