SaaS

How Salesforce and ServiceNow are squaring off in the battle for the helpdesk

Benioff banks on user engagement while McDermott wants to govern AI agents

FEATURE Salesforce CEO and chief “SaaSquatch” Mark Benioff boasted about the wins his company's ITSM product had last quarter in the terms a proud dad uses to talk about the art work his kids taped to the refrigerator.

“I especially loved five customers who got to leave the purgatory of ServiceNow, like Sunrun, Cornerstone, CoolSys, and there’s others, too, that we’re not allowed to mention,” Benioff said during Salesforce’s last earnings call in February. “But I might mention them anyway. They’re leaving ServiceNow now for the new Salesforce IT service product, which is about apps and agents helping you manage all your ITSM.”

The six-month old Agentforce IT Service has 200 total signups, which, to put that into some perspective, is about one tenth of one percent of Salesforce's total 150,000 customers.

ServiceNow has 8,600 ITSM customers and controls 40 percent of the ITSM software market, according to the latest figures from IDC. In fact, ServiceNow has six times the market share of its next two leading competitors, BMC Helix and Atlassian.

So, even for the outspoken Benioff, name checking a competitor and crowing about five wins was rare spice for the usually number-heavy and sonorous earnings reports. ServiceNow CEO Bill McDermott took note, and planned to tweet about it, he said, but held off and responded days later during a presentation at the Citizens Technology Conference on March 2 where he called Benioff’s comments “unhinged.”

“I thought to myself, ‘My God, you know what is going on here? Have we really gotten that far under their skin that they’re doing this type of a thing?’ ” McDermott said.

McDermott disputed that Salesforce had taken all five of those companies. Four, he said, were still ServiceNow customers. He said Salesforce did take out one, which represented a $42,000 loss for ServiceNow – which reported $13.2 billion in topline revenue last year.

“The other ones are still doing business with us. Most of them are renewals that haven’t even come up yet,” McDeromott said. “I want you to understand that just because somebody says they did something doesn't actually mean they did it.”

The Register spoke with executives at ServiceNow, Salesforce, analysts with IDC and Forrester, and a large ServiceNow partner to get to the bottom of what is driving this renewed rivalry. What we uncovered is not just a battle of ITSM products but a fight over the future of how IT problems are solved in the enterprise and beyond.

ServiceNow's edge: Control and orchestration

“Overall, I’d frame this less as a clean head‑to‑head ITSM battle and more as a collision between two different models of enterprise control,” Charles Betz, vice president and principal analyst at Forrester told The Register.

“Salesforce is betting that engagement and AI-driven interaction become the primary organizing layer, and that deeper IT models can be reconstructed as needed. ServiceNow is betting that AI makes control planes more important, not less, because poorly governed autonomy is a real enterprise risk. What’s genuinely new this time is that both arguments are now plausible in a way they simply weren’t in earlier Salesforce ITSM efforts.”

Harsha Kumar doesn’t view this as a "two horse race” either.

Kumar is the CEO of NewRocket, a ServiceNow Elite partner known for work in banking, telecom, financial services, risk workflows and the use of AI.

“I really don’t think it's ServiceNow versus Salesforce,” he said. “The opportunity and the threat is how do you leverage agents that are now doing some of the work with AI? So it's not just the workflow orchestration and it's not just the system of record. Obviously Salesforce is a system of record for customer interactions and customer data. ServiceNow obviously is the strongest when it comes to service requests and servicing existing customers and so on. Both of them have some data which is the system of record, but beyond that, ServiceNow is also an orchestrator. It can orchestrate workflows across various systems of record: could be Workday for HR, could be SAP for ERP, could be Salesforce for customer data.”

And with 22 years of institutional knowledge about IT workflows across the largest customers in every vertical, ServiceNow is leveraging them to create guardrails for its AI that can verify the correctness of actions being taken.

“While AI thinks, workflow acts, and that’s our unique competitive advantage that today,” McDermott said the same day he took Benioff to task. “As we’re having this conversation, we have 85 billion workflows in flight, in the Fortune 2000 doing almost 7 trillion transactions, so deeply embedded, deeply durable, expanding platform with a deep, exciting moat that continues to grow and prosper.”

ServiceNow’s Jeff Hausman, EVP & GM of Technology Workflows, told The Register that those workflows are sticky, with 98 percent of the company’s 8,600 customers renewing their contracts, a testament he said to the tremendous value provided by its products.

“We built this category. For 22 years we have been helping customers to get value and to make sure that they are getting what they need out of IT service and IT service response," he said. “In terms of what’s going on in the market, look there are constantly going to be various different organizations and companies who think about how they help customer. And over time, I would say the customers have voted with us and stayed with us, which is why we are a leader.”

Salesforce: Meeting users where they work

Betz said Salesforce is coming at ITSM as a system of engagement and meeting users where they already work – in Slack for example. He said that allows them to abstract away much of the complexity around submitting tickets, and use conversational AI so people can resolve issues “without really knowing or caring that it’s ITSM.”

“That resonates right now because most employees don’t want an IT process, they just want the problem to go away quickly and with minimal friction,” he said.

This isn’t the first time Salesforce has tried to sell an ITSM solution. Betz said in the past, Salesforce tried to compete directly with ServiceNow on “ITSM mechanics – ticketing process coverage, ITIL-style completeness,” but that landed their products squarely in ServiceNow’s sweetspot and none lasted long.

“It’s true they’ve had multiple failed attempts, and a lot of longtime ITSM folks more or less rolled their eyes at this latest one,” Betz said. “That said, I do think they’re more motivated this time, so I’ll give them that.”

Leading the effort for Salesforce is Muddu Sudhakar, senior vice president, Agentforce IT Service and HR service. He arrived at Salesforce in August but he has been driving strategies inside some of the largest tech companies since the 1990s including IBM, Dell, VMware, Splunk – and ServiceNow, where he was a senior vice president and general manager leading a team of 1,000 employees.

Sudhakar worked on the ITSM product under legendary former ServiceNow CEO Frank Slootman and today he sees a ServiceNow platform that has remained largely unchanged from that time.

“The workflows have not changed. There’s no hybrid workflow. Everything is rules-based. The CMDB is rules based. There’s no agents in that. They’re the Goliath. We’re the David,” he said. “It’s not just ServiceNow. The whole ITSM market has not innovated in 25 years. That’s the bigger picture.”

Sudhakar said what makes this time different for Salesforce is they have built the solution internally and organically to meet the AI moment, so users can talk in natural language to begin to resolve tech problems.

“Do you really want to open up a ticket and wait for somebody to solve it? No. You will go into a tool and say ‘I have a network issue.’ ‘Fix my password reset.’ That conversational, agentic approach, the legacy guys do not want to offer it,” he said. “They don’t want to disrupt themselves. There’s no incentive for them to do it.”

Not just large enterprises

Yet, even if Salesforce were to poach all of ServiceNow’s estimated 8,600 ITSM customers, and claim the top spot in the ITSM market, how much will it move the needle? Overall, ServiceNow’s revenue is expected to be only about one-third of what Salesforce has forecast for this year.

“It depends on how you slice the TAM,” said Kishan Chetan, EVP and GM of Agentforce at Salesforce. “We’re clearly taking ServiceNow customers, but I think the way we are looking at that market is not just a ServiceNow take-out play. It’s a play for the entire market, which includes mid market, which includes SMB, and it includes enterprises as well. So it’s a broader play.”

Chetan sees ITSM as a $50 billion market, which includes those downstream customers. That makes ServiceNow just one very large obstacle to getting there.

In addition to having their CRM product and service cloud platform inside the same enterprises that use ServiceNow for ITSM, Salesforce has a broader set of customers in the midmarket and SMB that it can target with its Agentforce IT Services product.

“Let's focus on Salesforce customers,” Sudhakar said. “If you’re not a Salesforce customer I won’t call on you. So all day long we can stay in the Salesforce ecosystem and we can sell this product.”

This is where Salesforce has an advantage, said Snow Tempest, analyst with IDC, and where ServiceNow’s complexity and sophistication becomes its foil.

“Salesforce can also be present in some not-as-large enterprises. And ServiceNow they’re known for being in the top of the top, in huge organizations. There’s more competition in ITSM in general among smaller enterprises, and midsized organizations. There’s a lot of other vendors competing in there.”

In other words, in order to grow, ServiceNow still has to win fights against BMC Helix and Atlassian, while fighting off Salesforce. Meanwhile Salesforce has a path to take share downmarket, and thanks to Slack, CRM and its cloud platform, it already has a relationship with many of those customers.

“Salesforce has a reputation for scalability and Salesforce has a claim to go after those markets,” Tempest said. “They know those customers. They have those relationships.”

In order to be effective, Chetan said what he really cares about is “our customers getting up and running rapidly.”

Salesforce’s ITSM customers have been able to go live in a speedy 45 to 50 days, Sudhakar said. ServiceNow’s ITSM can be installed and running an organization in about the same time, four to six weeks, according to Kumar, the ServiceNow consultant.

Reining in rogue agents

But in the era of deriving trust and value from AI, the speed to integration is not the only decision maker.

Forrester's Betz said ServiceNow is making the argument for more control and governance inside ITSM as a differentiator for AI. He said that they’ve spent close to two decades building operational models of the digital estate — configurations, dependencies, change, risk, incident, compliance — and turning those models into executable workflows.

“Their view is that, as you introduce more autonomous and semi-autonomous agents, that accumulated logic becomes the guardrails that keep AI from doing something unsafe or destabilizing at scale. So even though both companies are talking about AI agents, they’re solving very different problems underneath,” he said. “One way I often put it is that Salesforce starts from the user and works backward into IT, while ServiceNow starts from the system of work itself and then tries to improve the user experience on top of that. AI doesn’t erase that difference; if anything, it sharpens it.”

Hausman said ServiceNow’s “AI control tower” gives it the ability to provide governance and security for agents, to understand permissions and policies and audit trails and monitoring on a continuous basis, for full life-cycle visibility across every model that has been incorporated into a customer’s system and every agent that’s actually doing work, whether it’s ServiceNow’s own agents or even those tied into third parties.

“That’s what enterprises need to feel confident in the ability to use these new capabilities in the right way,” he said.

Rahul Tripathi, senior vice president and general manager of service operations at ServiceNow said new AI capabilities inside their ITSM platform like Autonomous Workforce – which can resolve 90 percent of inbound tickets without human intervention – have prompted ServiceNow to redefine how they look at ITSM.

“That is why we are calling it service operations now, not ITSM anymore, because ITSM and CMDB, the core data are all the same, like angles to the same problem,” he said. “So that is what we are leaning on and if we deliver them right, then absolutely we will continue to grow. And of course, if we don’t, then we have no right to be in the market.” ®