ServiceNow CEO Bill McDermott said workflow and process optimization are blending as enterprises shift away from siloed data and infrastructure to focus on transforming operations with new technologies such as generative AI.

McDermott, speaking during ServiceNow’s industry analyst day, closed out sessions with ServiceNow executives who outlined generative AI plans, strategy, target industries and returns on investment.

He said enterprises have created "a hornet's nest of complexity." "The number one reason that digital transformation hasn't delivered positive ROI to businesses is integration. And that's why 85% of the businesses that have gone on transformation didn't get a positive ROI, because nothing integrates," said McDermott.

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What's changed is an inflection point where enterprises have to cut costs, leverage new technologies and be agile enough to navigate a bevy of unknowns.  McDermott said IT budgets are likely to rise and "generative AI is the main cause of the increase." "I've tested this theory with CEOs that they're going to lean even more heavily on SG&A functions. They're not going to do what they've always done, which is upgrading older technology and 1,000 points of dim light point solutions. They're going to start stopping things in favor of investing in platforms that matter. There's about a half a dozen initiatives that matter and Gen AI is number one on the list," he said.

McDermott added that boosting efficiency requires a focus on processes and a move away from siloed operations.

"We're moving away from the siloed operation. Operations today have to be done in teams. It has to be done across silos. It has to be done in business processes, whether that sorts of pay cash and so forth. So, what you're seeing now is a complete renaissance in where the work needs to be done," he said. "We have to put a bit of an action layer above this mess. Straighten out the mess, go into the process, go into the end integration and then provide a UX that hides the complexity."

According to McDermott, C-level executives are pivoting to business transformation management "where you rethink the whole value chain."

Other key points from McDermott include:

Speed and time to ROI is critical. McDermott said CEOs have to rev innovation cycles even as they are navigating multiple concerns--geopolitical issues as well as economic concerns--and have to become more productive. "Leaders can't be focused on time consuming projects with high risks," said McDermott. "They have to get the job done. Customers need positive ROI. They need costs out and they need productivity up and keep an eye on growth."

He added that CEOs "really need to increase the clock speed of their companies."

Work is still complicated. "What I try to explain to CEOs in the context of what we do is companies still waste a lot of time," said McDermott. "The average worker today swivels between 13 disparate applications in the enterprise. And that's forfeiting more than 20% of their productivity. Some cases are a lot higher than that. That seems pretty ridiculous."

The intersection of data and AI. CEOs are starting to realize that to leverage generative AI they need to focus on their data. "The enlightened CEOs are getting the picture that they really need to focus on data," said McDermott, adding that AI is the next step. "If I can improve the productivity of my workers or my engineers by 30% to 40% combined with digital transformation, we're now moving into a whole different category--business transformation."

Generative AI's impact on employment. "I absolutely believe that this might be the great unlock in human productivity and enterprise productivity. And it actually might be a force multiplier for increasing the world's GDP. Because if I'm right on digital transformation, I would also be right that we're going to need more people in the workforce. They're going to do different things. They're going to be retrained. A lot of people forget we're in the tightest labor market that we've been in for two decades," said McDermott. "It's the biggest thing that we've come across in the enterprise, probably since the internet."