McDermott's Move From SAP to ServiceNow: ClearEdge Predictions for Deal Makers
Updated: Jul 9, 2020
After a successful nine-year tenure as CEO, Bill McDermott departed SAP to take charge at ServiceNow. Changes to the C-Suite often bring changes to pricing, product sets and company direction. To get an idea of how this might shake out, these are ClearEdge’s takeaways and predictions in the wake of McDermott’s big move:
1. McDermott will bring SAP success strategies to ServiceNow
SAP is infamous for its intricate licensing structures, bundled deals with little transparency, and ability to increase customers demand profiles to drive additional costs. ServiceNow on the other hand operates in a different manner, mostly quoting in a transparent line-item model. Expect McDermott’s influence to push new sales strategies that may bring bundling and demand manipulation to ServiceNow deals.
2. SAP’s CEO replacements will follow in McDermott’s footsteps
SAP appointed two co-CEOs to replace McDermott, Jennifer Morgan and Christian Klein. Morgan came from the sales side, running the company’s cloud lines of business, while Klein’s background is focused around SAP’s core applications like S/4HANA and Digital Supply Chain. Both co-CEO’s prior experience compliment the initiatives McDermott spearheaded while at SAP. We expect SAP to maintain status quo and continue with their overall push to the cloud with their main product sets.
3. ServiceNow and SAP will be flexible to keep customers happy
Anytime there are high-profile CEO moves, customers are justified in voicing their concerns. Typically, new CEOs bring new agendas, sometimes changing customers’ product functionality and pricing, ultimately resulting in higher costs.
Sales reps are aware that some clients may be uneasy over these moves and, in some instances, would be willing to provide additional concessions to maintain customer satisfaction. ClearEdge recommends using these events as opportunities to garner leverage, and suggests the following messages to drive uncertainty and achieve concessions on terms and pricing:
Why did your CEO jump ship? This seems like a red flag. How can we trust that new management will maintain the same relationship we previously enjoyed?
We aren’t sure there’s a lot of stability right now. We’re going to have to consider other alternatives for our new growth instances.
How can I make a purchase with you today, knowing that the new leadership might change product sets or pricing tomorrow? We might hold off on new purchases until we see how things shake out.
For more information on building leverage and creating uncertainty around your next spend, please contact your ClearEdge representative.
Brady Carlson is an Analyst at ClearEdge Partners.