Last year, ServiceNow decided to focus heavily on the CRM market. During its annual ServiceNow conference, Knowledge 25, ServiceNow presents its renewed vision and solutions for the CRM market. According to ServiceNow, CRM will be entirely AI-based and will become more than just a system of records. Everything indicates that they want a piece of the Salesforce pie with the Now platform, but what is still missing is that they acknowledge this.
When large tech companies go after each other’s customers and market share, it makes it a lot more fun for us to write about it. In this case, ServiceNow wants to compete with Salesforce, but they don’t want to admit it. Someone has decided that they’re not going to say so. The big question is, of course, why not? Maybe they’re afraid of being compared to Salesforce, or it will put pressure on their relationship with Salesforce. Who knows? In any case, it’s causing a lot of noise, and we don’t like that, so we decided to dive in.
Is ServiceNow competing with Salesforce?
Salesforce is the largest player in the CRM market, followed by a whole lot of nothing, and then the rest of the market. If ServiceNow says it wants to conquer the CRM market, then it wants to compete with Salesforce. It’s as simple as that, right? ServiceNow claims to compete with Salesforce primarily in service (customer and field service) and not so much in marketing or sales, which are also part of Salesforce’s prominent offering. However, ServiceNow is acquiring a CPQ (Configure, Price, Quote) solution, so they are certainly not neglecting sales and order management. They may manage salespeople less, but then again, they want to replace them with AI agents as much as possible. The fact is that they do want to compete on sales, but they are not there yet, as the CPQ acquisition is very recent.
Will ServiceNow disrupt the CRM market?
ServiceNow is devoting a lot of attention to its CRM solutions during Knowledge. ServiceNow CEO Bill McDermott has a vision and strategy to capture a large share of the CRM market, and therefore away from Salesforce. We explore this more deeply in a fascinating and wide-ranging conversation with Amit Zavery, President, Chief Product Officer and Chief Operating Officer at ServiceNow. It’s worth watching. He argues that Salesforce has a CRM, but not the exclusive right to that category. When you work with customer data, you are already active in the CRM market.
CRM is currently the fastest-growing part of ServiceNow’s workflow business, accounting for $1.4 billion in recurring revenue and 30% year-on-year growth. That certainly offers sufficient prospects for growth. By comparison, Salesforce is now approaching $40 billion. ServiceNow claims that its “CRM solution will disrupt the CRM market,” but how does ServiceNow intend to do that? One of the many questions we asked Zavery.
According to ServiceNow, it has a groundbreaking new vision for CRM that is entirely AI-driven. This vision will transform the entire customer experience from start to finish. Within ServiceNow’s vision, sales processes, order processing, and customer service are integrated. All processes involved are AI-driven so that everything is automated within these solutions. In principle, a real employee is rarely involved, except in very complex problems or high order values. As a ServiceNow customer, you can undoubtedly decide this for yourself. Ultimately, the end customer must be able to resolve everything via self-service, by using the phone, an intelligent chatbot, etc. According to ServiceNow, this is all possible with the new CRM AI agents on the Now platform.
This approach aligns with recent developments in the Now platform, which is becoming increasingly AI-driven and in which AI agents play a central role.
CRM AI Agents
These AI agents are designed to autonomously orchestrate and execute tasks throughout the entire customer lifecycle – from sales and processing to service.
Unlike traditional automation, which requires predefined rules, these AI agents can dynamically determine the best approach by resolving questions immediately, forwarding complex cases with full context, and managing workflows between departments. The agents start with a conversation to capture the customer’s request, after which they can manage the entire follow-up process.
At ServiceNow itself, AI agents already automate 37% of customer support workflows. By assisting human employees in call centers, they increase efficiency, speed up processing, and improve customer engagement as well.
According to ServiceNow, traditional CRM solutions will disappear. They add much more risk to acquiring new customers and retaining existing ones. Zavery argues that many CRM solutions work with different standalone poorly integrated applications that do not work on the same platform. ServiceNow offers a single integrated platform and uses workflows to connect the various processes and departments.
Can ServiceNow continue to grow at this rate in the CRM market?
The big question, of course, is whether ServiceNow will be able to maintain these growth figures. There are plenty of small CRM players with inefficient, non-AI-driven solutions for which ServiceNow offers a better alternative. Plenty of sales employees are still messing around with spreadsheets and don’t have their automation in order. However, this requires a cultural change with more guidance, direction, and training, rather than different software.
Ultimately, ServiceNow focuses on large (enterprise) organizations, where those small CRM players are the minority. That is Salesforce’s domain, because Salesforce also focuses primarily on large (enterprise) organizations.
In theory, Salesforce could also be described as a legacy CRM solution, a system of records that works in the old way, ServiceNow now claims to want to disrupt. Salesforce has been around for more than 25 years, so there is legacy. At the same time, it should also be mentioned that Salesforce is making huge investments in its AI solutions and, with Einstein, is one of the pioneers in the SaaS industry. Salesforce was the first to introduce AI agents and make them widely available. Salesforce has also rapidly migrated many of its solutions to the same platform and data model to make them more suitable for AI. Everything that ServiceNow now presents and claims to be able to do, Salesforce also offers.
Read also: Salesforce sets new standard with Agentforce 2dx: AI agents become proactive
Battle of the titans
ServiceNow says it wants a piece of the CRM pie without mentioning Salesforce, but the fact is that they will have to take those pieces away from Salesforce. If it’s just about customer service or field service management, there are more players in the market. However, the overlap with Salesforce is much greater. Marketing is still missing, but ServiceNow also wants to compete in sales. This could turn into a battle of the titans in the long run.
We are curious whether we will notice any response from Salesforce to ServiceNow’s actions in the coming months. Perhaps Salesforce will come up with a solution or a reaction to these developments.
In the meantime, ServiceNow has already acquired Logik.AI, a CPQ solution. This technology will help sales organizations to prepare quotes and close deals faster and better in the future. According to ServiceNow, Logik.AI is highly modular and AI-driven, increasing the productivity and efficiency of sales teams. This makes it a good acquisition to strengthen the CRM solution. ServiceNow is also launching its own free online ServiceNow University to teach people how to work better with AI and the Now platform.
The customer is the big winner
If we compare ServiceNow’s $1.4 billion with Salesforce’s $40 billion in revenue, Salesforce has little to fear, but it will have to stay sharp. ServiceNow is not a small player. A little competition for Salesforce can’t hurt, though, as it keeps everyone on their toes and means that the customer will ultimately be the big winner, because they will get a better and more innovative product.