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

[Presentation]

Excellent. Welcome, everyone, and thank you for joining us in this strategic discussion. We're calling three keys to unlock better experiences, savings and IT innovation. My name is Richard Hawes, and I've been really looking forward to this session. Our goal is to discuss the impacts of change and disruption over the last few years on IT organizations and how the role of IT has become more critical to the business at the same time. We'll touch on some topics that are forward-looking, so please don't rely on those topics when making a purchasing decision. But let me get started by introducing the team that's going to be sharing their experiences with you today. I'm very happy to have with us a long-term friend who's topped the talk in one of the Big 4 consultancy firms. He's walked the walk in a large retail bank. And now he shares his strategic insights with ServiceNow customers from one of our elite partners. Hi, Eric, welcome. Thank you for being here.

Hi, Richard. Thank you.

Great to have you again. Thanks for spending the time today. Next is our colleague and friend that I've worked with for many years at ServiceNow, a guru in strategic portfolio management and other topics, Debbra McGrath. Hi, Debbra.

Hey Richard, so happy to be here with you, Eric and Piyush. Thanks.

Great to have you all together. And Piyush, yes welcome. He's our second guru. He's got deep skill in asset management and other areas, and he's actually local to me here in Austin, Texas as well. So welcome, Piyush.

Thank you. Hi, everyone. Super excited to be co-presenting with my colleagues and partner here.

Again, thanks for being here. And Debbra and Piyush will join us again later in the session to show us some real examples of how ServiceNow breaks down these silos for the transformation, and they may join in the chat in the chat windows as well. So please take advantage of that. And thank you all for being here. So let's talk about the impact of change on IT organizations. And of course, no discussion will be complete these days without thinking about how generative AI fits into the story. So we'll talk about that a little bit, too. As you think of your questions, as was said in the intro, please put them in the Q&A tool and again, join us in the chat feature as well. What I'd like to do is just start though with a quick survey and it's a very simple survey. I'd just like to get your perspective on the impact on your own IT organization, the global changes and disruptions we've seen from the past few years. A lot of people have been accelerating initiatives such as for remote working. So how successful were you? Or did you not have to change very much? If you haven't really been disrupted in any way, I hope that's not the case or at least I don't expect that to be the case. But let's give it a minute or 2 for people to put in some answers to that. And I will -- let's have a few more people pick an answer. Again, this is a very simple survey. It might not apply to you specifically, but your best impression of what's happening in your organization. Okay. I think we've got a pretty good representative sample. So let me move ahead and let's look at where most people are. Yes, this is obviously what we might expect.

So Eric, let me bring you in here. What do you think of these results?

Yes. I don't think it's too surprising for sure. I think that this pretty much tracks to where we see a lot of organizations looking.

A lot of acceleration, but some challenges maybe that's led to.

Yes, exactly. A lot of the transformation tends to be very challenging. If you're not completely ready to change the way you do everything, which is pretty hard to do in legacy organizations. So a lot of folks will start, and they will start to see some positives. But then they end up with some of their own sort of realities of either politics or the cultural shift is too hard to bear. So...

Exactly. So yes, and it's this backdrop that we talked about, this unprecedented rates have changed and just go back forward to this one. And we've talked in the past about financial impacts and things that people are still facing, right? That's come out of that.

Yes, for sure. The financial impact is a lot of times, companies have taken these initiatives to move forward and invested quite a bit of money. That's actually -- I was part of the group at the bank that did that. And once we figured out that the challenges that we are up against were things like risk and governance and not being able to automate those sections, spending a ton of money to improve some of your initiatives like we built 3 completely automated CICD pipelines, but so what? Because we didn't actually look at the end-to-end sort of ecosystem of everything that needed to shift. So -- and I think we had a bunch of old metrics we used to quote, Richard, around 85% of sort of DevOps transformations, which is near and dear to my heart, had failed because of this challenge where teams would actually go after these things, but then not be able to get through the entire risk governance and sort of automation there. So the adoption of these new technology enablers is always typically challenged by the constraints of the organization they're sitting in.

Yes, I'm glad you brought up the point about end-to-end because I think that's the key -- one of the keys when we think about how we really address this is having that end-to-end perspective. And then the other thing I wanted to ask you about, Eric, we brought up in a conversation the other day about just the impacts of things like commercial real estate. And I know a lot of people are now going back to the office, but that's -- as those kind of impacts I think a lot of people haven't really realized it is affecting budgets that affect everyone in an organization, including IT.

Yes. And it's interesting because we built all these tools and platforms -- I shouldn't say built, they were already built, but we -- many companies adopted the remote work for the first time through COVID. And now we're seeing the impacts of all these commercial real estate buildings sitting empty. And so the gut reaction for a lot of companies is, well, pull everybody back in, but what I've been told by many friends in the industry who are commuting to their old offices is they go sit in the office and jump on Zooms all day, remotely still. So it's kind of like, okay, so our buds are here filling the commercial real estate. But again, I think the model shifted and companies still haven't figured out that, hey, we don't need all of these massive commercial real estate investments. But it is a very challenging, not a simple thing for us just to cover here. But yes, we're starting to see that the implications are just still being felt of everything that shifted, but hasn't really fully been realized, I think, so.

So talking of things that are having disruptors, I guess, and having an impact on teams, we can't really have a conversation without talking about generative AI, but -- so that's a whole new level of expectation from leadership, new set of technology challenges to what are you seeing around gen AI generally?

Well, yes, so most of what I'm seeing now, pretty much a year later from when it came out is -- and I had been sort of part of a group at KPMG that we're looking at. We had an incubator program where I was building an AI technologies engine with the metaverse. And we started that about 18 months before generative AI came out. And it was interesting to watch because when generative AI came out and really hit the mainstream, you get this initial reaction of all the corporate antibodies, all the societal antibodies of -- I saw it education, I saw it in all these things. My kids going through school being told you're never allowed to use generative AI, and I just find all of the initial gut reaction sort of shocking and painful. This technology is one of the most incredible advancements in enablers for people to work faster, better, safer, smarter. And with the combination of all of generative AI with AIOps and machine learning that we've been doing for years, it really becomes something that helps you do a better job and do it much faster and reduce your mean time to resolution, reduce manual labor of -- and cost of doing a lot of the traditional human knowledge-based documentation or summarization or our inability to consume data quickly was always a challenge of -- I have 15 alerts going off across all these different platforms with all these different logs that I have to try and sit and analyze and it could take hours or days to fully understand what's going on versus pointing it to gen AI, and it can read it all in seconds and come back and go, "Hey, from my summary, this is what it looks like is going on." And it's typically pretty darn accurate if you do the prompts correctly. So I think companies right now are at that kind of a challenge in two places. One is adopting these technologies because they have a lot of security and governance rules that are a decade old that have no understanding of how is this going to be managed? How is this going to be governed? How do we worry about data and intellectual property rights? How do we do all the attribution of things that we had in place for copyright and trademark and so on and so forth. So -- and it's really shifting everything about the IP management and talking about data and -- so I think from that perspective, companies have that challenge as well as you have a lot of knowledge workers that are worried about getting displaced by this technology. And rather than embracing it, they're naysaying against it every day and finding them pushing back against it. So I think from that perspective, it's around -- and the third part of this is all of the consulting firms and all of the teams that they would normally ask for guidance, it's brand new to all of them as well. So they're figuring it out as they go. And so they're not sure what the auditors are going to come up with and what the governance bodies are going to start introducing. So yes, it's just -- it's a lot of chaos right now. But the good news is those companies that are embracing it and are doing really amazing things with it are starting to see a competitive advantage again. It's been a long time. I think cloud was the last place before the BlackBerry that we really saw a massive competitive advantage coming from early adoption of technology. So I think this is another one of those pivot points in the industry. And if you can quickly jump on board and start to leverage it for real use cases that drive real business value, I think you'll see a ton of advantage out of it. Yes, and that's what we've been helping clients do is getting through that trough of disillusionment because the other part of this is they're inundated from a marketing perspective, every single presentation starts with gen AI, gen AI, gen AI, and it's -- it's almost gotten so noisy that people are starting to ignore it, but the reality is there are some really impactful use cases they can adopt today.

Absolutely. Absolutely. You've given some great examples there. Thanks for that, Eric. So -- and actually, I was going to ask people that are listening live, if you want to put anything in the chat about what you're doing right now with gen AI and sort of where you might be, feel free to do that. It'd be interesting for us to look at what everyone is looking at right now. But I love the point you brought up, particularly about yes, there's a lot of challenges and new sets of expectations. But gen AI also has a role in solving those challenges and improving everything from a -- certainly, from our point of view, from an IT perspective. So let's move on and think about that, about what this really means, all of this change for IT teams. And again, a very simple survey for those listening live to give us their impressions. Sort of how has the role of IT changed over the last few years in relation to the business, particularly as a result of all of this chaos in a sense it's been going on. Is IT more responsible for business outcomes or maybe things again haven't changed much or maybe the business units are taking on more responsibility? I'd be interested in perspective of our audience for this one, too. So again, this may not necessarily apply to everyone on the call right now, but I'll give it a minute for people to put in their perspectives. And I'm going to give it -- we're getting in quite a few -- I'm going to allow for a bit more of a representation. Okay, well, okay, there's a lot of answers coming in now. All right. Let's see what people are thinking. So definitely, the role of IT in driving business outcomes and revenue streams has increased. It's happened with all the business units that are taking on a lot more. And so I'm going to bring up our next slide, which is something that one of the analyst firms have said, which kind of aligns with what we've just seen in that survey. But Eric, again, you're seeing the same kind of thing, right?

Yes. And again, that's sort of the how I was referring to in the last conversation. And I'm sort of a broken record when it comes to this because one of the best books I ever read in this industry was by Nicholas Carr talking about the adoption of cloud. It was The Big Switch. And prior to that was a book that he wrote called Does IT Matter or which was off of an article that is like IT Doesn't Matter, that was a little bit there. But it really focused on how does IT become a business enabler and how are they seeing as really a strategic part of the firm versus just a cost center. When I first started in this industry, a lot of IT organizations were getting enrolled under the CFO and were treated just as an OpEx cost center, keeping the lights on is really how IT was seen and it was a necessary evil, but no one wanted it. And I really watch cloud sort of in digital transformation and everything as a service sort of make that companies that were able to adopt these things similar to what I was just saying, they had a competitive advantage. They could move faster, more agile. They could iterate, do R&D more rapidly and really outpace their competition. When I was brought into the bank, it was funny because I was told -- I was literally pointed to a website that was wealthfront.com. And on their page, they had an advertising literally that said, we don't have a release cycle, we have a deployed button. They were selling wealthfront.com as the power of the platform being that they had a fully cloud native CICD based automated release for the latest and greatest up-to-date information. Meanwhile, Merrill Lynch at the time had a release cycle of once every 6 months. And Wealthfront knew that. And so that was literally the first time I had seen a cognitive upstart start to challenge this 200-year-old massive monolithic legacy companies because -- and do it with IT being the flex that they were flexing to the market. And I think that, that's still the case. And I think generative AI right now is this next thing, right? A lot of people adopted cloud incorrectly. They didn't go cloud native, they went. We're going to pick up all the garbage we have, and we're going to move this to somebody else's data center and then they were like, "Oh, this cost us a lot more money," which is not the way they were supposed to have done it. They were supposed to look at their application architecture, look at their value streams, figure out how to deliver those things as products and really make that transformation. And I think the companies that failed took a pretty big hit because they failed. And I think this is the next step. And by the way, I still think there's a massive landscape for companies to continue to innovate in the cloud space. And then I think the next generation of this is how do they continue to get better and optimize this through generative AI and make things faster, better, stronger. I think Richard, I think it was either with you or right after you that I started switching my own sort of belief with generative AI being able to do text to code, and we had talked about low/no code. But I think that that's one of the area that's ServiceNow has leaned into with Flow Designer and all of their low code, no code places where gen AI just picks up and says it, I had stopped talking about delivering code when I was at KPMG, I'm running a modern delivery team. I started talking about delivering value because code doesn't matter to a C level. They don't care if you do it with code, if you do it on a SaaS partner, they just need a function to produce revenue for clients. And if you can do that without writing a single line of code, awesome, right? But a lot of companies haven't even gotten to that maturity where they can do that. So I think there's a lot of business enablers right now that can continue to drive competitive advantage and companies need to start if they haven't already, they really need to start looking at how they do that.

Absolutely. And coming back to this, what the BUs are doing in terms of technology and where IT sort of plays the role. I think what we're seeing is CIOs are really winning their IT teams to be the leaders in adopting the new technologies and adopting things like gen AI and then being the function that makes those business units more successful, right? In the way that they're using their technology and adopting cloud native capabilities and things like that, right?

Yes, because I mean, listen, when I was younger, we talked about shadow IT, where business units would go spin up servers or -- sometimes it was literally couple of laptops in the corner of the building that had notes on and that said don't shut this down, this is a server. I still see those when I walk through some offices and I chuckle every time. I know there was a group at a large company that had an entire tunnel that they had filled as a data center and not told anybody about it. And that still exists. And the real challenge is, there's a lot of SaaS providers and cloud native very commercialized software solutions where the business unit, if they don't like what they're getting from IT, they literally just go take their credit card and buy a cloud solution and IT may never know or they might find out 2 years down the road that they weren't even consulted for this because IT trust is still one of the biggest challenges I see in corporate America. They just have a bad reputation for being too slow, too cumbersome, too expensive, and they don't have the trust of the business as a strategic partner. And that's really -- whenever I talk to companies about transforming them, it's always we got to get close to the business and show some quick wins and get them on our side. And I've seen that be very effective. And then I've seen companies who implement amazing technology enablers and the companies don't care because the business is important, and the business doesn't even know that the thing exists, let alone what the value it is that it could be driving. So -- and a lot of IT engineers are very technical. And so they don't really want to have those business level conversations or they don't have the perception of them and vice versa. A lot of business people don't want to get into the technical weeds. So you need someone in the middle that can kind of liaison between speaking the language of business and getting them excited about the achievements and then tying that to the technology enablers and being able to talk and geek out with the IT folks about how cool all these new technologies are. But Yes. And I think really focusing on value streams, value delivery, that's the key to all of it.

Absolutely. And yes, we've seen that discussion come up a lot more. And a great segue actually to the next point we wanted to look at, which was, okay, how does IT become that organization? They have all these challenges today, still I'm taking on time to fix outages or investments going in the wrong places or not showing the yields that they should do or continual waste in assets because -- particularly because of the rapid expansion of new technologies that have happened over the last few years. So these are the kind of things that we're trying to help people resolve. And let me -- I want to get to the demo that Debbra and Piyush are going to do. So let me just move forward one more and let's talk about -- start to talk about sort of ServiceNow role in this. And of course, you Eric has seen this for a long time in a lot of different ways and way technology organizations address these problems. So in our area and kind of the 3 keys we're thinking about is how do you automate and optimize and improve what you already have? How do you make sure that you're delivering on the right initiatives, and spending the money in the right way and getting the return on those investments? And particularly, how do you optimize the spend on technology and the risk associated with that? I mean, do you want to say a few more words on that, Eric, before moving to Debbra?

Yes, that's perfect. Yes, I am actually a huge fan of where the ServiceNow platform has grown into, being able to watch it for the last 7 or 8 years, it truly is incredible to see how they took what was the most important resource, which is the underlying data. I'm very proud of the fact that the insight with every single investment they made to acquire companies and technologies, they forced them to be replatform into the CSDM data model. And because now what's happened is the power of this has just grown and grown and grown as a ServiceNow platform. One of my favorite science fiction books is The Moon Is a Harsh Mistress by Heinlein. And it's basically about a platform that grows on their mainframe that runs and controls every aspect of every system on the moon. But as they kept plugging different areas into it, the telecommunications got plugged into it, now it had years when they plugged in surveillance, now it had eyes when they plugged in, you know -- and so I look at ServiceNow as the same way as what started as just a CSDM has now grown to the place where all of these technologies are able to feed and elevate the next one. So how do you go from ideation all the way to production, how do you optimize and accelerate every step of that way and reduce risk. Once you're in production, how do you tie in with all of these systems of ops and use AIOps to reduce the noise and become the single platform for incident response and leveraging all of this to get MTTRs down from -- I'm not kidding potentially days down to less than 3 to 5 minutes. Like that wasn't possible because there was no single system that had that end-to-end life cycle of data of. This is what Eric -- this is the code Eric wrote. This is the code that went into production. We manage it through this sort of a release schedule and project, blah, blah, blah, all the way through the entire production chain so that when I'm an SRE, managing ops, I immediately know that this system that's down has this business impact, these are affected users, this is the support group. And I can automate so much now on this platform that by the time it gets to me as a human, it saved me 8 to 10 hours of work that I would have had to do manually to go fish all this stuff down without ServiceNow. So I am continually blown away with the innovation that the platform is going through and very happy, and it's one of the big reasons I came back into the ServiceNow ecosystem at RapDev is because we're really getting to stand the bleeding edge of enabling and amplifying the power of this platform.

Back to the end-to-end that you mentioned, it is -- great to have you back into that ecosystem, by the way. And yes -- and so actually, again, another great segue because I'm going to hand over to Debbra to talk about how we connect that because we really want to think about it's all connected in the real world. So it needs to be connected in the technology side as well. And who better to show us that than Debbra and Piyush. So I hand over to you, Debbra.

Thanks so much, Richard. And yes, Piyush will be joining me and we're going to together show a demo that shows the power of the platform. We're going to tell the story about a company that uses ServiceNow seamlessly together, and I'll tell you this company does not have that laptop in the back room somewhere with a sticky note on it saying, don't shut it down. So let's see how that works. So this demo is going to show how ServiceNow solutions help organizations overcome those traditional siloed work stream purchase. While they're still continuing to evolve despite ever-present challenges that they come across. So you're going to see how the ServiceNow platform helps organizations drive outcomes with a cost-effective solution that enables them to quickly adapt to change as they develop new automation as well as maintain existing digital services. And we're going to show this to you by telling a story of ED's Meds and this is a fictional Midwest pharmaceutical company with some very real, but very relatable challenges. And Claire, ED's Meds CIO is the first person I will take a look at. She is responsible for tracking and supporting both IT operations and technology needs. She consistently needs to prioritize competing demands to ensure the work IT is doing is continually aligned with their business strategy. And then service operations headed by Amelia, needs to focus on what's important to ensure smooth operations. And when issues arise, her team assesses health log alerts, performance probable root cause analysis to reduce mean time to repair or resolution. And then we'll see how Storm an ED's Meds employee is automatically notified of systems auditors. He's proactively assisted by both the virtual agent as well as a live service action, who seamlessly provided GenAI-created summary of any issues. And keeping a close eye on ED's Meds IT assets is Casey. She's laser-focused on optimizing costs, licensing as well as cloud migration opportunities. So the ServiceNow platform for digital business enables them all to accomplish this working seamlessly together to transform their digital operations and adapt to changes quickly. Let's see how they do this.

So as Steve Jobs knew, great things are accomplished by a great team. And they can achieve great outcomes even faster and better when they're enabled with a great platform. Let’s see how. So we'll start with the office of CIO.

So the ServiceNow platform helps the CIO Claire to track service operation stacks, align IT resources with business strategy and prioritize work across ED's Meds by making data-driven decisions on IT demand. Claire lies on the CIO dashboard for key IT operations insights and right away Claire thinks that there is a 23% increase breach service level agreements, and she also notices that employees satisfaction scores dropped by 33%. And there have been ongoing issues with internal business service and Claire wonders if that could be driving some of these troubling stats. Drilling down, Claire sees that recently, a large number of breaches have been classified as critical and a significant number of incidents have been opened in just the last 5 days. And her services and operations teams have been worried that this rise in incident count is related to order status, a business-critical service used by ED's Meds. The accounts receivable and sales teams. And based on what she's seeing, Claire agrees that addressing these issues with order status has become crucial, and so reach out to the operations team about it. But she also knows that strategic planning and decision-making in silos often leads to poor investment decisions, and must get a prioritization at work, and delays an outcome of delivery and value. And strategic portfolio, management enables ED's Meds to align their goals, prioritize work and adapt when necessary so that the teams across the organization are always focused on the right work to achieve the right results. Claire is pleased to see that the progress they've made against their business goals. However, she is concerned about the status of the goal to replace outdated technology. And Claire knows that replacing outdated technology helps them to achieve smooth business operations in customer satisfaction and a secure environment. And while the status of the goal to -- and target to update their service is yellow, she's also concerned about rising costs due to economic pressure ED's Meds is facing. There should be a gif playing here, I'm not sure that it is, but you can imagine the story, we're telling the story of what's happening if you don't happen to see this here. So planning prioritization provides Claire with a consolidated view of all types of work that enables her to prioritize the initiatives that can best help them achieve their goals, like the server optimization project. And Claire immediately notices that the project status is red, but the plan benefit outweighs the plan costs. And because server optimization is critical to their security and their success, they decided to focus on improving it and rank it higher. And prioritize work is then automatically added to ED's Meds digital transformation portfolio road map, and the road map shows all prioritized initiatives across the time line, including the newly prioritized silver optimization project. So Claire will now meet with the service operations and IT asset management teams to discuss how they can efficiently adapt their plan, improve their project status and stay on track to achieve their business goals.

So now let's look at things from the service operations point of view. Amelia, head of service operation, which consists of 2 integral teams across Ed's Meds Digital Workplace, the services and the operation teams working together on a common platform. The service operations team is very aware of the issue with order status. In fact, today, there is another issue Amelia finds herself troubleshooting. So from the service operation workspace, information is purposely group and organized so she can focus on what's immediately important. Using the Express list view Amelia can quickly focus on what's important, like alert related to order status, a mission-critical service. This health log analytics or HLA alerts warns that there is a significant increase in the volume of logs related to SQL server. HLA uses machine learning to recognize and classify patterns and provides immediate insight into the content of the logs. Amelia sees knowledge-based article provided by SQL server -- by SQL team to help in this situation. She can also see alert related to performance on one of the SQL server used to -- used for the auto status service. Having this kind of related information helps cut down context switching and [indiscernible]. For operations team, the probable root cause analysis section can help them when they're trying to troubleshoot. Thanks to ServiceNow mapping, contractual business awareness, any changes to related configuration item can be surfaced. With help of HLA and probable root cause, ED's Meds service operations team have realized a 45% reduction in a mean time of repair for outages. Amelia decides to signal a service aggregation, while they troubleshoot the issue. Automation engine, a local solution helps automate and connect anything to ServiceNow. The operations team has set up ITOM label to automatically restart SQL service as this often time fix this issue. But first, Amelia want to trigger a service aggregation, which is a quick way to alert employee of service outages, which then places a message on employee standard main page.

So that proactive alert allowing with virtual and generative AI assisted service options helps them quickly serve internal and external customers. So for example, using virtual agent and employ name Storm is immediately informed of the issue with order status. And during a virtual conversation, he chooses the option to get continued updates moving forward. And Storm can also access self-help knowledge detailing what to do when there are issues with order status. The intelligence found in the virtual agent provides 3 knowledge-based articles centered around order status to better adjust Storm's needs. Unfortunately, none of the information clarifies why he is having the issue. In this case, Storm selects no, that it's not helping him. And this triggers a workflow that creates an IT ticket, which is automatically assigned and routed to a live agent based on their skills and availability. So Oliver, the ITSM agent is logged into service operations workspace for ITSM, where he sees that Storm's incident was automatically assigned and rerouted to him. And the ServiceNow platform is able to provide Oliver with all the key information in a single view and most importantly without manual input. He can get all the relevant details, service map overview, service dependencies as well as related records specific to this issue all in one place. The gen AI summarized functionality helps connect teams across departmental silos by quickly providing concise issue summary, highlighting actions taken and showcasing potential resolution guidance. In fact, since implementing both virtual agent and ITOM playbooks, ED's Meds has realized a 25% increase customer satisfaction scores. And since virtual agent solutions like this can help deflect new tickets from being created on a known issue, IT support has seen a 3x reduction in incident count. The performance and reliability of the SQL server needs to be addressed as soon as possible, and they're considering either upgrading the physical or on-premise servers or migrating SQL to the cloud and scaling up in the process. And you know this is a high priority, but they also need to keep in mind Claire's concerns about rising cost.

Speaking of cost, let's check with Casey from IT management team. Casey uses the software asset workspace to manage ED's Meds software licenses and asset alerts and to create new entitlements, which are primary concern being rising costs as they make the shift to cloud computing. To research the information, the service operations team is looking for, Casey looks at software asset analytics and cloud cost stimulator. For Casey, this is a great place to view the big picture when it comes to comparing current on-prem cost versus cloud, such as AWS or Azure. Cloud cost simulator helps IT asset managers like Casey to estimate the cost of moving licenses from on-prem to cloud based on factors like low application usage, end of life for software, hardware assets and bringing your own licenses. This projected cost helped Casey and her team as they evaluate their cloud migration strategy. What Casey needs today is the estimated cost for SQL licensing. To find that information, she selects Microsoft SQL in the software drop-down selector, Casey is now viewing cost details for the SQL migration to cloud. This is a key piece of information that she can now use to build a business case for moving resources to the cloud. It identifies the like-for-like resources that would be needed for the same on-prem workload in each cloud environment. And there is also CapEx and OpEx cost breakdown between each cloud providers. The timing could not be any better, right? As Casey and her team has been working with Microsoft software renewal. The renewal calendar let's review contracts near exploration, so they can proactively adjust their usage. And only to know for what they are using. Procurement lost the idea of going into contract negotiation with usage data to help reduce costs. They've already asked Casey to do this for all their software and SaaS renewals. With these 2 key pieces of information such as projected cloud cost and renewal time line, let's transition to Claire and let her know what we have just discovered.

So meanwhile, Claire, the CIO, has been continually monitoring the server optimization initiative. And she's really happy to see that the adjustments they've made have already led to improvements. With ServiceNow, ED's Meds has a single location to plan and manage this project. Yes, so they can manage this project alongside all their strategic initiatives and view real-time impacts against their business goals. And because the team has a single platform that enables them to align all types of work to their strategic goals, they've been able to spot threats early, prioritize business opportunities, implement necessary changes quickly and deliver value faster.

With the help of ServiceNow ED's Meds has been able to manage all the challenges and realize their desired outcomes, including higher success, achieving business goal, increased CSAT scores and employee productivity, a 45% reduction in mean time to repair for outages and significant savings on their software and cloud budget. All this is thanks to the power of ServiceNow, which enables teams across the enterprise to work together from a single unified platform to transform their digital operations and quickly adapt to change.

And this is just one example of how an organization can accelerate value and innovation with ServiceNow, the platform for digital transformation. And back to you now, Richard and Eric. Thanks again, Piyush.

Thank you, Debbra and Piyush. That's quite an incredible amount that you showed there, a lot of different pieces, all coming together. And I think that's the point, right? You need to connect all of this to get that real power out of all of that data across all of the people involved. So thanks again for that. If you -- went fast, too, so you'll be able to get a recording of this session, if you want to take a look at that again we certainly encourage you to do that. I'll share some more about that at the end of this session. We have a few minutes left that we wanted to fill with Q&A. So if you have some questions, please feel free now to put them into Q&A. The things you might want to chat about, please put in the chat as well. And we just wanted to show this one slide quickly, just to give you some ideas about what we're thinking of in terms of how we can bring gen AI practically into what we're doing with ServiceNow. Some of these are available today. Some are coming in upcoming releases. You'll hear a lot more about this at our Knowledge event as well. So some of this is forward-looking as well. But certainly things that we can do to really help accelerate everything that IT is doing in your organization and bringing these teams together. So with that, let's talk some more about some of the questions you might have. There was -- I'll just mention one was a comment I think about as we were talking about budgets and things like commercial real estate. I think we covered that when we talked about even if the people are coming back into the office, it still has an impact. And someone was asking about a recording of this session. This will be posted to our website with our other on-demand webinars after this session. One more I wanted to bring to you, Eric, would be. I mean, I don't know if there's anything else you want to say about what we just saw. But you talked before about the move to the cloud and how some people have been successful and others really have just moved data centers into the cloud. Can you talk a little bit more about what you consider cloud native or how people are actually doing that and successfully. It was one of the questions was about the cloud and cloud native.

Yes, happy to do that. Yes. So that really goes to the fact that for a long time, a lot of the companies were trying to adopt cloud because the idea was we can offload the management of our infrastructure and operations to a cloud provider. And so that benefit sort of drew them to do that, but they didn't take the time to actually analyze their products and application services to say like in order to best take advantage of the cloud, we won't just spin up a bunch of web service application service, database servers, load balance, like they went with the same 3-tier old school web-based application mentality that they've lived with for 10 to 15 years, and they just moved that. They lifted and shifted it and it was really their mess somewhere else versus cloud native, which is there's a ton of technologies on all the different cloud providers that allow you to, first, you have to break into micro services. Secondly, you need to kind of look at your entire CICD process, how developers work in a completely automated fashion with a lot of risk removed, but also giving them the goal to go to production hundreds of times a day or if not thousands of times a day without stepping on each other and putting. That requires a completely different set of rules, I would say, in being able to -- how you would manage that sort of an environment versus the legacy traditional environments. And then I think from that regard, I think there's -- like I said, there's a lot of folks that still hold on to I'd say, the religion of their old legacy ways, right? It's -- we've always done it this way. So this is how we have to do it. Whereas cloud native allows you to just adopt whatever cool next technology is out there. Looking at a lot of the -- I was at VMware for years, and I love the technology that we had built. But the second Kubernetes and containers came out, we all sort of knew like, oh, yes, this makes a ton of sense and getting it in a cloud native environment, being able to do elasticity, horizontal and vertical scaling all by -- in real time. And multiply redundant data centers where the application architecture was such that I could lose an entire eastern seaboard of data centers. And none of our users would ever know and adopting things like chaos engineering where you shift your mindset from we can't break anything into production to, we actively attack our production environment so that we can find vulnerabilities ahead of somebody else finding them. All of these things are just a massive shift in thinking and what has happened in the industry is what we call cloud native companies, all these start-ups that have sort of disrupted all these legacy companies they were able to write their entire product in the cloud, cloud native. So that's what we talk about when we talk about cloud native. And the reality is they probably did it much cheaper with much faster R&D times and they have the ability to really rapidly innovate. Whereas a lot of the legacy companies in the G2K and beyond, they're kind of stuck in this place where I hear negatively, I call them the departments of no, where the departments will tell you all the reasons why they can't do something modern or why they can't make changes to their existing people process and technology stacks. So those folks tend to get in the way of progress. And they don't mean to. They have their best intentions at heart of staying risk averse and maximizing uptime, but they don't realize that if they actually made these changes -- the demo that everyone just showed, Piyush and Debbra showed is you're literally talking about a paradigm shift of mean time to resolution. Like if I were to try and even troubleshoot and figure out -- there's 3 steps to MTTR. One, I have to figure out something is actually broken. Second, I have to now troubleshoot why it's broken. And then third, I have to release the fix into production to fix whatever I broke. Each one of those sections takes a significant amount of human capital, time investment, right? So the second you go down and you stop driving top line revenue, you're bleeding revenue to the organization. And that's what the ticker starts for MTTR is -- and then the measure of when it's back up in production fixed is that window. So that window directly ties to top line revenue loss. So every C-level in the world is going to care about this. And if you can establish yourself as a technology enabler team that's really looking at resiliency, looking at uptime, looking at how to maximize and protect revenue. It's revenue protection -- the technologies that Piyush and Debbra just showed can literally take that from hours or days in that title to literally 3 to 5 minutes. We do demonstrations all the time of solution stack, what we call modern ops. And it's just built using ServiceNow's entire end-to-end platform. And it blows me away. I call it cheat codes as to how easy it is to restore services in this new world. And it directly ties to revenue. So that always excites people when you can protect and retain revenue or go get more revenue. So that's a big part of the solution that I think we needed to talk about what the business implications of how cool those enablers are.

And I'll add just a comment on that, too. And directly with everything you just said, Eric, while you're bleeding some of that money, there's a direct correlation to that customer satisfaction score too, and that's what we were kind of focused on with that story as well because with all those inefficiencies and the longer it takes to resolve some of those issues, if you can, right, that customer satisfaction is directly impacted and it's so important too, which also comes right back to the bottom line. So just a comment on that.

No, I was just saying Debbra, spot on. That was an awesome point to bring up for sure.

Yes. I think it's a good place to wrap up, too. I want to be respectful of people's time about the time we wanted to do. I know we didn't get to every question. We will get back to people who asked the question and answer you directly. Just quickly, one of them was about getting access to a sandbox. I mean, certainly talk to your ServiceNow representative if you do not already have an environment where you can try some of these things. And then there was a question about domain specific LOMs that will take off-line, but just I'll iterate that we do utilize that within ServiceNow to deliver the gen AI capabilities that we do. So with that, I want to thank everybody who joined the panel today, Eric, Piyush and Debbra and all of you for joining. I'll remind you that we have a major knowledge event coming up in May and would encourage you to go and take a look at that and get there if you can. And finally, I'm sure a lot of your colleagues will be interested in these sessions as well, as well as there are many other sessions that we have out there in our on-demand site. So feel free to go out there and browse and look at the other topics that I hope will be of interest to you. Again, thanks, everybody, for being here, and we look forward to seeing you at the next session.

Thanks, Richard.