Analysis: Can ServiceNow grow to generate $1bn in revenue?

San-Diego based software-as-a-service (SaaS) company ServiceNow has unveiled a five-year plan that will see it deliver complete end-to-end automation within service management, which it believes will help grow the company from its current size of approximately $100m to $1bn in revenue, and see it compete directly with technology giants such as IBM, HP, CA and BMC.

The announcement was made at its Knowledge11 conference in Frankfurt earlier this month.

The company was set up in 2005 and currently has approximately 600 staff.

Servicenow, which provides IT services management (ITSM) as well as SaaS, said that this five-year plan would see it provide a complete package of automated helpdesk services.

ServiceNow's platform currently offers automated service management applications that include incident and change management. Other services, however, are still being actioned manually, including system management tools – it is in this area that ServiceNow sees a lot of potential for growth via the change to automated products in the future.

To kick off the Knowledge11 event, founder and chief product officer of Service Now, Fred Luddy, explained that the IT helpdesk had evolved to become 'service management', and that the aim now was to make all processes as simple as possible.

He said that ServiceNow had taken the concept of the IT helpdesk with its PC, desktop and administration and evolved it to be self-service and based in the cloud.

Frank Slootman, CEO of ServiceNow, told Computing that instead of using a helpdesk, ServiceNow's customers are provided with a portal that pushes their workflow to them.

Slootman believes that although some tools cannot be automated yet, end-to-end automation would happen within five years.

He said that ServiceNow has responded to the demands of customers with newly virtualised infrastructures, which are organised differently from physical infrastructures, and he explained that it makes more sense in a virtualised world for new tasks, such provisioning, tearing down software and moving apps, to be automated rather than manual.

However, there is some concern in the industry that ServiceNow may not be able to grow quickly enough to meet the market demand for automated services.

Forrester analyst Stephen Mann conceeded that this was a concern, but said it was one that ServiceNow was addressing: "Managing its growth is a key challenge for ServiceNow, but it has recruited people who have worked in big companies, such as Arne Josefsberg [CTO of ServiceNow, previously GM of infrastructure services at Microsoft], to handle this."

Mann said that the biggest potential challenge for ServiceNow to continue to compete against technology giants such as HP was within its own business structure.

He said that ServiceNow uses partners for implementation of its products and if it is too reliant on them, this could become a problem – and this is more likely to happen as a result of continued growth.

"It has to make sure that its partners do not end up compromising it by customising the solution in ways that the company doesn't want them to," he said However, he explained that in the company's favour is the fact that it is so well established in the SaaS market, especially in North America.

"If an organisation wanted a SaaS tool, they would look into ServiceNow. For example, the financial services were looking for a SaaS tool and they looked at the big four (IBM, HP, CA and BMC), as well as ServiceNow," he said.

"This is because ServiceNow has a history of delivering SaaS. It is chosen ahead of its competitors in the same way that Nimsoft's SaaS offering is chosen ahead of CA's, even though CA was big enough to acquire Nimsoft," said Mann.