ServiceNow has been on a roll and gaining traction in the enterprise application workflow arena. However, workflow is becoming a key element in all business applications and a fundamental digital transformation building block. So, the high flying vendor now faces increased competition in this vital, rapidly evolving market segment.
Digital disruption, transformation, cloud, platforms – a large and growing number of phrases describe the impact that emerging technology is having on corporate business processes. “Companies want to use technology to create end-to-end, seamless transactions and interactions,” explained Joshua Greenbaum, an industry analyst and consultant at Enterprise Applications Consulting (EAC). “But they cannot occur in a single application, like CRM (customer relationship management). Enterprises need to extend applications, fill in gaps, and build bridges among their information silos,” he continued.
“Companies want to use technology to create end-to-end, seamless transactions and interactions”, Joshua Greenbaum, Enterprise Applications Consulting
Legacy system limitations
The problem with legacy enterprise software is that it often creates a lot of friction. Many of these solutions were paper based. As a result, employees, partners, and customers usually have to input a lot of information, sometimes in seemingly obscure ways, in order to complete different tasks.
Another challenge is organisations broke work down into distinct steps completed by different applications and often managed by distinct departments. Moving information from one system to another is challenging and is often stymied by the wide range of different interfaces and organisational roadblocks. In fact, the average organisation has 88 applications; large companies deploy 175, and smaller businesses 73.
Workflow’s vital role
Building business processes that break down those barriers and streamline the process starts with deploying software that connects the functions. That is workflow’s role.
Once that occurs, dividing lines between traditional front-end and back-end systems blur. Structured data and unstructured data are treated equally as valuable sources of business intelligence. Nonroutine (unstructured) collaboration occurs within the context of business processes, not in separate applications disconnected from their purpose.
Because of its benefits, revenue in this space has been rising. In fact, the global enterprise workflow automation software generated $4.8bn in 2018 and is expected to grow to $26.31bn in 2026, a 27.51 percent compound annual growth rate.
ServiceNow has been a leader in this market. The vendor focussed on a key differentiator: offering a single platform, single data model, and single architecture for enterprise service management, and continued innovation in advanced platform features, such as AI/ML and natural language query.
In addition, they positioned themselves as an enterprise application digital workflow company with marketing terms, like ‘making work, work better for people’. Another plus is the vendor successfully expanded its product focus beyond its traditional IT service and operations base into areas such as human resources and customer service.
A changing landscape
But as it has been successful, the breadth and depth of the competitive landscape has changed dramatically. “The enterprise application vendors quickly figured out that if a new processing layer is added and done outside of their core applications, they may lose control of their customers,” explained Craig Le Clair, vice president and principal analyst, Forrester.
As a result, they have been reinventing themselves. “SAP is no longer an ‘ERP’ company, ServiceNow no longer an ‘ITSM’ company, Oracle no longer a ‘database’ company and AWS no longer an ‘IaaS’,” stated Craig Roth, research vice president at Gartner Inc. “All are focussing on the new ways of work, customer experience, intelligent automation, and flexible and adaptable workflows.”
“All are focussing on the new ways of work, customer experience, intelligent automation, and flexible and adaptable workflows” , Craig Le Clair, Forrester
As evidence of the change, Salesforce purchased Slack in December 2020. The acquisition presented a new opportunity to bring together the two halves of the enterprise software market: enterprise applications and productivity applications, according to Gartner’s Le Clair. Too often, employees work in silos, flitting between enterprise applications like CRM to accomplish business-critical tasks and other applications to discuss and create content around these tasks.
In the following November, the company added an integration layer that makes it possible to combine third-party applications with the original Slack platform. Slack included developer tools in the new platform that professionals use to integrate various workflows and other work-based applications, alongside features to make it easier to integrate Slack Connect with other applications.
• Slack’s Workflow Builder allows teams to automate work without code. Users drag and drop pieces of existing apps and streamline workflows, such as approving time off requests.
• Slack Links enables employees to sign into work apps via their Slack accounts.
• Users subscribe themselves or a channel to custom notifications without an external app.
• Developers host and store the application data within Slack.
• Developers attach invisible metadata to messages which enables apps to communicate.
While the change may impact ServiceNow, Salesforce may have had Microsoft, its traditional rival, in its crosshairs when it made the purchase because its Teams solution is emerging as a popular collaboration workflow solution.
The competitive landscape widens
However, overlap and competition with ServiceNow is evident in other areas. In addition to Teams, Microsoft developed Viva, an employee experience platform to bring tools for employee engagement, learning, wellbeing and knowledge discovery, directly into the flow of people’s work.
ServiceNow offers Employee Journey Management, a suite of enterprise-wide workflow capabilities focussed on improving the employee experience. The solution helps them navigate and monitor important moments in their work lives, such as returning to work, setting up remote workspaces, and transferring departments.
Oracle also has a product that helps human resources professionals. With Oracle Journeys, HR teams create, tailor and deliver step-by-step guidance to walk employees through events as diverse as onboarding, having a baby, returning to the workplace, launching a new product or growing their career.
The next step
So, how will this market evolve? Right now, the market is in an early stage of development, one with a great deal of chaos. “There is total confusion in the market,” explained Forrester’s Le Clair. “I spend half of my time on the phone with clients trying to help them understand how the various products work because all of the platform suppliers promise great outcomes and sound the same.”
Delivering a workflow holy grail, a system that works seamlessly across every business application, may be a noble but quixotic quest for a few reasons. “Enterprise application software often seems like the hero’s journey where vendors start down a path with many obstacles and find themselves dashed on the rocks or eaten by a sea monster,” said EAC’s Greenbaum.
The first challenge is the underlying technical complexity. Then, there are organisational challenges. “The problem with application silos is vendors created them and the enterprise was shaped to support them,” explained EAC’s Greenbaum. “To overcome the sins of the vendors, the customers have to reshape their organisation
Vendors are taking a pragmatic approach to the market shift, first adding workflow features to their existing solutions and gradually branching out into other business units. “Businesses need to recognise that these platforms have a long history and come with DNA that has various strengths and weaknesses,” said Forrester’s Le Clair.
Other suppliers recognised the significance of these solutions. Consequently, ServiceNow as well as everyone else will face more competition as the market evolves.