ServiceNow, Inc. (NOW) Earnings Call Transcript & Summary

Good morning or afternoon, everyone, and welcome to today's webinar, Innovating for 2023: Gain digitally enabled efficiency and people-powered productivity. My name is Nin Sandhu, and I'll be the off-camera host for today's session. So whether you're tuning in from home or the office, I'd like to take a quick moment to say thank you for taking the time out of your busy schedule to be here with us today. We brought together 2 outstanding leaders, who will be sharing their knowledge and insight on some of today's top organizational challenges. And I'm confident you'll find the information to be both informative and actionable. So without further ado, let's get started. So as we all experienced, the past year has been brought up with rapid changes to the world of work. And organizations are facing a myriad of complex challenges driven by economic headwinds and shifting supply chains and talent disruption across every industry. As we move into 2023, the need for organizations to be more agile and adapt to change has never been more crucial. So in order to navigate this constantly evolving landscape, leaders must be equipped with the insights and strategies necessary to make important decisions so they can continue to drive business growth and success. That's why I'm thrilled to welcome Jacqui Canney and Chris Bedi, two executive leaders with a wealth of experience in helping organizations succeed in challenging times. So with that, I'm going to have each of our speakers introduce themselves. So Jacqui, let's kick it off with you. Can you tell us a little bit about yourself and your role at ServiceNow?

Sure. Thank you for having us. It's an awesome opportunity to talk about something that Chris and I are both super passionate about. I joined ServiceNow a little over 1.5 years ago. So I feel still quite new yet and super energized by everything we have going on here. I, before that, though, was the Chief People Officer at Walmart for 4 years and helped lead that digital transformation. And before that, I had the opportunity to work in one of the best classrooms for human resources, and that was 25 years with Accenture. So I am thrilled to be here and excited to be here with you, Chris.

Chris, what about yourself?

And super excited. And Jacqui, you said you've only been here a year, gosh, time flies when you're having fun. We've done a lot together already. But I've been here at ServiceNow for about 7 years. I'm our Chief Digital Information Officer. Work a lot with Jacqui on our talent strategies, our own digital transformation work a lot with all of these great ServiceNow customers. And if you're a customer listening, thank you for your trust in ServiceNow, and super excited about the topic at hand.

Love it. So now we've got a little background on our speakers. Let's move on to the panel discussion portion of our webinar. So our panelists will be discussing a range of topics related to challenges that organizations are facing today, and we'll be happy to answer any questions from the audience in the Q&A portion at the end of the webinar. So let's get started. I think we'd all agree there's been a significant amount of economic, social, business and talent disruption we experienced in 2022, it was crazy. So as we enter 2023, what are some talent and work trends you expect to continue? And which of these trends are keeping you both up at night basically. Jacqui, let's kick that off to you first.

Sure. Ironically, there were some excellent research that Accenture just produced that I read that I think is relevant to the answer to that question. And it's about how our CHROs and their work changing? And it's because of those very trends that we see in the workplace that are pushing our roles to be a little bit different than they were before. And in particular, it's how does the CHRO, with the talent strategy at their sort of core of their job, drive growth for business. And that's a really unique new way of centralizing all of the work that the HR team needs to be focused on. So what do I mean by that? There's some specific areas that drive growth for companies. And what I see for ServiceNow, we talk a lot about productivity, we talk a lot about skills, and we talk a lot about well-being. So when you layer how does your talent strategy drive growth for the company and serve those 3 big trends that are happening out in the world, I think those are here to stay for a little while, and, I guess, keep me up at night, although I try not to be up at night too late.

Love it. And Chris, what about you?

I think there's the -- what was old isn't old. And that's -- talent is the biggest thing as a predictor of a company's success or not. And there's been countless articles written about the shortage of tech talent. While everybody needs to digitally transform, we need to help employees as a transition and navigated this pandemic and flexibility is the key word. And I think all of those things really continue into 2023, not really new, but really saying, how do we -- what do we do with this now? How do we really equip our talent, so they have the career development and growth and flexibility that they want? How do we -- we all know that diversity of thought is what all winning companies have, how do we promote those sort of behaviors and help people along those journeys? How do we leverage a little bit closer to my home, AI and ML to help managers be better managers, employees be better employees, leaders be better leaders? And all of those things saying, how do we coalesce that and do a talent strategy that the employee base can really understand, embrace and experience in a very easy way.

And I might add, Chris, to that, one thing that I have -- well not one thing, there's many things you've helped me with. But when you put all that together, that can be an overwhelming set of data or signals coming at leaders. So how you and your team have helped my team create the insights that can drive the actions driven with this predictive data-driven insight into what do people want, how can they learn quicker, what's going to drive their capabilities to be stronger, better, faster, tied to what our business needs are, is, I think this really big unlock. Because if you don't have a partner like you, in my seat, that's a lot of overwhelming information that doesn't necessarily get you to making the critical decisions that you just laid out that our people want, our leaders want our business needs.

Takes two to tango, Jacqui. You're a great partner as well.

Awesome love it. I mean, it definitely sounds like organizations still have their work cut out for them this year and organizational agility is going to be kind of a steady theme throughout the year. So as leaders, what are the critical talent and business strategies that you're communicating back to the office of the CEO. What are you telling Bill? And how are you driving that success in growth going forward?

I'll do my answer and then we'll see where it agrees or disagrees with Jacqui's point of view. And I think we're a high-growth company. We're privileged with high growth and a set of great customers out there, who continue to have trust in the ServiceNow platform. And with that high growth comes hiring a lot of employees, helping them ramp up quickly and all that. But to CEO, Bill McDermott, it's how do we make sure we have the right skills at the right place at the right time to serve our customers in the best way and to continue to innovate on our amazing platform. And it's a combination of bringing in those skills from the outside, building up those skills internally and really helping and making sure that we're creating a unique talent advantage for ServiceNow, which can help us differentiate in the marketplace. To me, that is the CEO conversation. I don't know, Jacqui, how would you frame that?

Yes. No, I think spot on. I agree with everything you said, and I know that you're -- that's what Bill asked us both, as does the board. It's not just CEO agenda. It's the whole company being rooted around that. What else I would add is that we are a high-growth company. We recruit many people every year. We're really doubling down on the development of the people inside of our company, too, in the last year and into next year. So when I listen to what they're telling us, and what Bill relies on us to have the pulse of our people, it is around career development. It is how do I get to the next opportunity? What are the relevant skills? And how are you making them easy for me to get those? And Bill is asking for the data model behind that. So he can say, okay, my skills in this company went from this to this. What were we trying to change and evolve to for the people inside the company, and he wants to be able to see that simply from his phone or his iPad. And I think it's that synthesis of the complex of making every one of our 22,000 people grow, develop and be able to dream and get their dreams here. And then how does Bill have the confidence that we would have moved those skill sets to be what's the DESCO 21c, right? And I think that's the challenge he puts before us.

Yes. And then sorry, we're not allowing you to ask a lot of questions. But just to riff on this a little bit, I think, and Jacqui, I hope you don't mind me saying it. I think, traditionally, all of this has been done through an HR lens. Here's the HR learning process. Here's the HR performance management process and with Jacqui's leadership and our partnership, what we've been able to do, I think, is really flipped on its head and do what I think every company needs to do, which is really put the employee at the center. Let the employee be in charge of their own learning and development. Let the employee be in charge of their own performance management process. Like why should HR decide when and how I get at 360 and who should get it from? And I think, Jacqui, with your leadership of, I think, helping us think different and think big really putting the employee at the center, I think that's going to be critical for every company out there. And you have to tech enable it. Because if you put the employee at the center and put the burden on all the employee, it's not going to go anywhere either.

Right. Right.

No, I like -- love the fact that we're doubling down on the employees, right? When you look at other companies doing the opposite, right? So my next question kind of builds on the previous one is like -- and what other areas are you partnering together to execute on that, right? You mentioned kind of putting the employees at the center of it. But what else are you guys doing to kind of make that -- on that doubling down effort?

[indiscernible]

Yes, maybe, Jacqui, you could talk about some of the recent set of innovations we launched for our employee base.

Yes. So we have -- we think about the talent strategy as like a system. You can't just have a great way that you're hiring and not have a great development program, because you make like a leaky bucket, right? You hire all these great people they don't get what they want, so they leave. And what Chris and I have done is created this integrated way of working together. It's more like systems thinking about what an employee wants and needs. And with the amazing platform that we have here, we've been able to build these [ products ] that sit on the Now Platform to serve and bring to life and to the strategy. And those are things like goal setting. We have goal setting as a criteria for everyone in the company to be tech-enabled and in our systems by a certain date. But that doesn't just stop with the goals. Then it's, what are your individual development plans? And how are you talking to your manager about them with quarterly growth conversations, which then lead to what's our succession planning methodology and who's getting the right next jobs? And then building a learning experience platform that we have named Fred after our founder, which everyone loves. It's gotten great engagement, but it's also using AI and ML to predict what you might want to learn and what we need you to learn as part of working at ServiceNow and create this very integrated, easy way to develop your sales. And those are individual products, and there are so many more, but they're all tied to the system of how we're going to continue to grow our company and grow our workforce's capabilities. And I could go on and on, but Chris, I'm sure you have ones to bring up, too.

Yes. And I think it's what you said, all those examples, employee at the center, digitizing it, giving the employee and manager an experience they love, they actually look forward to, which hasn't been the case often with HR tools, and I'm sorry Jacqui, to do that. I don't put that on myself, too, it's having deployed them. But you didn't mention my favorite one. And that's -- and it goes back to well-being of the employee base, which is recognition, making it easy for somebody to say, "Hey, I think you did a great job today, I think you did fantastic," to a group of people, and they're making that very visible and in a very social sort of way, having people comment on it. And people keep track of their personal kudos boards. It's really cool. I haven't gotten any myself, maybe, Jacqui, maybe you could give me one after this. But I think we're early in our journey in what one thing that all of these digital products on the incredible Now Platform are going to create for us is data. Data that can then feed AI/ML algorithms to do what I talked about at the beginning, which is as a manager, "hey, here's the next best action we suggest for you right, to help out with Kim's development or John's career development plans." And that's where I think we really get to that next level in terms of talent management.

And I want to jump on that, too, because it also creates where our goals for diversity, equity and inclusion become more to life because we're using more data and insights and not just relationships that you have, that you need to know the person to be able to give them that stretch assignment or for that person to have access to training and development and getting more. And I'll add, this is a lot of tech enablement, but it's a very human role that our people managers are having to play, and it's a complex time to be a people manager. You've got people working all over the world and screens and offices. And by creating these products and giving the insights and using the data, we're trying very hard to enable that manager's role to be less complex and certainly be able to spend more time in the humanity of being the manager, right, of having the time to have these quarterly growth conversations and advocating for their people, while serving customers. So we need to, I think, get better at that.

100%. And I think the other thing, I'm sorry, I'm going to put my CTIO had on is from an architectural perspective and for all of our listeners out there, and we do, too. We have a recruiting system over here. We have a comp system over here. We had this over here. We have an HCM, which people maybe we went into twice a year, besides Jacqui, our HR group. And we really thought about, it can't be this collection of point solutions. It's got to be a platform, which can provide a continuous experience, as you talked about, Jacqui, across each of these dimensions. And it's a place that becomes very sticky, where employees and managers want to go. I talked about the recognition that kudos, that becomes a daily, weekly thing that people look forward to going to. And while they're there, let me check in on my goals. So we have to bring really that product mindset to it. And that's where I think we are privileged to be able to leverage our platform as much as we are. And this platform is pretty amazing. It can do everything. All of those things that Jacqui and I just mentioned were built on the Now Platform in like weeks and months, not years.

You're right, that's a really good point, like really fast, it's awesome.

It speaks to the agility factor, right? So I'm loving the partnership here. It's clear that business leaders can no longer operate in silos given today's business environment. Here's my next question. So when I look at the news, it's still very evident that organizations are faced with some extremely hard business choices in 2023. Do they elevate experiences or cut costs? Do they invest in people or invest in tech, they automate operations or improve service, work with less or do more? So Chris, my question to you is like, what advice would you give to these leaders, given like you have to make a tough choice?

You can't make the choice. You have to do all of them. I think it's a fallacy to think that any business leader has a choice point here. You have to improve service, you have to automate operations, you have to elevate experiences. You have to cut costs. You have to do all these things. And the key is having great partners like Jacqui, having clarity of thought on the North Star of outcomes for your team and then understanding and helping people understand. It's not great experience or automation. And if you think about it for a second, when you build a great experience, what do you typically do? You simplify, you remove steps, you revisit the policy, you make it easier for people to get done. The only way to do that is automation. So I kind of view a lot of these things as 2 sides of the same coin. So my advice internally, and it's hard. I'm not going to say it's not hard. It's easy to say, well, I can only do one of these it's to really challenge yourself to say, look at these things holistically. And maybe you're pressing harder on one dimension or the other and maybe look at some of these things as byproducts or the other. If you're automating and creating great experiences a byproduct is going to be a reduction in cost structure. So you don't even actually have to work at it. It will just happen. You have to be intentional about wanting it to happen. So my suggestion would be, you got to look at these things holistically. But easier said than done, right, Jacqui?

Yes. I agree. Having a plan -- if you're a leader in this spot, having a plan where you say yes to those questions, not no is really, I think, the future of where this economic time, we're in -- I know some call it unprecedented or some feel precedented, I guess. But this has been a challenging couple of years. And I don't see that changing. So having a plan to automate that increases experience and puts your people at the center while serving your great customers is going to be here for a long time, if not forever. And I don't like talking about hybrid work and all that anymore. It's like we were productive for 50 years. Let's be more productive for the next 50 years. And you have to say yes to those questions to be more productive in those next 50 years, or your competition will probably outpace you. And that's the big thing a CEO or leader is probably got to be worried about. And I see that you can always afford to change out all those expensive systems. So what is your quicker way to experience while you maybe have to change out those things. And that's when I was a customer of ServiceNow, and that helped me do a lot of that as a CHRO. And I knew I couldn't change out every legacy system, but people, employees, associates are in the driver seat. It may be -- the headlines talk about layoffs and things, and that is happening. I'm not diminishing it. But there is still a great strain on talent and how to get the best people into your company no matter what industry, no matter what country, I believe, you live in. So serving up the great experiences is not an option if you're trying to attract and retain those people, while managing your cost base, cost to serve, the customer service. And I think there is a way to, yes it's not easy, but it's there.

Definitely a great advice. I mean I love that. It doesn't have to be one over the other, and companies can still do both to set themselves up for success like that. So I'm going to pivot a little bit here and talk more about the talent conversation. So Jacqui, ServiceNow kind of recently launched the RiseUp program, a global program to scale 1 million people on the company's platform by 2024. So can you tell us a little bit about the program, and how it aligns to your overall talent strategy you were just talking about?