There are many in the tech world — Satya Nadella, for one — suggesting that major SaaS platforms will face obsolescence because of the increasing maturity of generative AI and agentic applications. And on a superficial level, the idea that a person could use agents to automate their daily tasks in a compelling and data-driven way does seem plausible. That plausibility forces providers like ServiceNow to deal with a possibly existential threat.
Whether that threat is actually feasible now or in the near future is almost irrelevant. What is relevant and strategically consequential is how SaaS companies respond. ServiceNow’s response has been to proactively lean into the disruption and marginalize the threat — as shown in the past couple of weeks by its “Yokohama” platform release and the announcement of its planned acquisition of Moveworks. I think it’s a great case study for dealing with rapid and disruptive technology evolution.
Responding To Disruptive Threats
To start, I am not in the camp of those who think that agents will “kill” SaaS. My rationale is that SaaS platforms provide a number of important services in a very contextual way. And while I do see agents taking on an increasing (and possibly dominant) role within a given SaaS platform, the notion of a contextual enterprise-class platform will continue to exist. Just the stability of the data model and business logic almost guarantee a long life for many SaaS platforms. But, maybe needless to say, my opinion could be wrong.
So, what’s most interesting to me about ServiceNow’s recent announcements is not necessarily the technology (it’s good — more on that later), but how the company is responding to disruption. Realistically, when a tech company is faced with a disruptive threat like AI and agents, there are only a few ways to respond. Most of the time, the company adopts a combination of the available approaches as the threat evolves. Here are the main responses as I see them.
- Denial — The easy thing to do early on is to frame the disruptor as immature; maybe even the idea that the new technology could be disruptive is framed as being frankly silly. A great example of this came in the early days of open source, when nobody thought that “free” software could be taken seriously.
- Arrogance — If denial stops working, some companies will choose to disrespect the disruptor. But technology history is littered with “good enough” disruptors beating the “best” legacy answers. A great example of this was the x86 architecture and Windows versus Unix in the server market.
- Bolting On — A company may attempt to annex a disruptive technology and bolt it onto the main solution. For instance, VMware has done a good amount of this over the years with containers. While this seems like a good idea, it’s tough to make it work, and it can be perceived as an endorsement of the competition.
- Leaning In — While the other responses are reactive, leaning in is proactive and can be applied at multiple points in the disruption timeline. Although it’s riskier in the short term, it is also customer-centric, because it demonstrates a willingness to disrupt your own business by doing the right thing for your customers. Microsoft shifting to the cloud might be the most successful recent example of this type of competitive response.
ServiceNow’s Response Is To Lean In
A key element of leaning in is that it may appear to happen overnight, but that’s a myth. It takes a while. The starting point is building belief amongst the organization that (a) things need to change, and (b) it will be a risky bet. Therefore, it’s notable that ServiceNow was an early believer in deploying AI within SaaS. In fact, my colleagues Melody Brue, Robert Kramer and I wrote about ServiceNow’s major AI announcements last year.
But the next step is to go beyond building belief and, as an organization, to back up the belief with action or conviction. ServiceNow’s latest platform release, coupled with its planned acquisition of Moveworks, is a demonstration of its conviction that AI and agents are the right way forward for its customers and other organizations. This is a clear signal that, despite a positive initial response from customers, its commitment to AI needed to continue to evolve with the market. This could not be a one-time technology injection followed by a retreat to the core technology.
Agentic Transformation Is The Cornerstone
As I evaluate the SaaS platforms, I see that the agentic story has been heavily focused on automation of end-user tasks and personal productivity. Included in that strategy are also typically a number of canned agents targeted at common business tasks to help customers get started. These features are becoming table stakes for both ServiceNow and its competition. But what we see from ServiceNow’s latest announcements suggests a more strategic and enterprise-focused approach. For instance:
- More professional developer capabilities — ServiceNow already has some solid no-code agent-builder capabilities and a very good agent-friendly workflow engine. However, the new Yokohama release adds to this with more robust AI Agent Studio tooling, which unifies workflows and agents in one interface. This also includes the addition of agent-to-agent collaboration, which is something I covered in a recent article about horizontal AI development platforms like AWS Bedrock. There is also a major update to Workflow Data Fabric that aims to improve data integration and preparation.
- Backend analytics — I am particularly interested in the Moveworks Employee Experience Insights solution, as it is able to prioritize, align and aggregate corporate data better than just using RAG attached to an AI chatbot. What’s really interesting is how AI can be used to gather issues and find trends; in other words, it helps spot where employees are asking the most questions or struggling with a process. This moves the agent game towards team and corporate productivity rather than staying at the level of the individual. I like to think of this as an agentic feedback loop where agents are not only automating a process but helping figure out how to improve it.
- Governance and management — For successful deployment of agents in the enterprise, enhanced governance and management will be key. In the absence of attentive governance, lowering the development barriers to creating agents is sure to lead to infrastructure sprawl and possible security gaps. The new ServiceNow release has agent governance features, including new role definitions in the security model and new cataloging and workspace functionality. Also, Moveworks already has approvals built into workflows to help manage business processes via agents.
Things ServiceNow Needs To Consider
ServiceNow has taken concrete steps to not only build competitive SaaS features but also expand into horizontal AI platforms. As impressive as the strategy and specific steps have been, I’d like to propose a few areas for attention.
Beware going too broad too fast. ServiceNow is executing across multiple fronts. There is of course the AI and agentic disruption, but also the intent to expand well beyond the IT service management category. It’s a lot to take on, and hopefully the team can allocate and prioritize effectively. Dilution of attention can undo even the best of strategic intentions.
It might be time to provide a more futuristic viewpoint. ServiceNow has done well in articulating and delivering its strategy. But I’d like to see something more futuristic from the company to really set itself apart from the competition. For example, instead of agents handling human-centric tasks, ServiceNow should consider completely autonomous agents. For example, consider demonstrating self-healing infrastructure agents, or possibly adding value to a robotic solution.
A targeted agent development platform. It’s not clear whether adding AI and agentic features over the past year has helped drive net-new customer growth or deepen existing customer relationships. ServiceNow may want to consider standalone offerings (possibly from Moveworks) that don’t require the full ServiceNow platform. This could open the door to new customers that aren’t already ServiceNow shops, and maybe provide a long-term migration path. This would be in contrast to what we have seen from other SaaS platforms like Salesforce, which requires use of the core Salesforce platform to deploy its new Agentforce capabilities.
To its credit, ServiceNow has taken big steps in AI over the past 12 months. Instead of trying to deflect or deny the threat of AI, it has embraced and integrated AI into its SaaS offerings. Its latest moves only reinforce the company’s conviction and purpose in that direction. Hopefully, it can keep moving forward with the conviction needed to thrive in the next wave of computing.
Moor Insights & Strategy provides or has provided paid services to technology companies, like all tech industry research and analyst firms. These services include research, analysis, advising, consulting, benchmarking, acquisition matchmaking and video and speaking sponsorships. Of the companies mentioned in this article, Moor Insights & Strategy currently has (or has had) a paid business relationship with AWS, Microsoft, Salesforce, ServiceNow and VMware (Broadcom).
