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

Welcome to today's discussion about now on now and how we're achieving GBS outcomes at scale. So what do we mean by Now on Now? We talk about the ServiceNow platform and how it drives transformation across global business service organization, shared service constructs, et cetera. We here at ServiceNow use the platform internally as well. So now on now really refers to how we apply the platform internally against ourselves. So I'm Tom Parisi, Chief Transformation Officer here at ServiceNow. I'm excited about this topic. In many ways, GBS can be the heart of a digital transformation. It can be the catalyst that starts to change the way organizations work. And not just work on actual work point of view, but culturally, bringing different stakeholders together looking at processes end to end, really making the whole concept of work kind of shed the pains of the past. We no longer have to be hindered by these disparate technologies the different organization specializations that are always needed, we could start to hide that complexity from our audience and from the fulfillers of the work. And that's exciting in a lot of different ways. One, there's an immediate uplift in experience works just easier for everybody involved. Two, the service quality grows. When things are done well, they're done at a higher level of quality, there's less rework and pretty typically, there's a lot more speed involved. You'll also hear us talk today about visibility into the processes like how do you kind of understand what's happening across the organization. processes individually, but also processes over time. How do you use your history and all the work that you've done to make the future work better. All of that really just brings us to a situation where the idea of applying transformation at GBS has so many benefits. And as you'll hear today from our panelists, a lot of excitement people want work to be different, and this is a great way to do it. So today, we're very lucky to have a couple of real practitioners in this space with us. You'll hear them talk about their experiences both here at ServiceNow but also their involvement with GBS other organizations as well. So let's jump right in. Kelley, why don't you tell us about yourself?

Thanks, Tom. Really excited to be here with you today. What a great introduction. I am currently the lead for the global people operations here at ServiceNow. And as you mentioned earlier, was a prior customer for a large home improvement retailer where I learned about ServiceNow. Happy to be here today.

Thank you. Nate?

Again, super grateful everybody taking the time out of their data to spend with us and talk about GBS. My name is Nate Aschenbach. I have the great fortune to be part of the IT organization supporting enterprise technology. So bringing technology for our people organization, finance organization and legal organization which tends to be a great starting point for anybody going on this journey.

Yes, absolutely. I'm glad you called out those organizations because it actually kind of leads into that first question I wanted to cover which is, I had mentioned there's a lot of unique elements of GBS and the organizations have their differences. But in reality, there's also a lot of universal themes, some consistent patterns and needs we see or across many different organizations. Each of you talked about kind of being at previous organizations prior to ServiceNow. Kelley, maybe you could get us started with some perspectives on -- you mentioned a large retailer and here you are at a Silicon Valley tech company. Maybe you could talk about some of those universal themes you've seen across organizations.

Yes, Tom, it's a great question. And I do think that, that convergence is happening even more now that technology is starting to enable some of the capabilities that we'll talk about. But for years, I've seen the opportunity for us to really simplify work for employees. And I think with the advent of the iPhone and other personal technology in our daily lives, our lives outside of work, that simplification seems to be happening everywhere. And so what I have found is that especially younger employees who are joining the workforce, they're asking the question, why has worked so hard? Isn't there some opportunity for us to leverage what we're seeing in our personal life in our work life? And so I think that really focused on how do we simplify complex processes, which you talked about earlier and not just the processes themselves, but the interaction like how can we make it easier for employees to do business with any function in the organization and then probably the second thing I would say is something that we've all wanted to do for a while is how do we standardize process while maintaining some personalization for the individual. So people don't just get lost in the numbers. You may want to make people feel like that they're a unique part of an organization and a unique contributor. But you know that from a cost-effective standpoint, you've got a standardized processes in a way that works for the company. So finding that balance between standardization and personalization is probably another challenge that I know many companies are dealing with.

Yes, excellent point. I love it. Nate, how about your thoughts?

Yes. I love resonating on the fact of no matter if I was at a search company, a social media company, semiconductor or here at this amazing SaaS company. A lot of the challenges are very common and very similar. When going on this journey, it's all about wanting to be able to scale the transaction volume for a hyper-growth company without growing your OpEx as a percentage of revenue. So being very focused on cost conscious. But also on the flip side of the coin, if you're not a hyper growth, you're still focused on the bottom line. And that's one of the key initiation challenges of really pushing companies into this journey and progression. Once you've made the commitment and started going on that journey, holding SLAs, a lot of these organizations come together to provide a service, exactly what Kelley said, how do we provide services to our employees that are personalized but at a low cost, but a consistent level of service. And so being consistent with our SLAs being able to measure them, working on improving them while scaling or being cost conscious is going to be a critical challenge for any of us going on this journey together.

Yes. Let's dive into that because I think that scale without scaling, and I love your point that even if you're not growing that concept of how do I optimize. Nate, I know one of the levers you use quite a bit here at ServiceNow is process mining, process optimization. I've made that reference to kind of visibility and how do I start seeing trends? And how do I improve without having to have a kind of a stand-alone continuous improvement team looking at everything that's happening in the shop. Can you expand a little bit about how you're kind of leveraging some automation, optimization, mining to kind of help achieve that scale without the scaling?

Yes, it's super exciting. So I love this topic. It's one thing to get a magnifying glass into your existing process. What we do is we take the platform and look an end-to-end process to understand what are the gates that, that process goes through. And what we look for are constraints. If you're from the manufacturing world, it's a very common terminology what is causing friction in your process. Typically, we'll look at, is it a policy? Maybe we grew and we need to reevaluate a clip level. Is it a process that was good for us a few years back, but not going for us into the future or is it a system constraint that we need to consider. Then from there, we take 1 of those 3. And if it's a system constraint, we make a decision. Where should we put the change into place when it comes to system. Sometimes we landed into a system of record, if that happens to be our HCM or our ERP system. But 9 times out of 10, the reason we have a constraint is because one of those systems of record has a gap or a void and that's where we bring our platform into play to bridge those gaps of where those systems of record are not able to meet the need that we have. And so that's how we really take process mining to look for the constraint and then use our platform to solution. Now what's really exciting where we're pushing the edges of process mining with hyper automation is we're able to design a new system process and run it through that to measure are we going to get the outcome we're searching for with the new design. We call it blueprinting or designing for the future. And so we're able to model that and put it side by side to the real world to make sure that the outcome we're looking for is going to be delivered ultimately to Kelley and our business partners.

Sounds exciting. Kelley, kind of where are you seeing that? You mentioned your people operations side of the business. How are you seeing some of that scale without scaling take effect.

Yes. And so lucky to have Nate across the table for me to help support us over on the global people side. And Tom, one of the things that I didn't mention earlier that Nate alluded to was really about how we helped drive the experience for employees. So a lot of times, those things that are happening in the gaps or things that aren't quite connected are the things that cause our employees the most frustration. And so probably some of the best examples of what we've done, obviously, through our platform onboarding and off-boarding I know for myself onboarding, it was a pleasure to onboard completely on my mobile phone. I didn't have to worry about navigating the org chart, understanding who was getting this form, who is requesting that information. Everything was laid out for me. And I know that in the future or our previous role, I had mapped out the onboarding process for a company, and it was like 140 steps, and only 40% of that roughly was in HR. And so all the sudden you need to go get with all these other functions that are contributing to the experience of an employee before they even hit your door on day 1. So imagine my surprise when I came here and everything was well laid out. I know exactly what was expected. I can complete everything on my mobile phone and really had a great start to day 1. And then the same is true with offboarding, which there's a lot of risk mitigation that happens with offboarding. Are you getting equipment returned, and we've seen a 50% improvement in our capabilities around that just by enabling the platform to do that. But the other thing it does is it gives people a sense of here's what we expect and here's what you can expect from us, quite frankly, and a lot of customers that I've seen are leveraging that offboarding to lead right into alumni and maintaining a connection with employees. And if you're in a position to rehire employees or to leverage them for contacts in the future, it's certainly an important part of what you want to do to enable your organization, both those that are currently with you and those that have been with you previously. And Tom, the other thing I would say is just using technology generally to get people what they need faster. We've implemented virtual agent. We've implemented a live agent. We've implemented bots and probably some of the most impressive results we've got are -- with our live agent if somebody makes a request during the times that live agents are available, our average wait time is 38 seconds. I can remember a time where we talked about call centers in a number of minutes for you to have to hold, and now we're talking about seconds for you to get a response and interact with a live person via chat. By the same token, we've also, with Nate taken a lot of time to really develop our bot capabilities and we took some of our biggest transactions and said, how can we make them bought capable and things like changing your business title or changing your cost center or changing your manager, the things that we kind of generally call employee changes, we've been able to enable that using a bot. And we've had just a tremendous amount of response from folks to be able to say, well, I can get those transactions completed. I don't have to open a case, I don't have to talk to anybody. I can just put in the information. It's full proof. It will set me through the process and the steps that I need to complete the transaction, and then I can get on with my day. So I know there was a lot there, and I could go on for days, but just so many opportunities for us to simplify the transactions, make sure they're done for the person when they want it done and in a way that's enabled through our technology.

I love that you brought up that concept of multiple channels. As a customer of the work that you people do, that in your organizations do, you hit a couple of things. One, you talked about onboarding, offboarding. But even from a manager perspective, that ability to, again, visibility is so key. The ability to see like where are they at in the process and what steps am I responsible for? I think that's super powerful. And then the other element that had been mentioned was personalization. And I think what the 2 of you have done is so exciting is personalization within those other channels. So it's just not standardized bot routines. It's kind of like as you start a use case around my laptop issue, for example, it knows my laptop circumstances, what devices I'm using, when my refresh data is, et cetera. And so that concept of personalization within the actual channel. What I found is having always been a skeptic of self-service kind of prefer self-service now, like self-service done well, it's actually pretty exciting. So kudos to the 2 you much appreciate it. I want to continue that theme because I think what's exciting about what you're talking about is how you can kind of connect work across the enterprise the multiple different tools kind of take a bit of a backseat in that experience. And now all of a sudden, some of that complexity of the org is hidden from me and what we've seen is that opens up a couple of different ways organizations can work. They can be organized around GBS or as I know the two of you are kind of organized there can be the gap or the absence of a formal GBS organization, and you can kind of be virtually pulling it off. Maybe, Kelley, back to you, could you -- from a business unit side of it, can you talk a little bit about how you pull off without having the formal GBS construct kind of set in the organization hierarchy?

Yes. And the great news, Tom, is anybody can do this, right? And I have to give a big hats off to our tech teammates here with Nate at the helm because they've really been front and center to get us to think about what are those capabilities that we can do that across multiple functions. And with the seat that Nate has at the table in some of those functions, it's been an easy conversation. So probably the best example is and our employee center and our manager hub approvals, whether you're an individual contributor or a manager, you don't have to worry about what approvals are needed by you from which systems I can remember talking to many customers where they would talk about the way that they managed approvals. And one guy told me at the end of the day, he just moves all the e-mails over to a separate folder and he goes through those and get all these approvals done because he has to go out to multiple systems and sometimes they reply to the e-mail and other times go into to an ERP or whatever. And I'm sitting there thinking, boy, that's not what I do, and I literally held up my cell phone and I said, I go to approval central and I have an expense account to approve a travel request to approve a new hire to approve and onboarding activity to approve I mean the list goes on and on, and I can do it all while I'm sitting there on my mobile app. Never have to log into another system. And if I need details, thanks to Nate and his team, they've been able to actually represent some of that detail side-by-side on the platform. So in some cases, I may want to go out to smart recruiter and see more about the job that I'm interviewing for with candidates or I may just -- let me get the summary that's available to me and manager center and go from there. So I've got choice, but I also have simplicity at the same time.