Service Today (NOW – Free Report) recently announced that it has signed an agreement to acquire observability and log management solutions provider, Era Software.
During the fourth industrial revolution, organizations are digitally transforming their businesses by operating in multi-clouds. One of the most important aspects of digital transformation is the observability solution that provides developers with the necessary data regarding the performance of their critical applications required for their data transformation in the cloud.
However, many enterprise surveillance solutions remain siled and a costly undertaking for the company. Customers are increasingly making large investments to leverage software, which provides holistic solutions to help digital transformation faster and at lower costs.
To meet current market demand, ServiceNow decided to acquire Era Software to add unified monitoring solutions to Lighstep’s existing features, which drive its cloud solutions business.
ServiceNow Acquisition Strategy to Drive Share Price
The Russia-Ukraine war has created great turmoil in the global economy, exacerbating several macroeconomic issues. Due to rising macroeconomic turmoil, ServiceNow is grappling with inflation and unfavorable forex problems. Stiff competition remains a headwind and is expected to hurt close prospects. This affected the share price movement negatively.
Shares of ServiceNow fell 35.6% in the year-to-date period compared to the Zacks Computers – IT Services industry and the Zacks Computer and Technology sector, which fell 34% and 32.7%, respectively.
However, the challenges arising from war have created a need for cloud-based platform services, particularly in cyber security.
According to Gartner, 81% of organizations have a multi-cloud strategy. Organizations use cloud services for everything from hosting data centers to enterprise applications. As such, the challenges underscore the viability of investing in digital businesses, and the company expects a 23% year-over-year increase in the global public cloud market for 2022.
ServiceNow, which currently has a Zacks Rank #3 (Hold), is expanding its market share in the global cloud market through its investments in building its partner ecosystem. The company’s collaboration with Wipro Limited (SHARPNESS OF MIND – Free Report) is expected to help ServiceNow drive long-term growth. You see the complete list of Zacks #1 Rank (Strong Buy) stocks today here.
Wipro has delivered hundreds of client projects on ServiceNow IT, Employee and Customer workflows, which will help ServiceNow expand into non-ITSM markets such as human resource and security solutions by launching new products and service.
The collaboration with Barclays (BCS – Free Report) is also a standout. Barclays is helping ServiceNow expand operations in countries under the European Union.
Barclays works with ServiceNow to automate cross-agency management while complying with EU data privacy requirements.
ServiceNow also benefits from its long-term partnership with Adobe (ADBE – Free Report) to provide customer service management workflow products to enhance the customer experience as businesses conduct their operations on digital-only platforms.
ServiceNow and Adobe also expanded their partnership by providing the former’s services to the latter’s employees to drive 30% faster customer care solutions.
Acquisitions have played an important part in ServiceNow’s growth over the years. ServiceNow acquired Lightstep in 2021 to strengthen the company’s expertise in cloud-native apps for site reliability developers and engineers. Prior to its recent announcement to purchase Era Software, ServiceNow acquired Hitch Works, DotWalk, Mapwize and GekkoBrain to provide complete cloud solutions to customers.
ServiceNow expects to complete its latest acquisition of Era Software by the end of 2025, which is expected to provide a positive ROI for the company in the long run. ServiceNow estimates that the observability market will reach $9.08 billion by 2025, and with its recent acquisition, the company is looking to win significant market share that will drive its top-line growth.