ServiceNow has a new CEO appointed by former SAP boss Bill McDermott. What is interesting is how this growing company will handle this growing company, which has an expected revenue of more than $3.2 billion in 2019.
It is an understatement to say that there has been some turbulence in the management of ServiceNow. John Donahoe became the CEO of ServiceNow in March 2017 and said last week that he would leave to become Nike’s big boss. McDermott took over.
The former CEO of ServiceNow, Frank Slootman, is now the owner of Snowflake and is currently recruiting ServiceNow executives and sales staff. For example, Mike Scarpelli, the chief financial officer of ServiceNow, left the company in August to become the chief financial officer of Snowflake.
For ServiceNow, fortunately, its position and market share are very strong. The company started as a cloud-based IT service platform, but has now expanded to human resources, finance and customer service. ServiceNow aims to simplify and automate the workflow of multiple functions.
The company reported operating income of 885.8 million US dollars in the third quarter, an increase of 32% over the same period last year.
In IT service management, Gartner places ServiceNow at the top of its Magic Quadrant. In the CRM field, ServiceNow is seen as a visionary in a highly competitive environment.
This is the result of Bill McDermott at the helm.
More stable product roadmap
McDermott may refine the customer’s needs and provide it to them. Patrick Walravens, an analyst at JMP Securities, noted:
“Although ServiceNow’s core product is’rock solid’, some industry sources believe that the platform’s enthusiasm for’consumption’ makes customers confused, but some partners are frustrated. The key is that it shakes the growth engine.”
Business overhaul
McDermott is known for his sales-oriented approach, and he is likely to recruit new talent from SAP and other software vendors. Cowen analyst J. Derrick Wood said McDermott may be a good fit for ServiceNow because of its annual revenue of $10 billion. McDermott must stop the turnover caused by snowflakes and expand sales to large customers.
M&A
In order for ServiceNow to achieve significant growth, acquisitions must be made. McDermott led a series of acquisitions when SAP transitioned to the cloud. Wood said:
“McDermott has extensive experience, background and network, and can:
- Recruit talented sales personnel on a large scale to fill natural vacancies and build sales leadership that can lead large-scale sales operations.
- Effectively integrate new acquisitions to help ServiceNow enter new markets and expand (just like SAP, Oracle, and Salesforce do).
Macquarie Capital analyst Sarah Hindlian pointed out that SAP is a major customer of ServiceNow, and the distance between the two companies is getting closer. What if ServiceNow and McDermott return to SAP? Strange things have happened.
International expansion
Mr. Hindlian also pointed out that Mr. McDermott may also expand ServiceNow’s global visibility. ServiceNow does not yet have global SAP experience, McDermott has a global contact list, and is used to chasing large multinational companies.
Last week, the company released better-than-expected third-quarter financial results. ServiceNow announced net income of US$40.5 million and revenue of US$885.8 million, an increase of 32% over the same period last year.
The company said that subscription billing was $864 million, an increase of 28% year-on-year. Subscription revenue was US$834.9 million, an increase of 33% over the previous year. In this quarter, ServiceNow said that it has completed 46 transactions, with a new annual contract net value of more than $1 million. The company has a total of 809 customers, including more than $1 million in VGG, representing a 32% year-on-year customer growth.
The article “Bill McDermott’s ServiceNow: What can you expect” translated and adapted by ZDNet.fr
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