Serve immediately (now —— Free Report) is expanding and Microsoft (Microsoft Financial Services —— Free report). The company recently launched a new collaboration application integrated with Microsoft Teams for its employee center. The application helps simplify the employee experience in a mixed work environment.
ServiceNow has adopted Microsoft Teams for chat, meetings, and collaboration, and plans to fully deploy it among its 15,000 employees by the end of September 2021.
ServiceNow’s new employee center is a single, unified portal that can be used to find information, ask for help across departments (including IT, human resources, facilities, procurement, and legal), and request the services they need.
ServiceNow and Microsoft will also invest in joint innovation and go-to-market efforts across ServiceNow workflows and teams.
The relationship between ServiceNow and Microsoft dates back to July 2019. In May 2021, the two companies cooperated to strengthen corporate security. ServiceNow integrates Microsoft’s products (such as Microsoft Azure Sentinel, Microsoft Teams, Microsoft Threat & Vulnerability Management, and Microsoft SharePoint) with its ServiceNow suite of security operations solutions.
ServiceNow relies on strong subscription growth
ServiceNow has benefited from strong growth in subscription revenue, thanks to the widespread adoption of its Now platform. The company’s expanding global influence, solid partner base and strategic acquisitions are expected to boost growth prospects. Based on the widespread adoption of its digital workflow solutions, ServiceNow expects that subscription fees in 2021 will increase year by year.
ServiceNow’s expanding footprint outside of IT also provides important growth opportunities. The combination of IT, customer, employee, and creator workflows is expected to expand the company’s total potential market (“TAM”) from US$114 billion in 2020 to US$175 billion in 2024, a compound annual growth rate of 11%. It is worth noting that the TAM for IT workflow is estimated at 61 billion USD.
ServiceNow is now witnessing more than $33 billion in market opportunities in customer workflows, driven by trends such as direct-to-customer, everything as a service, and working anytime, anywhere. By 2024, the creator workflow TAM is expected to reach 36 billion U.S. dollars.
In addition, the growing need to improve the digital employee experience is a key catalyst for employee workflow, and TAM is expected to reach US$20 billion by 2024.
Zacks rankings and stocks to consider
ServiceNow currently has a Zacks Rank #3 (holding).
Silicon Motion Technology (Seymour —— Free report) and Avnet (Automatic Transmission —— Free report) is a better-ranked stock in the broader computer and technology industries. The Zacks of these two stocks ranked first (Strong Buy). You can view the full list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rates of Silicon Motion and Avnet are 8% and 25.4%, respectively.
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