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

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Well, great. Hello, everyone. Thank you for joining us today. I'm Piyush Patel, part of technical product and solution marketing team here at ServiceNow, and I'm going to be your host today. In the 60-minute webinar, Victor Parades-Colonia and Kevin Rieske will provide an overview and demo of optimizing IBM license compliance. Victor is a Senior Outbound -- Senior Principal Outbound Product Manager at ServiceNow; and Kevin is the Vice President at Anglepoint. Both have extensive expertise in our software asset management solution as well as other ServiceNow platform solution. Please keep in mind that today's presentation is protected under our safe harbor. We reserve few minutes at the end for Q&A. But please feel free to submit your questions in the Q&A section during the webinar as well. There are 3 key takeaways from today's session: how you can leverage ServiceNow for a centralized view of all your IBM environment, how our partnership helps you handle IBM license challenges with confidence and expertise, and what it means to be IBM audit proof with IBM Authorized SAM provider like Anglepoint supported by the ServiceNow platform.

With that out of the way, we'll start with a common question that's on everybody's mind: why is IBM licensing so complex? And for that, I'm going to start with you, Kevin.

So the world we live in is complex as well. So when you look at IBM, you notice that they have a very diverse product portfolio. So for example, they have hundreds of products, over 100 different licensing metrics or a way to count those products. On top of that, they combine all of their softwares, so to create a solution, they'll throw together 4 or 5 or 10 different products and offer it in a single solution or a single part number. Each of those different product solutions have their own specific licensing terms. And once you combine that, plus they offer flexibility of various licensing models. So you can get perpetual licenses, term licenses, subscription licenses. They've come out with some purchasing vehicles like FlexPoint and cloud packs to help kind of consolidate the purchasing, but it actually increases the complexity within software asset management. On top of that, they have different license usage restrictions. Sometimes, you restricted only use it in non-production, for example, or just after recovery environment, maybe counted slightly different than a standard environment. They have compliance reporting requirements, not only annually, but quarterly for our containers and sub capacity. They make changes to their product offerings, change the licensing models over time periods and combine that with all of the different virtualization technologies, VMware, and like all the other ones used to be deployed on a single server. Now you've got virtual machines, LPARs, vPars, numerous different operating systems to run it on. Once you add all that together, it just gets really complex.

Right? So I guess what we heard is that IBM has a diverse application portfolio with different license metrics and usage rights. Combine that with constant changes to their license models kind of makes it difficult for companies to adjust their usage. With that being the case, what is the solution? And how does it work? Victor, do you want to answer that?

Yes, I'd be happy to. It's a great question. So the way that I would describe this at a very high level is that a combination of ServiceNow Discovery with our software asset management solution and the Anglepoint IASP offering, all of that combined is our solution to that question, right? And the way that this works is really in 3 parts. The first is the IBM software discovery solution, which is done through our file-based discovery method. These are then discovered through file signatures, processes and associated products, which are then created in a record in our installation table. Then to handle the complexity of all of what Kevin described, which is the bundling, which is many different licensing scenarios that need to be accounted for, that is all ingested into the Anglepoint Elevate platform, where Anglepoint, with their army of consultants working with your -- with the customer, looking at all of the different bundling scenarios, knowing the product catalog from front to back and being able to administer the different licensing consumption rules associated to those installed products, then are able to update the product classification table to account for all of those licensing scenarios. It gets pushed back into our SAM solution, which is then used to do the reconciliation and compliance reporting, right? So things like measuring at the host level every half hour, the peak usage for that daily report. These are requirements that are required for licensing consumption. But when you have that reporting, you have the product classification and now you have the reconciliation engine combined, all of this together creates the solution, which is an effective license position of your sub capacities consumption for IBM. I have a brief demo that we could actually go through. This is one transcript part between myself and Kevin, and this will give you a little bit more visualization about what I just described. So why don't we look at that? [Presentation]

Welcome to today's demo of the IBM Software Asset Management functionality within the Utah release of ServiceNow. I'm Kevin Rieske of Anglepoint, and presenting with me is Victor Parades-Colonia of ServiceNow Software Asset Management team. The first step to installing the IBM licensing in apps is to go to the ServiceNow store. And you'll identify that there is going to be 2 different applications that you'll need: the IBM licensing compliance or software asset management from the ServiceNow and the IBM licensing for software asset management from Anglepoint. As you look at each of them, you can see the dependencies needed, the different plug-ins and the different applications. So switching over to the ServiceNow's application, and they also have their dependencies there. There is a step-by-step installation guide as part of the ServiceNow documentation as well, which is located within the IT asset management section, inside of the Anglepoint Elevate integration. It goes through step-by-step how to set up the product as well. As you get to your ServiceNow portal, once you have those 2 applications installed, there will be a new menu item for Anglepoint IBM licensing, which gives us access to directly log into Elevate. Once you are into Elevate, which is part of the Anglepoint's IBM Managed Service, you will go to your IBM Managed Service project. And it will give you step-by-step instructions on how to install the different applications, import the IBM content needed to extend the different catalogs, how to set up the VM managers within ServiceNow, how to create an Elevate Integration user and register the application within ServiceNow, how to configure the discovery to be able to pick up the extended catalog of IBM products, how to switch over to utilizing the Software Asset Management application instead of an adapter for ILMT, your big fix. And then you'll go through the steps to set up the actual Elevate connection, utilizing the new user that you've set up within ServiceNow, along with the client ID in secret that was provided when you were registering the Elevate application. Once you have that connection, you'll be able to push and pull that data directly into Elevate, getting to an IBM license compliance position. Victor?

At this point, Casey has completed 2 of her 4 goals. She is now moving on to the next one, which is related to IBM. The goal in question here is to create a compliance position for the IBM Publisher. That takes into account sub capacity. Having a look at the activities that are associated to that goal, we can see that this goal is in progress. Casey has already completed the entitlement creation, and she has already done the discovery of IBM installations. At this point, it's important to note that Casey and her organization are actually qualified for IBM sub capacity by way of the IASP support coming today in Utah. And what this essentially means is that, in lieu of ILMT or big fix, a customer can qualify for sub-capacity licensing, provided that they work with an IASP provider. In this case, that is Anglepoint. So through the combination of ITOM discovery; Item SAM; the Anglepoint store app, which is used for software bundling classification; as well as Anglepoint's IASP service, that combination of offerings together qualifies Casey and her manager for sub-capacity licensing. Picking up where Casey left off, she now wants to review the list of discovered IBM installations. She'll look at the software installations table and filter for the publisher IBM. Here, we noticed that the full list of installed software that is discovered, as well as its discovery model and normalized product name and what device it is installed on. We continue then going back to the asset workspace. And when we go into the license operations module, you'll find the IBM ASP menu item. And here, we get a product classification table. So in the previous view, we were able to see all the discovered products that ITOM Discovery found through its file discovery pattern technique. And that information gets pushed out to Anglepoint through their store app. And what is done in the back end from the Anglepoint's side is a product classification analysis, and the results are then ingested back into SAM and populates this table here. So for all of those installations that we found discovered, we now are able to identify if any of those are bundled, and we have that classification provided here. The reconciliation then is leveraging this table to do the reconciliation for compliance. From here, Casey then goes through the daily high watermark usage, and she's able to see all the list of products by their daily high watermark usage. The reason this is important is because IBM requires that there be a daily high watermark count analysis of the IBM environment. This is captured by ITOM discovery and is populated in to this table. And the most important thing here, aside from high watermark usage, is that it is also calculated based on region. So again, this is all tied to IBM licensing requirements. So now let's go to device settings. And here, Casey can monitor and analyze what PVUs per core are used for reconciliation analysis. And here, we have a default setting of 100. This is going to be based on the processor type. And once this is discovered by ITOM discovery, what the processor type is, our tool will identify what is the corresponding PBU core that's used for reconciliation. The devices to scan menu item will be based on the VM manager or V center. So all devices that are associated to a particular V center can be targeted for the discovery of software installations. In other words, you don't necessarily have to scan your entire environment if you don't need to. If you know where your IBM footprint exists today and what V centers house your IBM installations, you can add those and incorporate those as the devices to scan. At this point, Casey has all that she needs to run reconciliation for her IBM sub-capacity environment, Workspace again, where Casey is going to run reconciliation. She'll run reconciliation based on IBM. And after clicking the Run Reconciliation button, reconciliation will process and she will then have the results that she's looking at. From this view, all the products that are PBU based or RBU based by core are presented in the workbench. These, again, are coming from the collaboration between ITOM Discovery, the Anglepoint Store app and service and the Software Asset Management application. Casey will validate that the information here appears correct. She'll take an example here from MQ. She knows that she has 1,000 licenses for this product. And as a result of the life software installation, there's 800 that are db2 enterprise. The organization owned 1,000 licenses, but they're deploying 1,400. So they are at a deficit of a noncompliance result of 400 [ PDU ] licenses. Taking a look at the RBU product in this environment, particularly composite application manager, the organization owns 5,000 licenses, of which they are deploying 4,340. So there is no compliance issue with this particular product.

Great. That was a very good overview of how some of the actions play out on both platforms. And I'm sure many people will appreciate seeing how the technology actually works. But at the same time, some might wonder how this solution compares to its existing solutions for handling IBM license compliance within ServiceNow. Kevin, you've been working with IBM licensing for a long time. Can you help explain how this solution compares to existing solutions out there?

Sure. Absolutely. So [indiscernible] subscription solution of ServiceNow users needed to use 2 separate platforms to achieve their IBM licensing position. So first they needed, to do the discovery, the classification, the measurements of the products, do all the classification work within ILMT. And then they would then go over to ServiceNow and enter in other entitlements. And then we'd use an adapter that would pull in the kind of the host [indiscernible] to ServiceNow and then tie those 2 together with the entitlement to get their license consumptions position right. So at that point, they would have their -- a great position, but if the customer did end up having something that went over, instead of being able to drill down to see what caused that overage in the state, which LPARs, which virtual machines actually caused that consumption data to go, to be what it is, you would actually have to go all the way back over to IL&T and kind of look through that system to get to that answer. So on top of that, since it came in only at a host level data, the actual VM and the different LPARs and VM machines that contain the actual data isn't in the actual CMDB, which then kind of restricts the rest of how are ServiceNow to be able to act on the data that's being discovered. So with today's solution, we're able to now natively discover that software down to virtual machine, the partition level and actually create those calculations directly within ServiceNow of waiting to have 2 separate platforms to manage that environment, so...

Great. So kind of staying on the solution design topic. I'm going to ask Victor, if you can tell us what inspired the development of this new innovation with the ServiceNow.

Yes, happy to. I think in 2 words, our customers, it's really a demand from our customers, and it's our answer to us listening to them, right? We know that, as Kevin described, in some ways, IL&T can be a little complex to configure. And that, in part, leads to some complexities when you're kind of bringing that information into ServiceNow. And so in our answer, we're also looking at what is the best way we can keep everything on our solution, right, more specifically in our platform. As you know, our platform is really designed to be very holistic and comprehensive. And adding this capability of managing IBM licensing is part and parcel to that. When we combine that with our partnership with Anglepoint, that just elevates the amount of accuracy that, that bundling is going to have when you're doing reconciliation. So at form, it's really about keeping everything centralized. So you're not jumping across different applications to get to that final outcome that you need. And it's also being able to leverage expertise in the area of IBM licensing.

Great. Thank you for that background, Victor. You touched on a couple of points that are kind of important to note. First, organizations now have an alternative solution to ILMT and/or big fix. And the partnership with Anglepoint was vital in quickly bringing the solution to the market, which kind of leads me to my next question, Kevin. People probably have some level of understanding with IBM-authorized SAM provider program or IASP. Could you help explain what this program is? And why a company would want to be part of it?

Sure. So back in 2019, I then kind of created a new verification program called the IBM Authorizing and Provider Program. So at that time, they wanted to help companies that are trying to be proactive with their software asset management programs to be able to provide a more transparent relationship with their clients. But the recent adjustments to the past. So especially agreement, IBM requires our clients to create a report annually for all our products and the management maintained quarterly reports. And so companies that are willing to actually engage an IBM authorized SAM provider at their own cost to help kind of complete those reporting requirements and also willing to submit those reports to IBM. They're able to join this program, which helps kind of remove them from their traditional audit program with using third-party auditors and be able to integrate this program directly into their SAM program. There's additional benefits to that program as well, being able to utilize additional tools and processes. In conjunction with their ISP partner, they're -- which effectively means they're able to use preferred platforms like ServiceNow and others to be able to meet these requirements, management of additional tools like IL&T.

Yes. Great. So we talked about complexity, the solution and ISP program partnership. But one of the key components of successful SAM program is managing different types of assets on a single platform. Victor, I wonder, can you briefly touch on how this solution integrates with ServiceNow platform? What area does it most augment? And how does that directly impact your organization?

Yes, sure. So I think to set the stage and the context there, really, the issue that customers face is the ability to track all of their assets across many different environments, right? On one hand, you have assets that are on-premise. And on the other hand, you have assets that are in the cloud. But you add another element to that, right? One is, are they physical assets or are they software assets? In the world of software assets, it's going to be products that are SaaS related or end-user compute or infrastructure-based products. Our combination of solutions within the asset management world is actually covering all of those different types of assets, plus all of the physical assets that exist out there, whether they are IT or enterprise-related nonbusiness assets. But when you have integrations, such as the solution, what you're also able to do, in addition to just compliance position, you're able to also bring in that information that will affect the software and the hardware that it sits on across the entire asset life cycle. So from request, all the way to retire, we're able to discover, we're able to fulfill, we're able to monitor, deploy all of those different areas of the asset life cycle. We'll benefit from the ability to discover those assets and as a result of the compliance positions that we show, in this case with IBM. And so this speaks again to our overall platform strategy. It talks to the ability to do everything in-house collectively on one single platform. And to my earlier point, this is one facet of the entire ServiceNow platform where you're able to manage assets in the cloud and in your environment. But then this also leads into workflows being able to look at vulnerabilities of those softwares through security. We have workflows around that. We have things like service support, if you need to maintain a software or run any support services to that software; incident management, if there's anything related to managing an environment; or if you're making changes to the environment, looking at workflows and calculus around change management orders and just having that overall financial oversight and of all of those changes in the platform.

Great. Kevin, one final question before opening it up for Q&A because we're seeing a lot of questions come through the Q&A. What are the main benefits you see for organization effectively managing your IBM environment?

Yes, great question. So like you mentioned, the main benefit is just having access to current and accurate data, right? So speed at which businesses are required to move today, just constantly increasing. Previously, an IBM client just needed to understand their position for an annual renewal or a new solution rollout. Now solution rollouts would typically take months or even years to do. Today, you need that same data monthly, daily, sometimes even hour, right? So if you're constantly chasing that data, you can't rely on the accuracy of the data, being able to adapt after those constantly changing technologies and demands within the organization is getting possible, right? So whether you're the one responsible for negotiating your contracts or renewals, you're in charge of ensuring software is properly deployed or patched, whether you're part of the incident management team, like what you mentioned, where maybe it isn't a certain outage or a network outage, what software and solutions are actually impacted by that outage? Having accurate data to being able to understand where that software is and how it's being used and the cost and everything associated to those, it will be the difference of whether you're successful in your role or not, right? So that's the main benefit, right? So...

Great. I'm not going to switch over to a learning summary. And remember, 3 main takeaways that we cover in this session are how you can leverage ServiceNow for your complete IBM environment, how ServiceNow and Anglepoint partnership can help you handle IBM challenges and what it means to be IBM audit proof with ISP Anglepoint supported on ServiceNow platform. So this concludes our panel discussion. So with the remaining few minutes we have, I'd like to open this up for Q&A. Please go ahead and submit your questions in the Q&A sections. We already see some questions come through. We'll start with the first one, which is pretty relevant to what we talked about already. And it has to do with, can ServiceNow and Anglepoint [Audio Gap] have the licensing on AWS?

Sure. So with the ServiceNow platform, there is -- it does go out and scan the data. We are currently working with the ServiceNow team to develop and integrate that solution to be able to be augment on platform. It is planned, I believe, to hit more in Washington in the future release. But we are getting -- we already are collecting that data. We have the ability to scan those devices. We have the ability to capture the actual consumptions. The issue is just integrating that data and into the calculations. So we are working on getting that functioning, and it will be coming out here in one of the future releases shortly, right? So it's not yet there, but it's coming very quickly.

Great. Next question, it has to do with how we handle -- the solution handles sub-capacity matrix. But what about other RVU matrix, noncore? Will they be measured automatically?

Yes. I could probably answer this one, Piyush. So the solution that we have today is for the sub-capacity, which incorporates PBU and then RBU based on course. For those noncore RBU-based products, we actually did introduce a different feature in Utah, which is the resource consumption calculator or resource consumption feature. What that essentially is, is a framework that a user can script and calculate a different sample. Let's say, your resource consumption is by number of devices or number of transactions, and that converts into a licensable metric. You can calculate and script that feature into our consumption account. It will go through the calculation, and it will generate that RVU consumption count. So that is one method in which we are addressing the RBU-based consumption that is noncore related.

And Victor, just to kind of add to that, right? So they'll also be utilizing Anglepoint's services, right? So inside of Elevate, we also go through every single IBM product that you have. And no matter what the metric is, we'll provide -- work that we provide, a, how to count, to collect, how to measure. And like you mentioned, if it's possible, getting it into that custom metric inside of ServiceNow, so it can be automatically calculated, right? So -- but it's like we have extensive subject matter experts in IBM that will help you figure out how to count it within your environment. And we'll work with you to get to a level that you're comfortable measuring that on a regular basis and where possible, automate that, right? So...

Great. Thank you both. Around that, some of the actions you were showing in the demo has to do with the data push and pull between the 2 systems. The question is, is that push and pull action in Anglepoint is to be performed with every discovery? And if that's true, can it be automated?

That's a great question. So as part of our service, we are going to be doing that on an agreed-upon time frame, right? So whether that's monthly, quarterly, et cetera, daily, we'll be taking and adjusting that into our tool and to Elevate. We're going to be looking for the most likely right answer and then working with your product owners to confirm any special use cases or any special situations that need additional consideration, right? So it does take a touch of rededicated to where it's counting appropriately within the tool. But the actual pushing of the data over working through that, that's part of your standard solution that [indiscernible] working with us on a day-to-day basis, right? So if you already have an Anglepoint service, you're pretty comfortable and familiar with this activity that you've done with IoT or any other product solutions so far, right? So it is still -- it does take the effort. It's not 100% automatable because the way customers environments are, they are set up with different use cases in different scenarios. So do you have to take some of that and exclusions and calculations into consideration, right?

Great. The next question is somewhere around virtualization, one of the topic earlier. You mentioned VMware, but what about other virtualization technologies like Nutanix and hyperV?

Sorry, yes, good question. So right now, we support the VMware virtualization technology. Main reason for that is through experience and through just the general understanding of the virtualization technology that is out there and proliferated amongst customers, it really hits probably 80%, 90% of the virtualization technology that's out there. But that is not to say that we aren't looking at other virtualization technology. That is on our road map. It's actually coming very soon in our next couple of releases. So we'll be expanding the ability to cover those virtualization technologies, starting first with LPAR, AIX and Let.

Just to add to that, right? So we -- those -- that data is already being -- is capable of being collected right now with ServiceNow, right? So there's an attic adapter connector. There's hyperV rconnectors. There's -- so the data is already coming into ServiceNow. It's just getting that integration into the calculator, right? So that's what we're working on right now with the SAM team.

Yes, thanks for that clarification, Kevin. That's right.

There's a couple of questions around just kind of validation with what this program actually offers and how it could help with the IBM compliance. So if I were to put it this way, if the company did not want to go with the ISP provider, that route, could they use IL&T and SAM pro to achieve the same compliance results?

Yes. So we do support -- in ServiceNow, we do support the integration of IL&T into ServiceNow. So you are able to leverage that to bring in that information and produce a compliance position. There are just requirements that you would still be responsible for, right? One would be ensuring that IL&T is configured properly. That would be the first thing. Secondly, you would -- as a customer, would also be responsible for ensuring that you are managing the bundling properly. So that's all of that configuration, all of that level of expertise that's required would really fall on the customer to ensure that you're able to do that level of work. So you can bring in that information. We support that information, and we're continuing to invest in that area so that we have that option available to customers. But it may be of a difference of experience that you're going to get then working with this ASP solution, right? And maybe Kevin can add a little bit more into what that differentiating factor would be. But from a technical standpoint, you can bring in that data and produce your compliance position.

Yes, you hit it right on that money, right? So obviously, IBM already allows you to use ILM team with a free tool to capture and collect that data that does take that exercise of classifying that product. If they work within the IL&T environment to get that cleaned up, measured and appropriately reporting within your environment. At that point, yes, you can bring it into ServiceNow, tied to entitlement to be able to look at the kind of the whole picture, which is missing for IL&T, right? So you don't put on, you put entitlement inside of IL&T. You just are capturing your deployment numbers, right? So -- if you look at that holistic picture, you do need to combine it with your entitlements and be able to measure and look at whether you're in compliance or not. But just that activity of running IL&T, capturing it, collecting it, classifying, all of those would be on your team to deal if you're not using a service provider, right? So...

Yes, great point on what the key value add here is with this partnership. The next question is around ILMT classification. And that's -- ILMT requires you to classify every software install. How is this going to handle in the solution? Victor, did you want to address this?

Yes. So I guess maybe it's better to just expand on the question. So can you repeat what you meant by every product?

Yes. I think the question, it says LT&T requires to classify every software install. How is this handled in the solution?

Sure, if you'd like. I would just maybe mention that our product classification table that I showed in the demo is just the PBU and RVU. So that's how that would be classified, but still working with Anglepoint. You would be classifying the other solutions and the other products. Go ahead, Kevin.

Yes. So you're right, right? So every instance does need to be classified, right? So we will work with -- regardless of the solution, right? So whether it's in ILMT, whether it's within ServiceNow, you do still have to go through that classification exercise of saying this product is tied to the following license and whether it needs to be counted appropriately or not, right? So all of that does get done. The benefit of this solution is that we do leverage the power of Elevate. It does add in a far more streamlined manner and takes a lot of the pain off of your own team having to do each and every one of those classifications, right? So that is the reason we leverage the connection to Elevate, is to be able to do that in a far more extreme line banner and get that data into your solution quicker and then also with a little bit more comfort with the efficient analysis that we do on it. So -- but it doesn't take that same effort, regardless of what tool you'd use, right? So great question.

Great. Yes, I'm not seeing any more new questions. A lot of them were kind of similar to what we already covered. And so to the audience, we still have 2 more minutes. If you want to go ahead and put somethinegative into Q&A. Otherwise, is kind of -- it concludes the actual webinar portion for the IBM license compliance. And so if there are no questions, I'm not seeing anything pop up, I'm going to go ahead and conclude this webinar. But before I do that, I do want to close out with a couple of items, which are related to a couple of the questions that came up around other webinars and other sessions. So stick around and let me share with what we have to help you in that area. But starting with the -- we have several resources events that we would like to share with you, and we can post this in the chat window here for you as well, mainly starting with the community page, which is a great resource to all things getting started around Software Asset Management. So take a bookmark of that. There's also a big event coming up for us. Remember to register for Knowledge coming up in May. And then somebody had asked a question about what about file-based discovery and things like that. So we do have library of previously recorded webinars, and this one will be also posted there. So if you go here, there'll be a ton of information for you to watch and play and learn more about the -- not just the SAM program, but other areas like Discovery and things like that. And then the Utah Release that we just recently came out with, there's great new innovation, key features that you could go and visit on and watch at your convenience as well. So I think with that, I want to thank everyone for your time and hope you have a great rest of the week.

Thank you for the opportunity.

Bye.