Earlier this week I attended the EMEA user conference of Service-Now.com, probably the leading SaaS pureplay vendor in enterprise IT service management. Co-founded by former Peregrine Systems and Remedy CTO Fred Luddy, Service-now champions a Web 2.0 approach to systems management, an approach that's often described as the consumerization of IT. But watching Luddy's opening presentation, it struck me the term is a misnomer.
'Consumerization' is the trend of making unwieldy and complex enterprise software as easy to use as the applications and services ordinary people use on the Web. We dress it up in a long word that implies the industry is doing its customers a favor, but what's so special about making software people can actually use? Isn't that what the industry should have been doing all along?
Furthermore, I don't think the word consumerization is an adequate description of what's really going on here. It's a mass media term, which makes it sound as though the IT department has bowed to popular demand and started beaming crowd-pleasing, populist software out to users' desktops in place of the challenging, highbrow applications it used to offer. The unspoken undertone of the analogy is that the users are dumb couch-potatoes that have to be cajoled and tricked into engaging with their work.
But passive consumption is the last thing Web 2.0 is about. If the media barons of Web 1.0 had had their way, users would have sat in their walled gardens and meekly consumed whatever Yahoo, AOL and the rest saw fit to distribute. Instead, users seized control, told each other what they thought of online content and started generating their own blogs, videos and commentary. Web 2.0 was a grassroots revolution, not consumerization but democratization, and that is the trend that is now transforming IT.
In IT service management (ITSM), which is the market Service-now addresses, that process of democratization has meant giving users the tools to find their own answers to problems instead of leaving them dependent on the availability of a limited pool of IT experts. This is a concept that's becoming known as 'shift left' in the service management world, said Luddy: "We're really trying to push more and more knowledge out to the end user," he explained, "to empower them to solve their own problems."
Service-now launched in 2005 with the aim of being an ERP system for ITSM, a vision of a single system of record showing what's happening across the IT organization. The timing was fortunate, allowing the start-up to ride a confluence of three disruptive trends that are buffeting the established ITSM vendors: not merely the advent of Web 2.0, but also standardization on ITIL and finally the emergence of the SaaS delivery model. These enabled Service-now to challenge what Luddy now calls the "Soviet era technology" of the established vendors with a user-friendly, flexible alternative that took its design cues from the consumer Web.
"The whole Web 2.0 dynamic ... showed people you could have extremely simple yet phenomenally powerful applications in a browser," he told me. "Nothing is a better testament to that as Facebook."
Service-now hasn't stopped to look back, building a 300-strong customer base that ranges from Deutsche Bank to Facebook. It has more than doubled its revenues to $28 million in the latest fiscal year and is targeting a $50m+ run rate by the end of the current year, Luddy told his audience this week. Fiscally frugal, the company has taken just $7.5 million in venture funding and has been cash flow positive for the past two years, he added.
Recession has helped rather than hindered its advance, he told me in a later conversation. "The economic times have really played well in our favor. Prospects that were swimming in cash twelve months ago are now drowning in red ink. Our job of selling SaaS has become much easier."
Elaborating on the Web 2.0 theme, the company's upcoming release adds new social features such as knowledgebase article ranking and feedback, integrated chat, and other aids to user participation. "The only way to make support truly scalable is to help users help themselves," said Luddy.
User acceptance rates illustrate how well Service-now has achieved its objective of being accessible to the average user. One large customer nearing roll-out of the application warned the vendor its infrastructure would have to be robust enough to handle as many as 55,000 cases a month. In the event, the monthly numbers rapidly soared to 150,000 because users found the system so much more accessible than what it had replaced.
Getting that right is more a matter of culture than technology, Luddy told me. "It's really a thought process more than an underlying technology. How am I going to build my technology so it can be used by the widest audience?"
Coincidentally, I noticed some debate this week whether Social CRM is just an extension of CRM or whether it's part of a Web-connected transformation that companies are undergoing "into a socially-driven business". Since you'd have to class what Service-Now is offering as Social ITSM, that provides strong evidence that the move to socialize business computing is already pervasive, permeating across many different enterprise activities and processes. Luddy's use of the term "Soviet-era software" to describe his competition is appropriate, since you could easily see Web 2.0 and associated moves to democratize computing as IT's Velvet Revolution — the moment when the people take over.