# Scaling Global Organizations in the Age of AI with ServiceNow Chairman and CEO Bill McDermott

Markdown copy of https://realalpha.app/v/tNNFJa5pUEg/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

Bill McDermott says AI should amplify human ambition, while enterprise platforms provide the workflows and context that models alone lack.

- Show: No Priors
- Hosts: [Sarah Guo](https://realalpha.app/people/sarah-guo/)
- Guest: [Bill McDermott](https://realalpha.app/people/bill-mcdermott/) is chairman and CEO of ServiceNow.
- Published: Apr 17, 2026
- Length: 57 min

## The best minutes

- [19:16](https://realalpha.app/v/tNNFJa5pUEg/?t=1156) [Enterprise platforms can cost less than rebuilding with AI](https://realalpha.app/s/enterprise-platforms-can-cost-less-than-rebuilding-with-ai/) (6 min)
- [36:21](https://realalpha.app/v/tNNFJa5pUEg/?t=2181) [AI speeds implementation and changes who companies hire](https://realalpha.app/s/ai-speeds-implementation-and-changes-who-companies-hire/) (5 min)
- [1:34](https://realalpha.app/v/tNNFJa5pUEg/?t=94) [A deli taught McDermott to serve customers and bootstrap](https://realalpha.app/s/a-deli-taught-mcdermott-to-serve-customers-and-bootstrap/) (5 min)

## Also worth watching

- [9:36](https://realalpha.app/v/tNNFJa5pUEg/?t=576) [A promise to his father helped McDermott land a Xerox job](https://realalpha.app/s/a-promise-to-his-father-helped-mcdermott-land-a-xerox-job/) (6 min)
- [30:25](https://realalpha.app/v/tNNFJa5pUEg/?t=1825) [Single-function software faces more AI disruption risk](https://realalpha.app/s/single-function-software-faces-more-ai-disruption-risk/) (6 min)
- [15:41](https://realalpha.app/v/tNNFJa5pUEg/?t=941) [Leaders can teach agency through repeated practice](https://realalpha.app/s/leaders-can-teach-agency-through-repeated-practice/) (3 min)
- [44:03](https://realalpha.app/v/tNNFJa5pUEg/?t=2643) [AI adoption is moving beyond pilots at uneven rates](https://realalpha.app/s/ai-adoption-is-moving-beyond-pilots-at-uneven-rates/) (5 min)
- [48:33](https://realalpha.app/v/tNNFJa5pUEg/?t=2913) [Enterprise buyers want specific AI plans, not long discovery](https://realalpha.app/s/enterprise-buyers-want-specific-ai-plans-not-long-discovery/) (2 min)

Skip the ServiceNow control-tower and security pitch, the internal success metrics, and the CEO's technology interests and daily routine.

## Summary

Bill McDermott is chairman and CEO of ServiceNow. He says he bought and ran a deli at 16, then built a career in sales and leadership before leading the enterprise software company.

Bill McDermott argues that AI should amplify human ambition, while workflow platforms supply company context, integrations and execution that language models alone do not. He says ServiceNow aims to connect models, hyperscalers, systems of record and IT and operational technology as an AI control tower. He argues that recreating a simple application on its platform with a language model would cost 10 times more, and expects agents to reduce added headcount while shifting human work toward engineering, judgment and customer relationships. He says enterprise customers increasingly want specific AI plans and fast, measurable results.

### Minute by minute

- [1:16](https://realalpha.app/v/tNNFJa5pUEg/?t=76) **Deli work centered customer needs.** McDermott says he bought the deli at 16 after working there, using a payment note and suppliers’ first order on consignment. He served blue-collar workers, seniors who wanted deliveries and children drawn in by video games, and says learning what customers wanted taught him that repeat business depends on serving them well.
- [7:29](https://realalpha.app/v/tNNFJa5pUEg/?t=449) **Human connection remains central to leadership.** McDermott says leaders can draw inspiration from rapid change and the challenges it brings. He recalls that Xerox interviewer Emerson Fullwood hired him after McDermott insisted he had promised his father he would return with a job; the experience shaped his belief that leaders should recognize individual potential and preserve human connection as AI advances.
- [15:41](https://realalpha.app/v/tNNFJa5pUEg/?t=941) **Agency can be built through practice.** McDermott says he was a shy, quiet child who gained confidence through work and believes agency can be taught. He recommends practicing attentive listening and care, then using simulation, coaching and certification to help people build confidence in face-to-face leadership.
- [18:37](https://realalpha.app/v/tNNFJa5pUEg/?t=1117) **Platforms turn AI advice into action.** McDermott says ServiceNow trained employees and CEOs on how language models differ from enterprise platforms. A model can recommend steps for a compensation problem, he says, but a workflow platform uses company data and coordinates functions such as HR, finance, legal or compliance to resolve and close the case.
- [22:00](https://realalpha.app/v/tNNFJa5pUEg/?t=1320) **Rebuilding workflows can cost more.** McDermott argues that recreating a platform with generated code requires rebuilding its functions and accounting for employee time, GPU and token costs. He says ServiceNow calculated that replicating a simple application on its platform with a language model would cost 10 times more, and argues that businesses also expect software to be dependable.
- [25:13](https://realalpha.app/v/tNNFJa5pUEg/?t=1513) **ServiceNow aims to connect AI systems.** McDermott says ServiceNow intends to act as an AI control tower that connects hyperscalers, language models and systems of record rather than displacing them. He says its expanded remit includes IT, operational technology and security integrations, with visibility into assets ranging from networks and manufacturing equipment to medical devices.
- [30:25](https://realalpha.app/v/tNNFJa5pUEg/?t=1825) **Departmental software faces more risk.** McDermott says generated code and agents could put some enterprise software at risk, particularly lower-value tools serving one department. He argues that companies spanning departments or serving as hard-to-replicate systems of record are better positioned; he cited more than 85 billion workflows and 7 trillion transactions on ServiceNow’s platform.
- [32:13](https://realalpha.app/v/tNNFJa5pUEg/?t=1933) **Platforms combine systems and workflows.** McDermott defines a platform by its mission-critical role, high switching costs and ability to connect business systems. He says roughly 800 substantial systems of record integrate with ServiceNow, which can connect data without moving it and let customers change processes or build applications using AI tools.
- [36:21](https://realalpha.app/v/tNNFJa5pUEg/?t=2181) **AI speeds deployment and shifts work.** McDermott says some large ServiceNow customers now go live in under 30 days, and that faster deployments give systems integrators more projects to complete quickly. He says agents handle 90% of ServiceNow customer-service cases and expects them to curb future headcount growth, shifting people toward engineering, judgment and customer relationships. He cited 2.2 billion agents entering the workforce in the next couple of years.
- [40:54](https://realalpha.app/v/tNNFJa5pUEg/?t=2454) **Agent use is a key success signal.** To judge whether its AI strategy is working, McDermott watches customer adoption of ServiceNow’s control tower and agents, and tracks agent assists and consumption. He says the goal is to connect enterprise data and assets in real time and become central to how customers operate.
- [44:03](https://realalpha.app/v/tNNFJa5pUEg/?t=2643) **AI adoption differs across industries.** McDermott says AI adoption varies by industry and region. Citing a meeting with businesspeople from Brazil, he said only 11% of companies there had moved beyond experimentation; he described public-sector efforts as consolidating complex systems, healthcare as modernizing patient experience and financial-services firms as rethinking operations and headcount. He said the U.S. leads in AI adoption and consumption.
- [48:33](https://realalpha.app/v/tNNFJa5pUEg/?t=2913) **Customers want specific AI plans.** McDermott says enterprise customers want specific recommendations tied to their business and leadership goals, with AI-driven solutions that can go live quickly and deliver predictable value. He says customers have little patience for exploratory sales conversations and expect vendors to know their business and offer a distinct position.
- [50:48](https://realalpha.app/v/tNNFJa5pUEg/?t=3048) **Technology should improve the human condition.** McDermott says he is curious about technology that could improve the human condition, including environmental work, space and new virtual markets. He describes a CEO routine organized around global time zones and regular team and customer conversations; he said he had 72 meetings with quota-carrying representatives on his calendar that month.
- [56:10](https://realalpha.app/v/tNNFJa5pUEg/?t=3370) **Leaders should face periods of uncertainty.** McDermott says leaders should not look for an escape hatch when conditions get difficult. He urged the Brazilian executives he met to face uncertainty and prepare for challenges, saying he believes periods of rapid change bring out strong leadership.

## Transcript

No Priors, hosted by Sarah Guo, with Bill McDermott.

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[0:00](https://realalpha.app/v/tNNFJa5pUEg/?t=0) The cost to replace an enterprise platform in this SaaS-pocalypse that people talk about is an extraordinary expense. Let's take that cost and then let's take the cost associated with the human capital doing that instead of something else because the platform was doing the work for you and then let's add up the cost of the GPU factory and the tokens that will materially affect their business model. And so for a simple application on our platform, it would be 10 times greater in cost to try to replicate it with a language model. People that run businesses understand that people make mistakes. They never will forgive software for making a mistake.

[0:50](https://realalpha.app/v/tNNFJa5pUEg/?t=50) Hi, listeners. Welcome back to KnowPriors. Today, I'm here with Bill McDermott, CEO of ServiceNow, and the closest thing we have to a rock star in enterprise technology. We talk about leadership in the age of AI, what enterprise customers actually want, the difference between SaaS platforms and the SaaSpocalypse theory, and the next 10 years of ServiceNow. Welcome. Thank you so much for being here. Thank you for having me, Sarah. Thank you. So I want to talk about your career and leadership and what's going on with ServiceNow, but I want to start at the beginning. I read Winter's Dream last week, and it's an amazing book.

[1:25](https://realalpha.app/v/tNNFJa5pUEg/?t=85) You talk about the deli you bought when you were 16. First of all, that's a very strange thing to do, but it's such an amazing story. Can you tell me a little bit first about your thought process, and then we can talk about how you managed it. Yeah, I don't, I don't deserve too much credit for, you know, doing a strange thing buying the deli because I was really trading in multiple part time jobs. At the time I was stocking shelves, pumping gas and bussing tables. And so I had a chance to consolidate all of that into the delicatessen and have one job where I could spend all of my hours. And for a kid going to high school, that kind of made a little bit more sense.

[2:11](https://realalpha.app/v/tNNFJa5pUEg/?t=131) So I got lucky. I bought the business for 5,500 notes, 7,000 with interest. If I make the payments, I keep it. If I miss a payment, they take everything away from me. So it was a pretty cut and dry moment. And I think the biggest thing that I've learned in my life, and especially there, is it's all about the customer. In the end, the customer and the customer alone determines whether you win or lose. And it's a very simple equation. If you keep them coming back, you got a good chance. And if you don't, you lose. And, you know, back then, one of the most interesting parts about that store was knowing your customer and knowing your base.

[2:56](https://realalpha.app/v/tNNFJa5pUEg/?t=176) And I really had, you know, three main customers. You know, one was the blue-collar worker, like my dad, as I said in the book, was rich on Friday and dead broke by Sunday morning. They were the senior citizens, and this was the early days of DoorDash, I guess, because they never wanted to leave their house, and we delivered, and no one else did. And the hard part was getting the kids to walk a block and a half past 7-Eleven to come to my store, and these were the early days of video games. and asteroids and pac-man and you know you tell that to people today most of them never even heard of these games but kids would stand there for hours plucking their parents quarters into those games and that's how i got them to walk a block and a half past 7-eleven and come to my store at the end of a long day one of the young people said to me you know when we want to have good food, be treated with dignity and respect, and play video games, we come to your store.

[4:00](https://realalpha.app/v/tNNFJa5pUEg/?t=240) And when we want to steal stuff, we go to 7-Eleven. So if you take care of your customer, you know who your customer is, and you give them what they want, just the way they want it, no matter what business you're in, you've got a really good chance. And that's all I did. And it put me through school, including college, and it got me my start. And I have to tell you, the EQ that comes with dealing with 500 customers a day is worth a lot. And I have a feeling the world could use a little more EQ right now. I learned a great deal, not managing a deli, but at least being a hostess in Outback Steakhouse.

[4:44](https://realalpha.app/v/tNNFJa5pUEg/?t=284) See? Yeah. You can relate, right? Well, you just, you know, the repeats of dealing with a lot of different types of people is useful. So it's still, like, amazing and strange to me. You talk about this set of customers that you, you know, understood and tried to serve. Like, were you just sitting there in the deli observing them before you bought the thing? Like, how did you even figure out these were the people? I worked there first, you know, and what happened was the owner was going through some personal divorce circumstances and wanted out. And I was the guy that was always there anyway. So he tried to sell it.

[5:21](https://realalpha.app/v/tNNFJa5pUEg/?t=321) It was only a one-year lease. You never owned the land of the building, so he was selling a one-year lease. The lease was owned by Sunmark Industries, which is Sunoco gas station, and they could throw you out anytime they wanted. So only a kid who didn't know any better would pay anything for it. So eventually, that's how the deal got put together. I said, I don't have any money, but I'll, you know, take a note from you and pay you back with interest. If I miss a payment, you get everything back. What was really interesting about the story is I didn't have any money. But what I did have, because I work there, is relationships with all the suppliers.

[6:02](https://realalpha.app/v/tNNFJa5pUEg/?t=362) **Bill McDermott:** So I got them to give me the first order on consignment.

[6:06](https://realalpha.app/v/tNNFJa5pUEg/?t=366) I said, I will always pay you back. 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. And probably they charged me too much on the margin, but I didn't care. I was in business, and that's all I wanted was a shot. And that's all I've ever wanted is a shot. And I'm so honored that in my life I've had the shot. And when you have a chance, you can really bring the winner within you out. And all people should ever want is an opportunity because an opportunity is a gift.

[6:48](https://realalpha.app/v/tNNFJa5pUEg/?t=408) And it's something that you should really cherish. And every time you get one, make the most of it. That resonates. One of the things I love about being in venture is you're in the business of giving people shots. Exactly. And entrepreneurs like yourself, especially when they get to be very successful, they value it for a really long time. Well, I deeply admire what you do. And I mean, can you imagine being the guy that came from the corner store that went to the corner office? And I think about your great job that you do in the venture world and how unbelievably creative you have to be. And the benefit of seeing all these young entrepreneurial companies, it's something I've always had a great deal of interest in.

[7:29](https://realalpha.app/v/tNNFJa5pUEg/?t=449) So, like, I should really be doing the interview with you right now, Sarah. Absolutely not. Um, when you, uh, um, okay. So it starts with, it starts with, you know, your, your part-time jobs in the deli and then this amazing career in sales and leadership and SAP and service. Now, um, one more piece on the leadership, uh, front before we go to, you know, talking about the companies, what's happening in the tech landscape. So in the book, you talk about resilience and ambition and disciplined execution. Yeah. When did those ideas crystallize? in your head as the way you would lead. And then, do you think that changes today, given how dynamic the landscape is? And I was just talking to the leader of a, you know, tens of billions of dollar AI company. And they're like, we have to update our strategy every month. Like, we have no idea what's going on. And so, how do you think about operating in today's environment?

[8:21](https://realalpha.app/v/tNNFJa5pUEg/?t=501) I had the great pleasure last night of meeting with about 800 business people that were in town from Brazil. And we were talking about leadership. And they took me back to my book, Winner's Dream. A lot of them listened to it, which is fun because I actually read it kind of straight through in between business trips. And I'm glad I did because it added the authenticity to the book I had hoped for. But it was wonderful being with them. And they really wanted to talk about leadership. And I think leadership is the greatest profession in the world. And in this environment we're in today, which is changing, and it's dynamic like never before.

[9:10](https://realalpha.app/v/tNNFJa5pUEg/?t=550) And it's fast like never before. I tell them it is fast, but it'll never move this slow again. So this is the way it's going to be. That's kind of stressful. Yeah, it is in one way, but it's inspiring in another. You know, we have to learn to get like real inspiration from the challenges that are in front of us. Because if we're able to cope with them, and especially if we're able to overcome them, we get superpower. But I go back to the original job of being a leader and, you know, getting my first break with getting my job at Xerox. And, you know, Xerox back then was the Google of its era. Right.

[9:53](https://realalpha.app/v/tNNFJa5pUEg/?t=593) And it was just like such an honor. And, you know, I go back to that original interview a lot in my mind. And I think about the opportunity of getting that shot. and you know I'm getting geared up to leave Long Island my dad drops me off at the railroad tracks and you know I'm just turned 21 years old and I guaranteed my dad I was coming home my employee badge in my pocket and there's something important about that because my dad said Bill you're a good guy don't put all that pressure on yourself and I said no no I guarantee it and I went in to New York that day, and I was reading the annual report on how that CEO, David Kearns was his name, was reinventing this corporation under the quality management principles given to the world by Deming, and at that time, as you know, most of the most valuable companies in the world were from Japan, and they were actually selling a very high quality product for a lesser price than xerox was building a lesser quality product it's hard hard to do right and so this is exactly the time i'm joining the company but i was so inspired by this guy who wanted to transform that company that by the time i got into new york i wanted to be the next david kearns but i had to go knock on cold doors for a living to get my shot so on my last interview

[11:24](https://realalpha.app/v/tNNFJa5pUEg/?t=684) I'm so psyched out because I'm meeting with the big boss at 9 West 57th overlooking Central Park. And I sit on a bench next to another friend that's my buddy today who's waiting for an interview. And he's been waiting for a long time. I said, what are you doing waiting? I go over to Joanne Siciliano, who's a receptionist, and I said, look, I had all day. I'm not going anywhere. Please let Mr. Fullwood know I'm waiting. And I really look forward to our meeting. I was instantly invited into his office. And this is the essence of it all. over his shoulder at Central Park on the 38th floor and line was 57. I realized then, as I

[12:07](https://realalpha.app/v/tNNFJa5pUEg/?t=727) **Bill McDermott:** realize now, it was not an interview. It was a battle for survival. Because if I get that job, I'm in control of my own destiny. It's my shot. And it's up to me to do something with it.

[12:24](https://realalpha.app/v/tNNFJa5pUEg/?t=744) So at the end of an interview, he said to me, Bill, it's a very interesting interview. You're interesting young guy the HR department's going to get in touch with you in the next couple of weeks and I said to him you know Mr. Fullard I don't think you completely understand the situation sir and he looks at me with the tilted head like what's his kid up to and I said um I haven't broken a promise to my father in 21 years and I guaranteed him come home tonight with my employee badge in my pocket and he really like kind of tilts his head now like what's this guy up to and uh you know he goes you know bill mcdermott as long as you haven't committed any crimes you're hired now i hadn't committed any crimes of course i told him that and i double checked that you really mean and i'm hired and he goes yeah so i go over there and i you know he's kind of sitting the way you are i pick him up hug him a little bit put him safely back in his chair and I run past the receptionist Joanne and get down to Fifth Avenue and head over to Sixth Avenue to a Bunnenberg or to a pay phone.

[13:31](https://realalpha.app/v/tNNFJa5pUEg/?t=811) I call up mom and dad and I say, you know, break out the Corbell, got the job. Now, people don't often know, especially in Silicon Valley, what Corbell is. I'll admit, I do not. It is like the cheapest, worst champagne you've ever had in your life. Okay. But in Long Island, where I come from, that's cristal so the point of the whole thing 25 years later emerson fullwood asked me to give a speech at the rochester institute of technology to students and in introducing me he said the only time that he had ever broken policy at the xerox corporation was the day he hired me i didn't know that. And what I found remarkable about it is that he remembered that and he knew what he was doing when he did it and thought it was worth it. So we have to put tremendous care into people, tremendous attention to detail when it comes to, you know, uniqueness in human beings and what they are capable of doing. And without him, I wouldn't have gotten my shot. And I never forgot that. And today, when I have CEO meetings, he still comes to them. And he's my friend for life.

[14:58](https://realalpha.app/v/tNNFJa5pUEg/?t=898) So I think somehow, in the mixture of things, with AI and today's society, we're losing a little bit of the human power that we all have to connect with each other and do magical things together and just make sure we remember AI is to serve people and to make the human ambition greater, not to take it away from us. And so that's my feeling on, you know, just how things have changed, but in many ways the essence of leadership human connection people are just more important now than ever i know i said i was gonna then ask you about service now but i have to ask you a little bit more about this let's do it um do you think it's possible to coach or to teach people that type of agency that you have yeah Yeah.

[16:00](https://realalpha.app/v/tNNFJa5pUEg/?t=960) I do. I think that, you know, someone asked me last night, you know, that similar question. And I said, you know, I'm a person like a lot of other people. I was a very shy, quiet, laid back kid and really came into my own through work. And, you know, those part time jobs I was telling you about and the desire to be somebody in this world and know that my only way out, I wasn't going to make the NBA. I love basketball, but I wasn't going to make the NBA. Yeah, me neither. Right. So I said, you know, what can I control? I can control how hard I work. I can control desire to do something and make a difference.

[16:46](https://realalpha.app/v/tNNFJa5pUEg/?t=1006) I can control that. And so I got a lot of confidence from work. And, you know, other people might get confidence from something else, and that's fine. But I think it's so important to be connected to work, especially work that ties to people. Because when you know how to deal with people, and in the deli, I had 500 of them a day, you start to get a good feeling and a good understanding that if you really listen, if you really care, and you're really there, present, and not just going through the motions, there's people that want to connect with that kind of person. And so I really do believe that you can teach that. But you do have to practitioner, you know, those ideas. You have to be a part of the process. And I think so much is done today on the beautiful mobile phone in your hand that it's replaced, you know, the human side of the connection.

[17:52](https://realalpha.app/v/tNNFJa5pUEg/?t=1072) I, like you, I've got one in each pocket and I value them because they make me more productive and happier because I can do those things. But we really do have to train people.

[18:07](https://realalpha.app/v/tNNFJa5pUEg/?t=1087) **Bill McDermott:** We have to make them do it where they actually have to simulate and be trained and be certified and understand and be coached well.

[18:18](https://realalpha.app/v/tNNFJa5pUEg/?t=1098) so they have the confidence to get out there and be in front of other people where they can lead and make a difference. And I'm convinced that they can do it. Yes, there are differences. Some people are more skilled at it naturally, innately, no question, but more people are capable of more things than they realize. That's very encouraging. One thing that also struck me as soon as I asked you the question about leadership in the age of AI was your immediate reaction i said you know something that's a very uh common sentiment it's the the pace of change is scary and your immediate reaction was like well it's also inspiring right it's a very like positive attitude um uh for especially for you know someone running an amazing incredibly adorable platform company where you're also facing more questions than you have previously sure um how do you think about like you know in getting everybody at your company or encouraging other people to have that type of reaction to change that it's all an opportunity well for one i agree with you that a lot of people are frightened of change to begin with the era of ai has disrupted every industry every business every person and everybody needs to really rethink everything and it seems to be coming all at once so my approach to that was

[19:46](https://realalpha.app/v/tNNFJa5pUEg/?t=1186) to lean into it and one of the ways we did that here is put together a white paper on the blueprint for agentic business which I'll happily give you a copy of today and train them on, you know, what is the difference between a language and model and an enterprise platform? Not saying better or worse, they're both important. They're both extremely important. And one actually makes the other stronger. But if you don't know where one begins and one ends, it really is kind of confusing for people. And that was a big unlock. I literally had CEOs tell me that that white paper actually let them see the world totally different, that there were many things in it that they didn't know or didn't realize.

[20:35](https://realalpha.app/v/tNNFJa5pUEg/?t=1235) One such example would be, you know, let's take an example that's real. Every company today has a compensation issue. So, OK, we have a compensation issue on aisle seven in XYZ Corporation. The language model will do a great job of telling you, in a compensation situation like this, please consider step one, two, and three. Excellent. Does it in milliseconds. Fantastic. Only problem is, it doesn't actually close the case. So now in aisle seven, we got to have the data, the context, and we'll have to go in and out of several different iterations of departments because let's assume it's a salesperson in aisle seven.

[21:28](https://realalpha.app/v/tNNFJa5pUEg/?t=1288) And oh, by the way, that's connected to the HR department. And because it might be a problem, probably finance is involved in it or legal or compliance or risk. And now we have data and a workflow that's gone through many different iterations, databases, and functions to come back and remediate the issue and close the case. That's what a workflow platform like ServiceNow does. And it was also important to have AI think, but workflow acts. That's an unlock for a lot of people. Another case example would be, hey, you know, I'm a bank. I've got 15,000 of my own engineers. My CEO is under pressure from the board to come up with AI use cases. The board meeting is coming up in 60 days. And I got to look like I got all my story straight on what we're doing to infuse AI. You agree that that's a common thing, right?

[22:31](https://realalpha.app/v/tNNFJa5pUEg/?t=1351) Very common. Yes. Very common thing. OK, so one thing would be AI and some of the AI code out there is fantastic and it can write new code very beautifully and set up the engineer for success and get things done at a speed never before done in the world. It's also true that that net new code comes at a cost because the cost to replace an enterprise platform in this SaaS-pocalypse that people talk about is an extraordinary expense to try to match what some of these really important enterprise platforms do. because you'd have to rebuild it. You're getting a model. I'm going to write code now. So I'm rebuilding your model.

[23:23](https://realalpha.app/v/tNNFJa5pUEg/?t=1403) Let's take that cost. And then let's take the cost associated with the human capital doing that instead of something else because the platform was doing the work for you. And then let's add up the cost of the GPU factory, the business model associated with the language model company, and the tokens that will materially affect their business model we've actually done the math on

[23:50](https://realalpha.app/v/tNNFJa5pUEg/?t=1430) **Bill McDermott:** this and so for a simple application on our platform it would be 10 times greater in cost to try to replicate it with a language model. Now, the other thing about that is, if I give you the language model and it makes

[24:06](https://realalpha.app/v/tNNFJa5pUEg/?t=1446) a mistake, you call me up and you say, hey, Bill, the language model made a mistake. And I say to you, the language model works. And you say, yeah, it works, but it made a mistake. Well, it's probably right, but it's not deterministic. And incidentally, it doesn't have the context of all the data that has materialized in the company in our relationship for a couple of decades now and so what we're learning too is people that run businesses understand that people make mistakes they never will forgive software for making a mistake so we're kind of in a situation where at a very small fraction of an IT budget, a premier platform, is a bargain. And to combine that with AI and the things that AI can do, you get the best of both worlds. You get more innovation, better integration, and a better outcome. Try to build it yourself at a 10x higher price, and then you have a problem.

[25:10](https://realalpha.app/v/tNNFJa5pUEg/?t=1510) And I just tell you that the model works, because I just give you the model. You don't have someone to call to fix things. I think a lot of the SaaSpocalypse discussion ignores the basic fact that I don't think most businesses want to build workflow software for everything they do internally. And I do think they want somebody to be responsible for it. And I think it takes a lot of energy to go gather that context today. It is not an automated thing. And maybe it'll become more automated. but uh but that all resonates for me i i will have to ask you you know um so lms they can in the traditional interaction mode they give you an answer when you ask a question right now you have long horizon agents maybe you have computer use people can use applications with these models does that change your thinking at all no i think we lean into it you know our our perspective is these language model companies are fantastic and they're very important and they're going to do fabulously well um we said the same thing with the hyperscalers you know it wasn't that long ago that people were like hey you know why wouldn't the hyperscalers just eat software because everything is going to go to a workload in these great hyperscaler companies and they are great

[26:31](https://realalpha.app/v/tNNFJa5pUEg/?t=1591) companies. They're fabulous companies. And so our perspective was we have to be the AI control tower for business reinvention that integrates with all the hyperscalers, with all the language models, and all the systems of record because they too are important companies and the data that resides in them is very important. So if we can be that fabric that connects all those nodes, now we can help you run a true agentic business. And on top of that, we made the move into security, not because we're going to do all things in security, but because U.S. is the world's largest economy, China is number two, and cybercrime is number three. It's a $1 trillion a month problem. And so we feel that being able to integrate to all the good security platforms, but manage IT and OT, which is the operating technology, with Armus now becoming a part of ServiceNow, we're going to give corporations the ability to have a full purview of the whole landscape and so for example in operating technology you know it could be networks with devices attached to it it could be manufacturing with various tools that are or aren't on a network where ai can or may not even see them it could actually be medical devices in a health care situation it could be a world's prestigious bank managing critical

[28:15](https://realalpha.app/v/tNNFJa5pUEg/?t=1695) infrastructure which includes the people places things but also the building and the things in it To have all of that in one automated AI platform for this reinvention of your business, it's pretty compelling. So it's all there now. And I really like see such a future and such growth in all of these businesses, our core and what we've extended it to because we're a native AI company. Even the platform itself now is autonomous. And, you know, you've seen what we did with MoveWorks, the agentic front door to the enterprise, and VESA, which is human and non-human identity, and now the security move with Armus on top of an unbelievable core.

[29:05](https://realalpha.app/v/tNNFJa5pUEg/?t=1745) By the way, we integrated these businesses in 20 days. 20 days. So a lot of companies don't have the engineering power to say they can do hard things quickly. But, you know, we're blessed with some real talent here. It's very impressive. I have sold companies to, you know, large enterprise software vendors where it takes like a year and a half of rebuild to get some value out of it. Totally. Yeah. I think it's a really good historical reminder that people forget that there was this fear about the hyperscalers as well, which, as you mentioned, have become very important to all of our businesses.

[29:45](https://realalpha.app/v/tNNFJa5pUEg/?t=1785) And yet have not replaced the need for, you know, workflow software and platforms. Yeah, as you said, you know, actually are very good partners, you know, and on the back of ServiceNow franchise, get billions in workloads into those clouds. And they're all such great companies, but they all tend to do different things super well. So for the customer to have choice is also a great idea. Just like they'll want choice on the language models and us not staying in the way of that and giving choice, but acting as that control tower is a huge competitive advantage or differentiation, whichever your perspective might be.

[30:29](https://realalpha.app/v/tNNFJa5pUEg/?t=1829) Do you think there's any segment in enterprise software that is at risk from generated code and agents? I think that it's true that there will be companies that will be at risk. It's also true that they theoretically should be more valuable because of the data and the context around that data. But if there was a risk, I believe it's more departmental companies. So if you think about companies that do something that span multiple departments or are a serious system of record that is very hard to replicate, they're safe and they'll be a part of the future.

[31:15](https://realalpha.app/v/tNNFJa5pUEg/?t=1875) **Bill McDermott:** If you're serving one function and what you do is not tremendously high value add, and it might not even be a high up on the priority list of a CEO, I think that that would be the chance where the vulnerability equation really rises quickly.

[31:37](https://realalpha.app/v/tNNFJa5pUEg/?t=1897) um we're fortunate in the sense that we go end to end on a horizontal and north to south on a vertical up and down the stack and across the enterprise and i think that's a pretty huge moat and uh right now i i believe the last time i looked at it was more than 85 billion workflows are in. light as we're having this podcast and we got 7 trillion transactions happening on that platform and it's representing the most important brands in the world and that's not only something we're proud of but it's also a serious responsibility because those companies can't miss and that system always has to be there for them and fortunately it is. You uniquely have run two companies that are just clearly platform businesses SAP and ServiceNow. Do you have a definition in your mind of what makes something a platform business because uh i grew up as an investor in the age of sas yeah and and you know rise the cloud and everything uh and it is it i think it was wonderful for innovation that you could build like sort of features that turned into companies right the software workflows that were um sort of tangential to a system of record for example. ServiceNow originally began with like IT Service Desk as the workflow. But how do

[33:03](https://realalpha.app/v/tNNFJa5pUEg/?t=1983) you think about like how the positioning is and the actual work is very different now and then like, you know, how you got there? Yeah, I think that had we only done what you rightfully point out, which had been an IT service company as an example, that might have been a system of record for the IT department but I think when CEOs look at a corporation and they say what are the needle movers those are the companies that since you mentioned the two that I work for you know one is running the financial system of global corporations of mass scale and multiple currencies geographies industries and And it's really kind of thorny and complicated to even think about removing something, especially something that's probably been mass customized for the unique attributes of that business.

[34:00](https://realalpha.app/v/tNNFJa5pUEg/?t=2040) So the investment scale was great. The switching costs are very high. I think you would consider that a platform. And I would say the same is true in a certain sense for a company like ServiceNow, but for a different reason. Yes, it's a system of record for all the things IT and the services that it provides, but it's even bigger than that in the sense that all of the other systems of record integrate with it. So now you have roughly 800 of the more substantial systems of record that integrate into it. And because of our in-memory open-source data platform, so it's built on the open-source technologies, but its speed, its scale, its ability to ingest data, we could take as much as you give us.

[34:51](https://realalpha.app/v/tNNFJa5pUEg/?t=2091) But similarly, you might say, okay, you know, I'll give you your core IT and OT, and I get the holistic end-to-end process. But, you know, I have data lakes, I have hyperscalers, I have language models. What about in the flow of work or a business process? What can you do for me if I don't want to put it in service now? Oh, we make a zero copy. And then the transaction is complete, done and dusted, nothing moved. There was no risk associated with it, and it works. So I think that is a mission-critical platform in the execution of work and the basics of getting things done. What's unique about it is you can change the business process instantaneously using the AI tools that are resident in the platform.

[35:47](https://realalpha.app/v/tNNFJa5pUEg/?t=2147) So if you want to build a net new application, you can do so. If you want to see how the business process would change in a knowledge graph, you can do so and you can see how that change. impacted the processes and the way work flows and all the individuals impacted in a corporation in real time. So I think the motion of that is very, very hard to replicate both on the history of it, the bandwidth of it, and also what we have designed in terms of the system's capabilities. It's very unique. One of the things that makes workflow platforms so sticky is the organization, beginning with IT, learns how to deploy workflows on it.

[36:38](https://realalpha.app/v/tNNFJa5pUEg/?t=2198) And as you said, maybe they can do it even more instantaneously now. The cost to implement new business processes, integrate, customize has always been very high for enterprises. Is that decreasing with AI? Is that like an advantage for you, a concern for you? It's a great question. It's actually a big advantage because we were always quick to implement. You know, nobody has time for multi-year projects. You know this. And the customer wants to get to value really fast. and with autonomous platform like we have now, we have major customers, big ones, that are going live in less than 30 days, big ones.

[37:22](https://realalpha.app/v/tNNFJa5pUEg/?t=2242) And so think about it. You know, if you go back, as you mentioned, you know, think about the financial crisis era and the scale even then of SaaS applications. If they could have been implemented in less than 30 days, everybody would be doing a rain dance with happiness. um it took months and to think that you can do things big things complex things in less than 30 days in some cases even faster um and it's all modular so you can get your quick wins and just keep going um you know some people thought that the si's you know would be hurt by this but the difference is they actually have many more projects and how that they can do much more quickly that's what you're saying yeah i'm saying much more quickly everything is happening much faster the customer's roi is better i'm a big you know proponent of a native ai company and everything we do is about being a native ai company every change we make is because of ai and some of those things you know they change business models they change um the way humans actually work in the

[38:31](https://realalpha.app/v/tNNFJa5pUEg/?t=2311) **Bill McDermott:** company. For example, you know, 90% of our customer service cases now are managed by agents.

[38:39](https://realalpha.app/v/tNNFJa5pUEg/?t=2319) And, you know, that means like only 10% are actually involving people. And so there's a lifting and a shifting and a changing of the guard in terms of what people do for the critical thinking and the judgment calls that they have to make instead of the tactical, you know, work of just grinding out details. And I think that makes people happier in the work, but it also does change the work. If you were to fast forward five years, like what do you think is different about the employee base at ServiceNow or even like the work being done? I think that in terms of employee base, I think you're going to see that the net new added headcount will be dramatically reduced.

[39:24](https://realalpha.app/v/tNNFJa5pUEg/?t=2364) And that's because the company will be far more productive. the agents are real and they will take on a tremendous workload so where to keep up with growth in a growth company like service now you'd have to hire thousands of people in finance and hr and the supporting functions and services just to keep up with it all and now the agents are going to be able to do a lot of that so you're going to invest in things that really matter like humans that engineer great innovations and that humans that actually manage The relationship and the importance of human to human connection, building trust, making promises and keeping them and enduring a relationship and the net present value of loyalty in that relationship, that's all going to be human. But I can see a company where, you know, you don't have to really increase headcount to achieve that goal. And I do think that the bar got raised in terms of differentiating your skill set and making sure what you're capable of doing can't be easily replicated by an agent.

[40:36](https://realalpha.app/v/tNNFJa5pUEg/?t=2436) Not just at ServiceNow, but in all businesses, if an agent can do it as good or better, that's an easy economic decision to make, which is why there'll be 2.2 billion of these agents entering the workforce in the next couple of years. And so, you know, there's going to be a lot more agents than there will be people. When you think about, you're just describing, you know, ServiceNow is growing about 20% a year, 13 plus billion in revenue trailing. It's a massive business growing at scale. I think one of the things that's so interesting about this SaaSpocalypse narrative is, you know, many of the companies as described are actually like doing really well on fundamentals.

[41:22](https://realalpha.app/v/tNNFJa5pUEg/?t=2482) signals um what are the signals you look for in your own business besides you know what customers tell you they want to do with you right um like quantitatively or otherwise let's say like what we're doing in ai is working well the most important thing is we've expanded the boundaries of the platform so we have a company that's operating globally we operate across multiple industries in the companies that we serve. We serve everything from IT to the employee experience to our fastest growing TAM, customer relationship management, obviously all the work that the creators do, and security, as I talked about. So what I'm looking for is the adoption of the AI control tower for business reinvention. And are we the agentic front door to the enterprise?

[42:18](https://realalpha.app/v/tNNFJa5pUEg/?t=2538) Are we managing the humans and the non-human identities? Are we connecting in the workflow data fabric all of the nodes that are operating in an enterprise? Whether it's a data lake, a hyperscale, a language model, a system, a record, all those things should go through the central nervous system, which is ServiceNow. And obviously, when I think about IT, we know the people, we know the places, we know the things. When I think about OT, we actually know the networks, the devices that reside on them, the critical infrastructure, the shadow IT, the disconnected controllers in the case of a manufacturing company, as an example.

[42:59](https://realalpha.app/v/tNNFJa5pUEg/?t=2579) So this amazing real-time insight and visibility into how that company is running and how we can make that company run better, that's the ethos of everything in terms of the customer relationship, that we know more, that we care more, and that we can do more for that customer than any other enterprise company in the world. That's the game plan. And, you know, for my money, what else do I look for? I look for the AI and the assists that the agents are doing to help the humans in the companies we serve. And I want to see that the trend line of those assists and the consumption of that innovation is really going right and up to the north side of town, because by doing that, you've solidified your position as super important to the way the company actually runs.

[43:56](https://realalpha.app/v/tNNFJa5pUEg/?t=2636) And not to mention the fact that the shareholder value creed. takes on a whole new meaning once you kick in that consumption model on top of everything else. When you talk to this amazing enterprise customer base that is deeply embedded with you, and then, as you said, importantly, trusts you and trusts you to do more all the time, what is the state of play in terms of, you know, you describe a very forward-looking vision for what AI can do to transform enterprises. Like, where are people today? What are the first questions they ask you? Do they believe it? Yeah, I think that's a great point because most people today know that they have to do something with AI. But like in the case of Brazil, as an example, only 11% of the companies since that was last night's meeting have actually gotten past the experiment phase where they're doing experiments. And so we're seeing now that companies are going past the experiment phase into mainstream on building the agentic business on building the agents to complement the humans and i'm driving business model innovation and efficiency that is now picking up steam but you have to remember it's a very diverse set out there I mean, in public sector, they're just basically now trying to consolidate complexity and get one department to speak to another department so we don't have billions of fraud getting through the cracks.

[45:31](https://realalpha.app/v/tNNFJa5pUEg/?t=2731) um other industries like healthcare as an example we're now moving into the modernization phase so the patient experience isn't so miserable because the professionals that work there are great but the systems have been holding them back but if you look at a financial services firm for example um you know they're moving full full speed on what can i do with ai to fundamentally rethink how I run my company, to manage my headcount better, to get more done with a lot less. So it's kind of based on industry, based on geo. Different geos have adopted it more quickly. The U.S. is the leader in terms of consumption and adoption of AI and then moving faster.

[46:15](https://realalpha.app/v/tNNFJa5pUEg/?t=2775) I give you a flavor of some of the industries, but I would say that it's more about modernization as a standard and the first movers now are moving out with ai and they're aggressive and they're going for it when you think about like what going for it means are there a set of use cases that are universal across companies or are there different things that matter to the different i think that they're um they're looking at their business model and what can ai do to change my business model the ones that are first movers or early movers and head count is definitely on the table obviously if you believe in the agent world and you do increase head count it's because you can see that the heads are supporting the digital transformation and the inclusion of the agents and there's more revenue to be gotten by adding them yeah there's roi on it yeah exactly and And they're not going to add them anymore, meaning people, without a clear ROI case.

[47:23](https://realalpha.app/v/tNNFJa5pUEg/?t=2843) And in many cases, a lot of these companies, especially if you look at the years 2020 to 2024, they hired a lot through COVID. Not a lot of people talk about this. I haven't actually heard anyone talk about it, but when they did the hiring and everybody had a hand in this, a lot of it was virtual. A lot of it then was, you know, keep the people. We need the people. You know, there's a crisis out there. And now they've realized they've layered up the companies. Some of the people maybe didn't get. As close a look as they should have because, you know, Zoom was the way to meet them, greet them, and hire them.

[48:08](https://realalpha.app/v/tNNFJa5pUEg/?t=2888) And now with the inclusion of AI in the business model and the innovation of the companies, it's kind of like, how do we get leaner? How do we get smarter?

[48:17](https://realalpha.app/v/tNNFJa5pUEg/?t=2897) **Bill McDermott:** And if AI does make us better, we should see that in the ultimate profitability of the company, the revenue per employee of the company.

[48:26](https://realalpha.app/v/tNNFJa5pUEg/?t=2906) And the company should have expanding margins, expanding or re-accelerating revenue, and should be in a more exciting growth story than it was two, three, four, five years ago. So there's high expectations for what AI can do. What is the biggest thing that's changed in customer conversations for you about AI over the last year? Right now, I think it's just, tell me what I need to know. um it's not like let me come in and discover your problems or let me bring you a solution because i have one in my pocket and i can't wait to share it with you um it's like you know my business if you don't know my business there's no conversation but let's assume you know the business be very prescriptive tell me very specifically at the macro level depending on

[49:17](https://realalpha.app/v/tNNFJa5pUEg/?t=2957) **Bill McDermott:** On the level you're talking to, how do I transform the company in keeping with the CEO vision or the management team's vision?

[49:24](https://realalpha.app/v/tNNFJa5pUEg/?t=2964) At a departmental level, you really understand whether it's sales, it's human capital, it's engineering, or it's technology or CTO and its orientation. You really understand the landscape and you have very quick solutions that can get up and running and deliver the value in a highly predictable manner and it's ai driven like they have to have ai in there because they know the ai is the force multiplier and so i would say the dance um has gotten brief the execution is where they want to spend their time get me there fast uh pretty impatient set of customers but they're uh sounds like they're pretty decisive given the parameters real decisive and real fair yeah i mean you know very open-minded if you can help me do it because i need the help everyone will tell you they need the help they're not telling you they have all the answers so it's our job again to know more about this than they do otherwise why do they need us in the room and then you have to have a position that you take that brings something unique and variable to the equation i always tell people If two people are in the same room at the same time with the same opinion, one of them is redundant.

[50:45](https://realalpha.app/v/tNNFJa5pUEg/?t=3045) I want to close up with two maybe more personal questions. You have a lot to cover with ServiceNow, but you're also just an interested guy. What inspires you or makes you curious in AI or elsewhere in technology outside of what you're doing with ServiceNow? Well, I'm fascinated by so many things. what really interests me in technology is how it will truly improve the world, the human condition. It could be an environmental conversation. It could be what we're seeing happening in outer space. It could be a global corporation trying to do unique things in a world in new places that they've yet to conquer, but they can do so with technology now and AI, and they can simulate a presence that might not actually be physical, but it could be unique, virtual, and new.

[51:46](https://realalpha.app/v/tNNFJa5pUEg/?t=3106) There's new routes to market, there's new channels, there's so many new things that could be done. So I think that this is the era where everything really does evolve and possibilities exist where it just wasn't possible three, four, five years ago. So I find that, you know, it goes back to the quote that I put in the book, since you mentioned what is dream, when the great Robert Kennedy once said, you know, some men see things as they are and say, why? I dream things that never were and say, why not? So I always try to look at things that didn't exist or don't exist with the application of technology or just a great dream.

[52:27](https://realalpha.app/v/tNNFJa5pUEg/?t=3147) What's possible? And then in terms of just the day-to-day in between your dreaming, what is the day in the life of Bill McDermott as ServiceNow CEO look like? Well, it depends on where you're physically at at the time based on what you're doing because the time zones are all different. But if you're in California, which we are today together, you know, you start your day off. It's really easy to understand this. With Europe, you migrate yourself then to the United States and you wrap up with Asia. So you always have to keep the tempo around the time zones and what's happening in the global economy.

[53:10](https://realalpha.app/v/tNNFJa5pUEg/?t=3190) I just try to be a global person and be a leader that's involved in all dimensions of the company in any time zone in the world. So that's one aspect of it. And you're talking to your teams there, hearing what's going on with customers, what's going on with them. Today, I've been in two out of the three with the regions of the world, and I'll finish up with the third. And absolutely, I want to hear what's going on with them, what's going on with the customer, what's going on with the business, what's going well, what's not going well, based on where they're at at any one moment in time. I can see and I feel things very deeply, and I'll offer my suggestions.

[53:53](https://realalpha.app/v/tNNFJa5pUEg/?t=3233) I try not to make the decision for everybody, but I'll offer my suggestions just on observations. And then, you know, we have an open, honest, riffing relationship on ideating on something, and then ultimately we get someplace quick. You know, there's no time to screw around. We got to get to the point and move on. A lot of time with customers. You know, I feel that I really get grounded with the customers and understanding what they're trying to accomplish and how I can help them. And, you know, a lot of people talk about, you know, sales and, you know, the idea of running corporations. It's all based on the customer and the customer alone.

[54:37](https://realalpha.app/v/tNNFJa5pUEg/?t=3277) They determine whether you win or lose. And if you never lose that in your heart, you're closer to success than failure. The other thing is I listen to the employees, you know. for example yesterday I started my day with 17 conversations with 17 quota carrying reps wow that's a lot okay 17 and I got 72 on my calendar this month 72 and it's inspiring because anytime you need to feel like feel good talk to the people that are closer to the customer And you realize just how great your company is, how great the people are, how smart they are. And, you know, they have so many good ideas and they're doing so many good things.

[55:25](https://realalpha.app/v/tNNFJa5pUEg/?t=3325) You know, one woman said to me yesterday, you know, she was most proud of the health check of her customer. And she told me all about the customer. The health check is our heuristics around customer satisfaction, the performance of the system and so forth. And it just inspired me. And then, you know, always try to do, you know, one-to-one, one-to-few, and one-to-many. And last night, I, you know, wrapped up my day with 800 executives from Brazil. And it was, like, amazing. And they wanted to, you know. Talk about leadership and many of the things that, you know, you want to talk about. And I think everybody is in the mode right now where they want to learn.

[56:10](https://realalpha.app/v/tNNFJa5pUEg/?t=3370) They want to experience what you think and they want to grow. And they are uncertain. And to some extent, you know, they don't have all the answers. And sometimes they're even afraid. And I explained to them, you know, don't look for the escape hatch. you know this is the moment when leaders really matter because as the waters get choppy you know we see who's tough and who's not and when the tide goes out you want to be fully dressed and even if things don't look so good you'll figure it out if you're fully dressed and you're ready for the battle and i think that um this is bringing out the best and real leaders and I live for this moment.

[56:55](https://realalpha.app/v/tNNFJa5pUEg/?t=3415) We seem like a leader for that moment. And I love the confidence that you have that other leaders want to meet that change too. Thank you, Sarah. Awesome. Thanks so much, Bill. It was an honor meeting you and spending this time with you. Thank you very much. Find us on Twitter at NoPriorsPod. Subscribe to our YouTube channel if you want to see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way you get a new episode every week. And sign up for emails or find transcripts for every episode at know-priors.com.