Specialist
Former VP at ServiceNow
Agenda
- ServiceNow (NYSE: NOW) overview – offerings and expansion
- Growth strategy, focusing on "land and expand" and new features, modules and markets
- M&A approach and related priorities
- 1-3-year outlook
Questions
1.
How would you describe ServiceNow given that the company was initially focused on ITSM [IT service management] but now has a GRC [Governance, Risk and Compliance] segment, among other things? I understand that non-IT workflows accounted for 38% of ServiceNow’s net-new ACV [annual contract value] in Q4 2020, so it is clearly doing a lot more than ITSM or IT workflows.
2.
The transition from one product to multiple categories with numerous products has happened over the last five years or so. Was this ServiceNow’s original vision for the platform and the company? How did it manage to add categories and products, while also taking substantial market share from incumbents who now appear somewhat and unexpectedly vulnerable?
3.
What was ServiceNow’s strategy as it sought to win and keep business? You alluded to the company’s focus on the IT leadership teams and decision-makers across enterprises and relevant organisations, especially while expanding across IT workflows and into other areas. Was this a key advantage?
4.
How does ACV or revenue roughly break down across ITSM, ITOM [IT operations management], GRC, and the employee, customer and creator segments? Is there another way to assess that on a relatively granular basis?
5.
What do you think ServiceNow would identify as its most significant opportunities outside of IT workflows? Employee seems a definite contender, with a focus on HR, and GRC has grown considerably.
6.
How do you think ServiceNow approaches verticalisation? The company has some vertical solutions in IT, a telecom network performance management offering and financial services in the customer workflows category. Do you expect this to be an increasing focus? Naturally it’s a big theme across enterprise software and people will pay attention, especially given Microsoft’s proposed Nuance acquisition and intentions to increase its TAM in healthcare.
7.
What percentage of net-new ACV do you think is confined within vertical offerings?
8.
Do you think verticalisation has become an important enough opportunity to encourage ServiceNow to become more aggressive in M&A, especially given the Microsoft-Nuance deal and Salesforce’s Vlocity acquisition. Would you expect internal development as well as M&A resources for verticalisation?
9.
Which verticals should ServiceNow increasingly focus on? Would it be a case of existing verticals at an inflection point or areas where it has inadequate exposure or needs to establish itself?
10.
Is ServiceNow still positioned to significantly take market share from more legacy players such as BMC? You indicated that ITSM probably still accounts for about 50% of net-new ACV. Who are the significant participants in this category and what are they doing to compete with ServiceNow?
11.
Why are people primarily making the move to ServiceNow for ITSM, aside from the cloud platform and offerings? As more and more external and internal developments impact companies, presumably they will be more inclined to re-evaluate and decide to move to ServiceNow.
12.
Is Atlassian considered a relevant player or an emerging threat? It isn’t necessarily a direct competitor but seems popular in the IT field and has a lot of different offerings.
13.
What’s your take on GRC competition? ServiceNow has grown substantially over the last 3-5 years and is now a respective leader.
14.
You identified customer and employee workflows as ServiceNow’s two biggest opportunities, but these have very strong cloud-based incumbents in Salesforce and Workday. How can the company go about taking share from Salesforce and Workday – two players who are very aggressive in their own rights and expanding across their own paths?
15.
Has ServiceNow been focused on any use cases or applications to break into enterprises in the customer and employee areas? You referenced that as an emerging competitor in these areas, the company could slide under the radar and attract some smart people.
16.
To what extent is there an opportunity for ServiceNow to scale up the resources and aggressiveness in M&A? The company’s past transactions haven’t been particularly noteworthy but given the customer and employee market opportunity, could we expect bigger multibillion-dollar-type deals?
17.
I understand that ServiceNow has historically used professional services to win and keep business rather than generate revenues and profits. What’s the strategic importance of professional services for the company? Do you think this changes as the company’s orientation evolves or it starts to consider bigger areas and larger scale M&A?
18.
You highlighted ServiceNow’s efforts to increase the customer stickiness of the platform and applications as well as improve business retention. What else could the company do to help retain and grow business?
19.
What are your revenue growth expectations for ServiceNow? The company appears to be positioned well and executing well to achieve estimated 25-30% growth over the next 2-3 years. What competitive risks or internal execution challenges would you highlight here?
20.
How are you sizing the international opportunity? Roughly 38% of ServiceNow’s 2020 revenues were from outside the US – it seems to be a fairly significant number. Salesforce reported below one-third of revenues from outside the Americas for FY21. What opportunities would you highlight? You alluded to emerging markets but what about the sweet spot in developed markets outside the US?
21.
What’s your take on ServiceNow’s management team and the respective changes since CEO Bill McDermott joined? Aside from the enterprise sales orientation, what changes would you highlight? What’s enabled the team to deliver over the last couple of years?
22.
What is your 1-3-year outlook for ServiceNow, considering all the points discussed over the last hour?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary 48 hour week trial
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
