Kirsten Loegering and Peter Russo, ServiceNow | ServiceNow Knowledge 2023

This is Techstrong tv. Hello and welcome back to ServiceNow Knowledge 2023. We're here with Kirsten Lore and Peter Russo, and we're talking about some new additions from the portfolio aimed at supply chain and finance.

Folks. Welcome to the show. Excellent.

Thanks Mike. Nice To be here. We've had finance and supply chain applications forever in a day.

So what are you guys bringing to the party? What's different and how do you add some value here? Yeah, Sure.

So I mean, really Mike, what we're looking to do is supercharge e R P for our customers. So there's constant change in the world that brings a lot of pressure on these teams that are managing finance and procurement, that's driving digital transformation. But the business is frustrated by all this manual work, right?

There's countless ERPs point solutions that they have to try to stitch together. It's not working. And in this macro economical situation, you can't throw more labor at it.

So that's the story to the business. Then you shift to it. They're dealing with migrating these huge E R P systems, highly customized multiple instances.

They're looking at three to five years to finally migrate these. That's not an answer that the business is willing to receive. So we come in there and our answer is basically yes, right?

We can deliver for finance and supply chain teams. We deploy in about 12 to 16 weeks in average. We bring a new experience and value right back to the business.

And then for the IT teams, we help with our low-code platform to cut down on all that technical debt around their legacy E R P. So we can speed that migration. So we really help both IT and the business to move faster.

Kirsten, what's gonna be the impact on the people who work in these departments? Do you think that the automations are gonna make their life easier? How, gimme some examples of what that might look like.

For sure. It, their experience will be much better in working in these systems. They be shielded from the complexity of the transactional systems being in the engagement layer that we provide them.

Um, they'll be able to self-serve. Uh, there's a lot of self-service capabilities built in, um, to really transact quickly and to get an issue resolved very quickly, uh, rather than to have to resort to email, to phone calls, et cetera. So we have it all in one system.

In the engagement layer, people will be able to deflect work, um, away from teams that are already inundated with many, many requests. Um, and, and that don't even get to the work that they should be doing. So in procurement, we've, we've looked at the numbers, for example, with our customers.

Um, in procurement, we see over 50% of activity is on time, is spent on solving issues that are not directly related to the transaction, but that are issues that occur in the process before the transaction in between transactions, after the transactions where users are coming saying, I don't know how, how I do, how do I do this? Where's my staff? Why did I not get paid?

Um, and um, only about 47% of time is really spent on creating value, um, being able to engage with suppliers, being able to do sourcing activities, being able to, um, negotiate contracts. Um, and so by taking those 53% of, of activities that we see 53% of time and really automating it, making people's life easier to self-serve, to have knowledge at their fingertips, to get guidance as to how to go through a process, we believe that we can elevate the time and increase the amount of time that users can spend, um, on really creating value for an organization. People are used to making changes to these systems in time allotments that are measured in months.

How hard is it to set this up and how quickly can I get a return on that investment? Yeah, sure. So again, I mean, our average deployment with our early customers, we have over 70 customers is about 12 weeks, right?

So that's, that's when you're comparing to multi-year migrations for an underlying E R P system, that's a mic drop. The other thing that's really interesting though is once we get inside with our products, we open up our low-code platform, right? Use the same platform to solution yourselves.

This unlocks a whole branch of talent inside of finance in particular, they were blocked in the past, right? They, they would need to learn how to code in ABA or Java or one of these older, um, technologies, right? And that was never gonna happen.

So what did they do? They used Excel sheets. They created these amazing pivot tables in clearing houses for some of these complex finance processes.

Now we untap all that talent and they can solution for themselves for a third of the cost and half the time on our low code platform. Who's using the low code platform? Is it a type of developer or is it the citizen developers or do you think it's gonna be business users and what is the scope of the offer?

Yeah, so I think it's gonna be a mixture of both, right? We definitely have a place to play in it in the organization of a CIO with VP of DevOps enterprise applications and roles like that. So there will always be a center in it because it's really important for it to have control, guardrails, security around any type of loco platform that you're using.

Cuz the last thing you want to do as it is unleash a platform and create app sprawl inside of the business. Now when you go back to the business user, it needs to be easy to use. You don't have this boundary of needing to know AOP or some of those older tools, right?

And you can just get to solution for your business knowing that the guardrails are in place. So you're not gonna be impacting negatively the overall IT architecture. Kirsten, do you think we'll see some best practices start to emerge around this?

Will there be centers of excellence? I mean, will organizations kinda create a, um, an automation mantra that will allow them to go look at all these processes? Mm-hmm.

I think we will. I, I really think that we are just at the beginning of understanding how workflow technology can impact the EER P space in the line of business. Um, and we see our customers starting to build those practices internally, um, to have teams of people that, um, in this case would ServiceNow really, really focus on how can we bring ServiceNow further into the organization, deeper into the line of business.

Um, obviously we're coming from an IT perspective originally and those, uh, context for us or those, those um, um, proponents of ServiceNow within customer organizations are starting to understand that we can bring that into the line of business and support any type of process. And so we see customers start building definitely center of excellence, um, engaging with us to really drive also, uh, what we are doing. And we do see our partners do the same.

We do see partners really establishing a ServiceNow practice in addition to the other practices that they have. Um, and uh, starting to um, to build center of excellence around ServiceNow beyond the IT space for sure. Do you think as this goes along and we're separating the workflow from the backend system of record, that it makes it easier to switch out the system of record over time?

Cuz my workflows are kind of more portable? Yeah, so I mean definitely if you take a look when you have workflow automation on top of an end-to-end process, there's gonna be less direct usage of those employees into those underlying systems, right? And that's how we make their work so much simpler cuz it's gonna pull the data when it's needed inside of a predefined process, trigger transactions as needed.

So once you decouple the experience layer from those underlying applications, think about when you start to migrate to modern solutions. Now you may have cut out 90% of the change management cuz your employees are working inside of the workflow. So as you start to redeploy some of those underlying applications, right, you don't need to retrain all of those users.

The data maybe gets richer, the transactions and throughput become faster. So there's really a decoupling, and I kind of use the example, if you zoom all the way back to kind of the seventies and eighties when enterprise applications themselves came out, right? Mm-hmm.

There's a lot of questions. What's their value? Is this just the layer on top of my SQL database?

Well, it turned out the value was rising up to the enterprise application layer. What I believe is happening right now is we're just at the cusp of workflow automation and this is the new game changer. This is where the value is really going to drive organizations moving forward.

Kirsten, at the same time, will it become easier to experiment? Because today if I create something that's hard coding using Java or whatever mm-hmm. Um, the cost is changing.

That is considerable. Yes. So does this allow for more experimentation?

Because a lot of times I'm never quite sure where that workflow is supposed to be first time out. Mm-hmm. Mm-hmm.

Um, absolutely. And I think that's what we see our customers do as well. Again, they start with smaller use cases, um, but have a vision as to where they want to go, how much they want to enable.

And um, so we see them be flexible and adjust on use cases that they deploy. Um, and in a combination with our low-code capabilities, um, we see customers experiment with this as well to fill white spaces that are very specific to their business requirements or specific to their industries where we form a, a purpose-built pre-built workflow perspective. Say we cover 80 90% of the baseline requirements, we cover the baseline process, but then go experiment and figure out what do you need for your specific business?

Because we have the tools, uh, for customers to do that. There are some natural biases in the world against low code and some people will say it won't scale. Does this scale and how does that get get done?

I Think it's knowing where to apply low code and where to apply a packaged application like we have with source to pay for finance and supply chain. So for repeatable processes like source to pay, there's no reason to do that low code and and your whole way, right? So by bringing that as a packaged application, right, we can deploy it much faster.

It's predefined. And then the advantage is as we do updates, like right now with accounts payable, we brought Doc Intel. So this is artificial intelligence to basically manage all the invoice ingestion.

We're completely automating one of the most painful kind of soul crushing processes in AP with three-way match. So every six months as we're doing these updates for the packaged applications, we could just make it stronger and stronger. All the new value we bring into the platform, we bring it directly into product.

And like Kirsten said, there's always gonna be that 10 to 20% that's special, that's unique, that's for your industry. That's where you need to drive low code. And I think that's the balance most of our customers will look to achieve.

Mm-hmm. Kirsten, how much of this is a cultural change as well, not just the technology change mm-hmm. But I think we have conditioned people to expect a certain experience and maybe we need to move beyond that.

It is a cultural change. Uh, again, as I said earlier, I, I think we are just starting to understand the impact that this can have. Um, and if we have this conversation 10 years down the road, the world will look very different.

I think, uh, in this space it is a cultural change, uh, in that we are so conditioned to think in transaction, um, and always look for that transactional outcome when we talk particularly about procurement systems and systems in the line of business. So, um, workflow will require change management, it will require that, um, customers step away a little bit from that transactional thinking and really make sure that processes people and systems get, um, get aligned and get brought together. Um, those customers we're working with are clearly very forward looking customers who have understood that and who are starting to experiment with this and see a very fast ROI and see significant improvements, uh, from a process perspective, for example.

Absolutely. A cultural change. You cannot walk down the street these days without somebody leaping out to tell you about their great new AI thing.

So how will workflow and AI come together in the future? How do you see that kind of impacting the way people do their daily work? Right, right.

So I mean, one thing we announced here is accounts payable operations. So as I mentioned, using Doc Intel, we're using automation for all the exception handling to really root out, we've estimated about 84% of a accounts payable agent's work is manual, right? So huge gains there with AI to really empower that worker to do their best work.

So that's super exciting. Then everything, I mean we're learning here at the event as well. What are we doing with generative AI and the impact that that can have on our product?

Again, that's the power of the platform, right? So we're all gonna get enriched in our different lines of business. I think finance and supply chain included in that front.

Yeah, it goes hand in hand. Our customers already bringing the use cases to us. What we should be doing in procurement and spec specifically.

Now, um, with ai, Do you think then people should take a step back and say, you know, these are all the manual tasks that are gonna go away and maybe sit down for a minute and write their new job description and say, okay, well if that all goes away, I can do this. Sure. So actually I, I don't exactly see it that way.

So I mean, let's take a procurement team, a supplier team, right? So their world today is basically dealing with all these different channels, emails, phone calls, people trying to figure out what's happening with my requisition or suppliers saying, Hey, I didn't get paid. What's the problem?

Right? So we automate all that. So we've seen where we can reduce that workload on their job, uh, 60% up to doubling the capacity of a procurement or supplier team.

Now what do you do at that time? Does that mean they're out of a job? No, that sets you up to be in a more scalable position when the revenue starts to grow.

But then think about supplier managers and procurement teams. You've now got this experience that's so much better for employees that they actually want to follow your process. So a big problem with a lot of companies is spend under management and most of our customers are coming in with under 50% spend under management.

Our process is so much better and unified, we get that over 80, 90%. Now you've got 90% of your spend under management. You've got supplier teams with more time on their hand.

Now they can start to say, Hey, who are we spending big bucks with? Where can we start to get some early discount payment contracts set upfront so we could start saving money on our spend? And that's the really exciting part with source to pay is we're seeing two to 3% reduction on indirect spend.

I think one of the things we saw during Covid Kirs is that, uh, our supply chains were not as robust as we, uh, had hopefully imagined. Will this make the supply chain more predictable and by extension our finances more predictable and people will have a better sense of what's going on. Cuz I feel like we're still guessing along the way.

We're Guessing. Yes. And and we've seen it particularly during Covid because it was really in the face of every consumer all of a sudden in our personal lives, right?

We saw things were not working well and you had to wait all of a sudden for, I waited for furniture for over a year during Covid while I was remodeling. You're Still waiting for my new car? Oh, you're still waiting for something.

So, um, because there was such a broad impact, but it's supply chain transparency and supply assurance are not new topics. I've been talking my 25 years under space with customers about this over and over again. We just have different technology at our fingertips today, uh, to address those problems.

So I would say supply chains will be more agile or our res ability to respond to situations like Covid will be more agile, um, to include our supply chains into our workflows internally, which today in traditional systems is still quite disconnected unfortunately. Um, and so with this agility, we should achieve better transparency, better visibility, and more reliability in the supply chain. We can't control everything clearly, right?

If, if a country shuts down because of covid and all factories are standstill, um, that's it. But we can, we can be more agile in responding to that and just creating the visibility into this. And I think that alone will help quite a bit.

As part of that we have more realtime insights. I mean we've all had that experience where, you know, you go online and they tell you that X item is at some store mm-hmm. And you get there and it was just sold about three hours earlier and you're like, thanks for driving across town.

Mm-hmm. Can we get to that near realtime visibility? Yeah.

So I mean I think that's the interplay of kind of the underlying solutions and kind of the data signals that we're gonna start to draw inside of our finance and supply chain solutions. And then you apply that to what we do dynamically with workflows. That's where we can really help solve things and get ahead of the curve.

So if I take things to what we're providing today with source to pay, let's take an example of an employee who wants to purchase something that's off catalog, right? So it's not inside of your network, you don't have a supplier set up. This traditionally is what gums up the works, right?

It leads to rogue spend. So even now we have a predefined playbook. So when a employee is asking for something off catalog, it guides them into a new workflow that's sent to a supplier manager to start to see, first of all, is it off catalog?

Is there somebody else that I could suggest to you? If not, let's start that whole sourcing engagement dynamically as you started your requisition. So it's those types of kind of dynamic workflows we could set up where we can start to get ahead of the curve and really helping to move things along with supply chain.

I Would also say, um, we have one customer who, uh, airspace and defense industry who's using supply lifecycle management or supply lifecycle operations, um, as a tool to understand all the part changes that are happening. Um, this w were many disjointed workflows and uh, with using the solution they can now have direct visibility into any kind of part change that their suppliers are making, which is very, very important right in that industry in terms of safety and quality. Um, and so they drive the visibility into part changes, into alternative, uh, parts into what the suppliers can and cannot do much, much faster at this point in time than they've ever been able to do before.

And this way they're consolidating, uh, tens of thousands of suppliers through the system. Um, get the master data that they need, get the part data that they need from their, uh, from their suppliers and have that clean and clear in their core e p systems and their master data. Historically, this has been an area where there's been some high priests involved where, you know, they're the masters of the supply chain or mm-hmm.

Where the people running finance will the rest of the organization gain more visibility into what's happening in the supply chain? Will a sales rep actually be able to see what's happening and maybe not sell something that we don't have? Yeah, so I mean I think this is the value of what ServiceNow does, right?

So workflow automation is built to bring together lots of disparate teams, right? With visibility into the data that they need for their part to play as part of a broader process and visibility inside of that process. So I think, you know, the further we start to move in finance and supply chain, we're starting with source to pay and procurement right now.

We see huge upsides as we think about what we're developing in order to cash inside of our company, the implications on finance, how we could connect front office to back office. Then you think about as we start to continue to mature procurement, um, there's a path with direct materials management that's a linkage right? To what we do with enterprise asset management mm-hmm.

Field service management for a lot of great things we could do. So I see kind of a two twofold power here is connecting lots of disparate teams inside of our customers. Also connecting ourselves cuz we have a riches of assets that as we build out we can really pull everybody in together.

So what's your best advice to folks about how to get started with all this? Cuz clearly we're talking about some capability that would, some folks would call superpowers, but where do you get started? Um, first of all, there's educate yourself about what we can do, right?

So that's, uh, that's something that we're working on. Building our go-to-market muscle and really educating folks out there, how we can translate the power of the platform from it into the line of business. What I see companies do that are very successful or very quick deployment, get our eye very quickly is to start small.

Start with a small footprint. Have your use cases ready that you want to realize in the software, but don't go uh, and boil the ocean, right? Um, start small, get a group of your employees, of your stakeholders successful and going and expand from there.

And that's the approach that most of our customers are taking often starting with case management, which is our strong suit. And then moving into other areas to run operations, whether it's non procurement supplier or apo, uh, with accounts payable. Um, have you use cases well defined?

Um, bring your stakeholders to the table. We have customers who have brought their employees to the table and had the employees test out the solution and vote on it whether they've wanted the solution or not. And I cannot have any better support from my customer when their employees say we want the solution, we want to work in this.

Right? So I would say happy use cases, um, defined start small, keep building. Because we're not talking about multi-year projects here.

We're not talking about difficult deployments. You can keep adding to the first use case and just keep going. Yeah, Absolutely.

Just to echo that, I think yes, think big. Mm-hmm. So tell the the source to pay story but start as Kirsten said, incrementally.

Mm-hmm. And that's, I think the, the winning mix cuz customers will know, okay, here's the full advantage I have for source to pay, but maybe I wanna start with suppliers. Maybe I just wanna start with sourcing procurement, right?

And build on from there. Folks, you heard it here. Digital transformation is coming to supply chain in finance.

The question is, are you the ones gonna drive it or is it gonna be somebody else from the outside? And I think these guys will help you be in the driver's seat folks. Thanks being on the show.

Great. Thank you so much Mike. Thank You very much.

And We'll be back in a minute.