Inside ServiceNow and Microsoft’s Intensifying Alliance

ServiceNow and Microsoft announced a strengthening of the partnership they established last October with the ultimate goal per their July 9^th press release, “to accelerate digital transformation for enterprise and government customers.”

Doesn’t that seem to be the goal of all IT vendors these days?

Satya Nadella, Microsoft CEO, specifically said, “Our partnership combines ServiceNow’s expertise in digital workflows with Azure, our trusted cloud, so that customers can accelerate their digital transformation, while meeting their security and compliance needs.”

Here are some of the highlights and key takeaways:

ServiceNow Will Use Microsoft’s Azure Cloud

For the first time in ServiceNow’s history, it is making their SaaS applications and products available for use through a public cloud platform rather than exclusively on their in-house server farms (their private cloud).  Out of the gate, ServiceNow will use Microsoft Azure as part of its preferred cloud platform for certain highly regulated industries and certain Azure regions in Australia as well as Azure Government in the U.S.  Apparently, the plan is to add markets thereafter but details around the availability to which markets and customers (and when) has yet to be provided.

This is a very smart move on ServiceNow’s part.  They understand that making their SaaS applications available through Azure Government will give them a much better shot at landing more and larger government contracts.  They can now better position their offerings to U.S. government agencies as solutions that run on (and are available through) a platform that was built specifically to address the capabilities, performance and extremely critical compliance needs of U.S. government customers and their partners.  Landing and expanding through accelerated government adoption will be critical to their ability to reach the lofty revenue goal they have put out there of becoming a $10B cloud vendor.

ServiceNow’s move to Azure is also a win for Microsoft.  It is critical that Microsoft not only continues to get more customers and workloads on Azure, but they need to land more SaaS vendors as customers, and they face significant competition from Amazon (AWS) as well as Google Cloud (GCP).

Microsoft Will Sell ServiceNow SaaS Applications

More details still need to come out about this, but having Microsoft as a reseller of ServiceNow’s SaaS applications has the potential to significantly accelerate penetration to companies they have not yet been able to land, as well as expand adoption and associated revenue in those that they have.  ServiceNow will be able to leverage the fact that Microsoft is in most enterprises and they already have established long-standing relationships at the most senior levels within those enterprises.  Until Google started stepping up their game, this could have said “in all enterprises”.

As part of this recent announcement, Microsoft will also be implementing ServiceNow’s IT and Employee Experience Workflow products across its own business, which not only gives a huge vote of confidence to ServiceNow’s solutions that can be used during future sales cycles, but it also makes it that much easier for Microsoft to sell ServiceNow to enterprise customers.  Remember the commercial, “I’m not just the President of Hair Club for Men, I’m also a client?”

For Microsoft, they can now present another leading cloud solution to their customers that they currently do not have on their product menu or in their ecosystem.

Microsoft Builds Out its Team

As you may or may not have noticed, there are lots of partnerships and “super teams” forming these days — not just in the NBA, but also in the cloud applications space.  By adding ServiceNow to their team of strategic partners, which already includes Adobe and SAP, Microsoft is further strengthening itself (not that they weren’t already powerful).  They look to keep themselves at the top of the cloud food chain and remain the cloud partner that is most relied upon by enterprises as they begin, or try to complete, their digital transformations.  Teaming up like this also allows them to better compete against other super teams that are forming, like the one that includes Google Cloud, Salesforce and Apple.

I would not be surprised if ServiceNow also eventually joins Microsoft’s Open Data Initiative that currently includes a commitment made by Microsoft, SAP and Adobe to use the same data model so shared customers can easily move information through their systems.

I will be keeping a close eye on how this partnership evolves and most likely further grows moving forward.  It will be important, especially as ServiceNow’s use of Azure expands to more markets and enterprise customers, that current and future customers push their points of contact in ServiceNow to bring additional clarity on what expected benefits are to come and possibly at what cost, if any.

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