Scaling Global Organizations in the Age of AI with ServiceNow CEO Bill McDermott
In a Nutshell
Bill McDermott, CEO of ServiceNow, shares lessons from his deli-buying youth and Xerox career emphasizing customer obsession, resilience, and disciplined execution as keys to leadership in the AI era. Replacing enterprise platforms like ServiceNow with AI is 10x costlier due to human capital, GPUs, and tokens, amid the "SaaS apocalypse" hype—ServiceNow thrives as an AI control tower integrating hyperscalers, language models, and systems of record for agentic workflows, security, and rapid implementations under 30 days. AI slashes headcount needs, boosts productivity (90% of service cases agent-handled), drives 20% annual growth to $13B+ revenue, and shifts customer talks to prescriptive, business-model transformations prioritizing ROI over expansion.
These notes were generated by AI and may contain inaccuracies.
The cost to replace an enterprise platform amid the SaaS apocalypse is extraordinary. Add the cost of human capital diverted from other tasks since the platform handled the work, plus GPU factory costs and tokens impacting business models. For a simple application on the ServiceNow platform, replicating it with a language model costs 10 times more. Businesses understand people make mistakes but never forgive software errors.
Hi listeners, welcome back to No Priors. Today with Bill McDermott, CEO of ServiceNow, the closest thing to a rockstar in enterprise technology. Discussion covers leadership in the age of AI, enterprise customer needs, difference between SaaS platforms and SaaS apocalypse theory, and next 10 years of ServiceNow.
Read Winners Dream last week, amazing book. Talks about buying a deli at 16. Thought process: consolidated multiple part-time jobs (stocking shelves, pumping gas, busting tables) into one. Bought for $5,500 notes, $7,000 with interest. Make payments to keep it; miss one, lose everything. Biggest lesson: all about the customer. Customer determines win or lose. Keep them coming back, good chance; don't, lose.
Knew three main customers:
- Blue-collar workers like his dad: rich on Friday, broke by Sunday.
- Senior citizens: early days of DoorDash, delivered since no one else did.
- Kids: hard to get them past 7-Eleven a block and half away. Used video games (Asteroids, Pac-Man); kids played for hours with parents' quarters.
Kid said: > "When we want good food, be treated with dignity and respect, and play video games, we come to your store. When we want to steal stuff, we go to 7-Eleven."
Take care of customer, know who they are, give what they want just the way they want it: good chance in any business. Put him through school including college. EQ from 500 customers a day worth a lot; world needs more EQ.
Learned from hostess job at Outback Steakhouse: repeats of dealing with people useful. Observed customers before buying? Worked there first. Owner in divorce, wanted out; one-year lease from Sunmark Industries (Socony Gas Station), could evict anytime. Kid who didn't know better bought it. No money, but relationships with suppliers: first order on consignment, pay back always.
"This is not a favor. This is a chance for you to get your shelves filled up with your stuff that I'm going to sell for you. But in the end, I'll always owe you that first delivery."
Charged high margin, but got shot at business. All he's ever wanted is a shot; honored to have them. Opportunity is a gift; cherish and make most of it.
Venture gives shots to entrepreneurs; they value it long-term. Admires venture creativity and exposure to young companies.
Leadership ideas crystallized: resilience, ambition, disciplined execution. Met 800 business people from Brazil; many read Winners Dream. Leadership greatest profession. Environment changing fast, dynamic like never before; fast but never move this slow again.
Stressful but inspiring: get inspiration from challenges to gain superpower.
First break at Xerox, Google of its era. Dropped off at railroad tracks at 21 by dad; guaranteed coming home with employee badge. Dad: don't pressure yourself. Inspired by CEO David Kearns reinventing via Deming quality principles. Japanese companies sold higher quality for less than Xerox.
Last interview with big boss Emerson Fulwood at 9 West 57th overlooking Central Park. Buddy waiting long; told receptionist ready all day. Invited in. Not interview, battle for survival: control destiny.
End of interview: HR contacts in weeks. Bill: > "Mr. Fulwood, I don't think you completely understand the situation. I haven't broken a promise to my father in 21 years, and I guaranteed him I'm coming home tonight with my employee badge."
Fulwood: > "Bill McDermott, as long as you haven't committed any crimes, you're hired."
No crimes; hugged him, ran to payphone, called parents: break out Corbell (cheapest champagne on Long Island, like Cristal). 25 years later, Fulwood introduced him at Rochester Institute of Technology: only time broke Xerox policy hiring him.
Put tremendous care into people, attention to uniqueness. Without him, no shot. Still friends, attends CEO meetings. With AI, losing human power to connect; AI serves people, amplifies human ambition.
Possible to coach agency? Yes. Shy kid, came into own through work. Couldn't make NBA, so control hard work, desire to make difference. Confidence from work tied to people: 500/day at deli teaches listening, caring, presence.
Teach by practicing, simulating, training, certifying, coaching for confidence. Mobile phones replace human connection but boost productivity. More people capable than realize.
Pace of change scary, but inspiring. AI disrupts all; rethink everything at once. Leaned in: white paper on blueprint for agentic business. Train on language model vs. enterprise platform differences; one strengthens other.
CEOs said white paper changed worldview.
Example: compensation issue in ServiceNow (Is 7?): Language model suggests steps 1-2-3 fast but doesn't close case. Needs data, context, workflow across HR, finance, legal, compliance, risk to remediate/close.
"AI thinks, workflow acts."
Bank example: 15,000 engineers, CEO needs AI use cases for board in 60 days. AI writes beautiful net-new code fast but replacing enterprise platform costs extraordinary (human capital, GPU factory, tokens). Math: simple ServiceNow app 10x costlier with language model.
Language model not deterministic, lacks company data/context. Businesses forgive people mistakes, not software. Premier platform at fraction of IT budget bargain; combine with AI for best: innovation, integration, outcome. Build yourself at 10x cost problematic; no one to call to fix.
SaaS apocalypse ignores businesses don't want to build internal workflow software; want responsibility, context gathering energy-intensive.
Long-horizon agents, computer use change? No, lean in. Language model companies fantastic; same with hyperscalers (feared eating software). ServiceNow as AI control tower for business reinvention: integrates hyperscalers, language models, systems of record.
Fabric connecting nodes enables true agentic business. Moved into security: US #1 economy, China #2, cybercrime #3 ($1 trillion/month problem). Integrate security platforms, manage OT with Armis (now part of ServiceNow): full purview (networks, devices, manufacturing tools, medical devices, critical infrastructure including people/places/things/buildings).
Native AI company; platform autonomous. Move Works (agentic front door), VZA (human/non-human identity), security move with Armis.
ServiceNow integrated the security move with Armis on top of an unbelievable core in 20 days. Many companies lack the engineering power to do hard things quickly. ServiceNow is blessed with real talent. Selling companies to large enterprise software vendors often takes a year and a half of rebuild to get value.
There's a historical reminder of fear about hyperscalers, which have become important to businesses but haven't replaced the need for workflow software and platforms. Hyperscalers are great partners. On the back of the ServiceNow franchise, billions in workloads go into those clouds. All hyperscalers do different things super well, giving customers choice, like choice on language models. ServiceNow doesn't stand in the way but acts as the control tower, a huge competitive advantage.
Some enterprise software segments are at risk from generated code and agents. Companies should be more valuable due to their data and context. Departmental companies are most vulnerable. Companies spanning multiple departments or serving as serious systems of record that are hard to replicate are safe and part of the future. Single-function companies with low value-add, not high on CEO priorities, face rising vulnerability.
ServiceNow goes end-to-end on horizontals and north-to-south on verticals, up and down the stack across the enterprise—a huge moat. More than 85 billion workflows are in flight, with 7 trillion transactions on the platform, representing the most important brands. This is a serious responsibility as those companies can't miss, and the system is always there.
ServiceNow and SAP are clearly platform businesses. In the SaaS age, features turned into companies, like tangential workflows to systems of record. ServiceNow began with IT service desk workflow.
If ServiceNow had only done IT service, it might be a system of record for IT. CEOs focus on needle-movers: SAP runs financial systems of global corporations at mass scale in multiple currencies, geographies, industries—thorny and complicated, with high investment scale and switching costs. ServiceNow is a system of record for IT and services, but bigger—all other systems of record integrate with it. Roughly 800 substantial systems of record integrate into it, using an in-memory open-source data platform built on open-source technologies for speed, scale, and data ingestion.
It handles core IT, OT, data lakes, hyperscalers, language models with zero-copy integration—no data moved, no risk. This is a mission-critical platform for executing work. Business processes can change instantaneously using resident AI tools: build net-new applications, see changes in knowledge graphs, track real-time impacts on processes, workflows, and individuals. This motion is hard to replicate due to history, bandwidth, and system capabilities.
Workflow platforms are sticky as organizations learn to deploy workflows, now even more instantaneously with AI. Implementation costs for new processes, integration, customization were high but decreasing with AI—an advantage. ServiceNow was always quick; nobody has time for multi-year projects. Customers want fast value. With the autonomous platform, major customers go live in less than 30 days. In the financial crisis era, SaaS took months; now big, complex things happen in under 30 days, modularly, with quick wins.
SaaS isn't hurt; there are more projects done much more quickly, better ROI. ServiceNow is a native AI company; every change is AI-driven, changing business models and human work. 90% of customer service cases are now managed by agents, only 10% involving people—shifting to critical thinking and judgment, making people happier.
Net new headcount will be dramatically reduced as the company becomes far more productive. Agents are real and take on tremendous workload. To keep up with growth, thousands in finance, HR, supporting functions were needed; now agents handle that. Invest in humans for engineering innovations and managing relationships—human-to-human connection, trust, promises, loyalty.
Companies won't increase headcount without clear ROI. 2.2 billion agents will enter the workforce in the next couple of years—more agents than people. Differentiate skill sets that agents can't replicate easily; if an agent does it as good or better, it's an easy economic decision.
ServiceNow grows about 20% a year, $13+ billion trailing revenue—a massive business at scale.
Expanded platform boundaries: global operations across industries—IT, employee experience, fastest-growing TAM customer relationship management, creators, security. Key signals: adoption of AI control tower for business reinvention; agentic front door to the enterprise; managing humans and nonhuman identities; connecting workflow data fabric nodes (data lakes, hyperscalers, language models, systems of record) through the central nervous system.
Know people, places, things; for OT, know networks, devices, critical infrastructure, shadow IT, disconnected controllers (e.g., manufacturing). Real-time insight to make companies run better. Ethos: know more, care more, do more than any enterprise company.
Track AI assists helping humans, trend lines of consumption going up—solidifies position and drives shareholder value via consumption model.
Customers know they must do something with AI, but many are post-experiment: e.g., Brazil, only 11% past experiments. Now moving to mainstream agentic business, complementing humans, driving innovation and efficiency.
Diverse: public sector consolidates complexity to prevent fraud; healthcare modernizes patient experience (great professionals held back by systems); financial services rethinks operations, manages headcount, more with less.
US leads in consumption/adoption. Modernization as standard; first movers aggressive.
Universal use cases: rethink business model with AI, headcount on table. Add headcount only for digital transformation/agents with ROI and revenue. Post-2020-2024 hiring was virtual, crisis-driven; now leaner, smarter. AI should boost profitability, revenue per employee, expanding margins, reaccelerating revenue, exciting growth.
Biggest change: "Tell me what I need to know." Not discovering problems or pocket solutions—know the business, be prescriptive. At macro/CEO level: transform per vision. Departmental: quick, predictable, AI-driven solutions (sales, human capital, engineering, technology/CTO).
Customers impatient but decisive, open-minded: if you can help, do it. Know more than they do; bring unique value. > "If two people are in the same room at the same time with the same opinion, one of them is redundant."
Fascinated by technology improving the human condition: environment, outer space, global corporations conquering new places virtually with AI—new routes, channels. Era of evolution, possibilities not there 3-5 years ago. > Robert Kennedy: "Some men see things as they are and say why. I dream things that never were and say why not."
Day depends on location/time zones (Europe, US, Asia). Global leader involved in all dimensions. Talks to regional teams on customers, business, what's going well/not. Offers suggestions, not decisions; open riffing to ideate quickly—no time to waste.
Lots of customer time to understand goals, help. Customer determines win/loss. Listens to employees: e.g., 17 conversations with quota-carrying reps yesterday, 72 this month. Inspiring—reps close to customers have great ideas. One rep proud of customer health check (heuristics on satisfaction, system performance).
One-to-one, one-to-few, one-to-many: e.g., last night 800 Brazilian executives on leadership. People want to learn, grow, amid uncertainty/fear. > "Don't look for the escape hatch... as the waters get choppy, we see who's tough... when the tide goes out, you want to be fully dressed." Brings out best in leaders; lives for this moment.
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