Bam! A little lightbulb just switched on. I think Microsoft is going to buy ServiceNow. Allow me to explain the reasons… and then predict what will happen to the product portfolio. First, since I’m under the gun to publish this before anyone else starts thinking about it, let me just start with a simple bulleted list of evidence and thoughts:
- Microsoft lost out big in CRM against Salesforce, but this was before Satya Nadella’s time. He doesn’t like to miss out on opportunities. Also, I’ve learned he’s wisely not over-confident in Microsoft’s ability to win. And Salesforce has been beating up on Microsoft Dynamics CRM for a long time. Microsoft cannot lose its core market of the Global 2000 IT department. It’s one thing to lose CRM where they never had a strong presence and wanted to make a nice little growth play, but it’s totally another to see the server and tools division get punished (which has been growing double-digits on multi-billion dollar numbers for quite some time).
- ServiceNow’s Market Cap today is between 14 and 15 Billion. The recent LinkedIn Acquisition was around $26 Billion. Microsoft has the money to do it ($112B in Cash and Short Term Investments).
- Under Satya Nadella, Microsoft doesn’t care about proprietary Microsoft-only technologies anymore (.NET). This has been one of Satya’s greatest strengths. He understands what is happening. He wants Office on iPhone and Droid. SaaS is more about successful integration than using the same programming language (API Economy/Mulesoft)
- So, this happened last week (see screenshot below). Microsoft is sponsoring a local user’s group conference in Redmond. Microsoft does not typically cozy up with vendors. This sponsorship must have required Microsoft approval.
- Microsoft SCSM (System Center Service Manager) has made very little traction in G2000 accounts. It wouldn’t surprise me at all if there were less than 50 G2000 accounts using SCSM. Our database of the entire United States (companies > $1B in revenue) contains only @10 SCSM customers)
- In the old way of thinking, this deal wouldn’t make sense architecturally (ServiceNow is built on Java & Java Script), but in the new world of SaaS, that simply doesn’t matter anymore. Microsoft is strong in web services… and there are many existing pre-built integrations between Microsoft products, such as SCOM and SCCM.
- ServiceNow is by far the leader in the world in ITSM at this point with @1.4 Billion in annualized revenues. But, they are going to increasingly going to come into competitive contact with Microsoft more in sales opportunities as they try and push Run Book Automation (Orchestration) with NOW products as a replacement for SCORCH. Or, ServiceNow Discovery vs. SCCM & SCOM. Or Performance Analytics versus Microsoft PowerBI (Think Northcraft!). Or NOW PPM vs. Microsoft PPM. This is not a full list.
Ok, I don’t want to go on and on here. There is ample reason to believe that Microsoft is going to purchase ServiceNow. They can’t lose their foothold and they have the money. So, why I am excited??
Because, here is what the new Microsoft product list post-acquisition could look like:
- NOW ITSM obviously replaces SCSM — No one will really notice or remember that product.
- SCORCH replaces NOW Orchestration – SCORCH has more traction at this point.
- SCOM stays, but NOW would likely be used as a Manager of Managers with tight integration here.
- ServiceNow discovery vs. SCCM/SCOM – I’m not sure here. I see them as complementary. ServiceNow does some things in infrastructure that SCOM/SCCM doesn’t, but on the client side, SCCM does some things ServiceNow doesn’t.
- Goodbye Performance Analytics, it has nowhere near the capability of a full BI stack. This is a core Microsoft offering that is actually touching the right edge of Gartner’s recent BI quadrant.
So, why I am writing the article? This is GREAT news for Northcraft Analytics customers! We are built entirely on Microsoft. Microsoft will soon realize the monetization potential of full BI solutions as opposed to their current method of giving away starter packs.