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

[Operator Instructions]

Good morning, good afternoon or good evening, wherever you are. Thanks for joining today's webinar, Optimizing lead-to-renewals, leveraging CPQ and a cohesive journey. My name is Kathy Neff, and I'm a Director of Product Marketing for ServiceNow, and I'll be moderating today's session. I'm joined today by Robert Munoz, VP and Principal Analyst from Forrester and by Anandan Jayaraman, also known as A.J., and he is the VP of Product Management from ServiceNow. But before we get started, I just wanted to mention the safe harbor notice as this presentation could contain some forward-looking statements and any purchase decisions should be based on existing release product. So let's take a look at the agenda. All right. We're going to start off with -- I'll have Robert and A.J. hand off to them shortly to introduce themselves. And from there, we'll go right into Robert's first section, and he'll share some of Forrester's findings about driving profitable revenue growth with CPQ. Then A.J. will highlight ServiceNow's view on leveraging CPQ within a cohesive lead-to-renewals journey. And I'm sure they'll have some back and forth as they go through their presentations. And then finally, we'll have some time for some Q&A towards the end. So now I am pleased to hand it over to Robert to start the introductions.

Thank you Kathy. And just a little bit about myself. I am in the revenue operations service, the practice within Forrester. And I work with sales, marketing and revenue operations leaders to really help guide them through commercial strategy to drive growth and with best practices, models, frameworks and leveraging technology. And prior to Forrester, I ran North America and U.S. multibillion-dollar sales segments and business units in high-tech companies. And early on was actually in presales. And as part of that journey also had an opportunity to work for years within the CPQ domain. So with that, A.J., you want to add some comments intro-yourself.

Thank you, Robert. My name is Anandan. I go by AJ. I lead the lead-to-cash portfolio for ServiceNow. I'm based in the San Francisco Bay area. So just a little bit about myself. I've been working in the CRM and CPQ domain for the last 25 years or so. And I've had the privilege of experiencing the space from multiple vantage points. As a vendor, I worked for several large enterprise software companies like SAP, [ Segal ] systems, Epiphany, also worked for multiple start-ups, but I've also operated in the space as a consultant working on behalf of customers evaluating CRM, CPQ solutions as well as helping them implement it. So that perspective, thus [ that is ] pretty different from that of the vendor. So pleased to be here along with Robert to talk about CPQ and how the market is changing. So Robert, back to you.

Thanks, A.J. And I'd like us to begin by taking a look at our B2B buyers today. And we begin here rarely with an understanding that B2B buyers, they want to control how they engage with us, right? Disruption is really turning B2B buying like B2B like B2C buying. It's really turning both the buying and the selling upside down. The notion of having very quick and efficient B2C buying journeys has really reshaped the expectation for B2B buyers and be that through e-commerce, be that through marketplaces, even our face-to-face or our direct engagement, but it's really shortened the distance between buyers and suppliers from an omnichannel, from any way that we want to engage. And in fact, we all understand that many B2B buyers prefer to self-serve. But contrary to popular belief, the firms that are really going to be Best-of-Breed, if you would, or best self-service customers are not going to be the ones that are going to win the hearts, minds and wallets of the modern buyers. Firm solely focused on human-to-human selling will also not fare as well and possibly even worse. Those that are going to win the hearts and minds and the wallets of customers are those that have one thing in common, and that is that they allow their customers to operate and engage in their preferred channel. And to do that really seamlessly between channels, with a consistent experience and these businesses are the ones that really are offering a true omnichannel experience. So businesses are either going to support their omnichannel customers or risk losing them forever. B2B buyers are omnichannel creatures. They have made it very clear they want to control their engagement and neglecting that on our omnichannel buyers in their choice and in their preferences is really going to be leaving money on the table. So let me share a little bit of this context. So let me try to back it up with some of the findings in our research. And we'll start here with really based on Forrester's annual buyer's journey study that we do every year, more than half of B2B revenues come through business partners or e-commerce or marketplaces, not necessarily the direct channel, right? So when we look at the spread of the revenue, right, when you look at the chart on the right, it's actually a total of about 55% for B2B revenues, about 3/4 or 74% for B2B2C and a total of about 62% for B2B and C through these other channels. So the takeaway is that businesses really need to ask themselves, are we enabling our customers and our prospects to easily buy our products and services through their channel of choice? And to not be at a competitive disadvantage, organizations need to scale. And to do that, the omnichannel approach so that they can meet the buyers where they are and enable them to buy the way that they want to. Now that's one data point here. Basically, validating that direct sales is just one component, but it's actually less than half. The other message here, and I want to dive a little more deeply is, this notion of lead-to-revenue from a Forrester lens. We look at this as the full revenue life cycle management process, which looks at optimizing the ability to quickly and accurately and profitably deploy and scale the new and existing offerings in the market across any channel. And this is regardless of how an opportunity or a lead or a transaction, how it originates, right? Generally, we might think of a lead or an opportunity. And that's the predominant way. But whether it is coming originally starting kind of left, right, whether it's coming directly from a buyer via self-service inquiry on an e-commerce site or whether it's from a sales rep that creates an opportunity in their CRM to a channel partner or even perhaps a support rep, service rep that originates the need to fulfill a piece of equipment or turn on a service for a customer in order to support some issue. However, that originates, there is a need to then configure, right, to determine what are the parts or what are the services that we need, what are the right SKUs. We need to have the right quantities. We need to then price it. Is this list price? Is it discounted price? What's the customer entitled to? Or is there some other negotiated pricing and ultimately bring this together in terms of the quote and maybe perhaps there's even a need to provide a contract or an agreement to seal the deal. So we go from configure price quote to contract and then in many cases, those deals may require approval to extend additional discount pricing, certainly for some of the larger opportunities where they may need to go a deal desk to review them and decide if they can provide a discount, maybe through finance or maybe changes in terms and conditions through legal. And in fact, configuration "actually is the #3 top area ranked by sellers in our sales activity studies that we've done of nearly 30,000 reps." It's in the top 5 #3 of the top area for improving for saving them time. So it is a really area that can drive productivity. And without it, it certainly can limit that. So having a very defined and optimized configuration, pricing and quoting and contract management process is really key. But once the deal is closed and ordered and built and the revenue is recognized, it doesn't stop there because beyond the initial order, we also need to not just automate, but to optimize the renewal process that can form if this customer is at risk of churn or if there's some additional action that is needed to intercede and maybe improve the experience or the value they're receiving. For our customers, we need to have visibility to their assets, their services or their products. What do they have installed that they previously purchased with us. And with that kind of visibility, we can then also more proactively and easily advise them on how we can drive additional value through upsell and cross-sell of additional services and be able to do that across the customer life cycle. So having visibility beyond just that initial sale of their offers is key. So last thing I'll call out is that in leveraging, today is increasingly AI-enabled technology stacks. What we can see is that it's going to deliver an even greater buyer experience because it's going to be able to monitor what is happening across this process and help to automate further and streamline the end-to-end revenue processes and ultimately really just drive renew cycle time, better buyer experience, better seller productivity, et cetera. So this is kind of the domain within which CPQ is really key, but it is part of this end-to-end revenue life-cycle management process. Okay. So that's a little bit of the big context on CPQ and where it fits in. Let's go back to our focus on buyers. And what we see in our buyer's Journey study is that there are more purchase influencers outside the buyer's company. In fact, the average B2B purchase involves three vendors, four departments or lines of business and eight people, four of those that are outside of the company. And these are different personas that are involved in the purchase decision. So how do we make it easy to enable all the relevant personas to see and experience the value of your offering. I mean this increases, we continue to monitor this every year. What we're seeing is, again, the increase in the members of the buying group, the number of different people that are involved in that go, no-go decision for a purchase. So we need to make it easier for all buyers, all members of the buying group to be able to engage in that buying experience and have exposure so they can validate the value and the relevance that it means for them. If we don't do that, then we run the risk that we think we have a deal because we're working with maybe the primary champion or stakeholder. And hey, from a sales perspective, this is a deal. This is going to be closed for the quarter. It's a [ commit ]. The end of the quarter comes, customer go silent, it didn't happen. Why? In many cases, because there were other stakeholders that were involved in influencing that buying decision. And so and they may not have been fully onboard with moving forward because they weren't kind of excluded in being able to have exposure to what was happening. So it's important that we recognize that decisions are made much more with larger buying groups. Now going a little further into our buyers, what we also see is that the -- when we look here, the B2B buyers, they are valuing the convenience of digital self-guided interactions at every stage of their buying journey. The three pillars that you see there reflect early middle- and late-stage purchasing what happens early stage, right, where we're primarily qualifying of that discovery phase, the middle stage where we're evaluating different options. In the third stage, we're now -- it's really about finalizing the decision negotiating, what have you, getting ready for that commit. And the dark green reflects those interactions that are personal people interactions. And the light green reflects those that are self-guided, right? They're doing their own research on the web and in other forms where they're getting their insight. And what buyers are telling us is that it is equally as important in their journey, the interactions that they are having face-to-face or directly engaging with vendors or other stakeholders as well as the ones that they have on their own. And it's not just that it's both interactions, which we've known that for years and the trend continues with more interactions that are involved in that buying decision, but what we see is that both of those interactions are important across the three stages, not just in the early qualification stage in the lead process, certainly very relevant there. But also as they're -- as now they're ready to start evaluating solutions and even all the way to the very end before they make that final decision. So enabling buyers to choose whether they want to speak with a rep or self-service on a portal is just as important in the early stage as it is in the late stage of the buying cycle. So again, we need to ask ourselves, are we enabling our buyers to easily engage and buy with a rep, a reseller or on their own on a portal so that they can engage as they choose and that we, in turn, earn the right to capture their business as we serve them. All right. So who are these buyers today? Well, we start by kind of recognizing that younger employees of businesses adopt self-service buying at higher rates. Instinctively, we might say no surprise there, right? This is part of the digital generation, right? We have younger buyers. But in fact, when we break this out across baby boomers, Gen X, Millennials and Gen Z, we see that each generation engages in self-service buying, for example, and younger employees do so at a meaningfully higher rates. Digital natives are influential, yet they underestimate. They're underestimated in terms of the role that they play as B2B buyers. They engage via a number of self-service tools and do a lot of their purchasing online. And this is a global snapshot a Forrester's data on each generation from a senior level, digital buyer perspective. And so when we look at the senior level digital buyers, we see that Gen Z and Millennial B2B buyers make up more than 2/3 of senior-level digital purchasers and Millennial leaders who are B2B buyers represent an audience that is 2.5x larger than Gen X leaders. And also Millennials frequently define the digital strategy that is used when it comes to buying groups. So as a result, sales and marketing, the motions that we take whether they're on a website, e-commerce site, marketplace or directly with our sellers, our sales reps. We need to understand the expectations of those experiences that impact the way buyers look to engage. All right. So younger buyers are also quicker to express their dissatisfaction with their buying experience. When we ask about dissatisfaction with their chosen vendor, younger buyers appear to be more demanding and forthcoming with 90% citing dissatisfaction with the vendor in at least one area compared to 71% of older buyers. There are many reasons a buyer may express dissatisfaction with price certainly being one, but the most frequently cited by both younger and older buyers is vendors need to pay close attention to the experience-related factors that can really affect -- have an effect through both sales and marketing. And these factors include competence that is exhibited, right, knowledge of the customer, knowledge of the product and service offerings that competence that is exhibited during the purchasing process and that was selected by 14% of the younger buyers compared to 8% of the older. So buyers' experience, they value within the decision-making process. The value -- they value the knowledge of the buyers, but they're also much more intolerant when they don't get the level of touch, when they don't experience that I'm getting value from that interaction at a much higher rate. So again, we need to remember that every B2B buyer right, probably all of us that are amidst session here today, we are also B2C buyers in our personal life, right? And our experience in the B2C right? The AKA Amazon-like experience carries over to our expectation in the B2B journey and that's even more so true with younger buyers. So bottom line as B2B buyers want value, right? They want a rich personalized experience with right immediate access that they can get the information they need that they can research and they can do it with greater ease. And when they have an interaction with us, they expect that to go very smoothly. And for us to have all the relevant information for them to make that transaction, that deal, that purchase move forward very effectively. All right. So let's now shift a little bit to looking at stepping back and being sure that we understand where does CPQ, Configure-Price- Quote, where does that sit within a customer's infrastructure? And what services or capabilities does it enable and integrate with. If you take a look at the left and the far right, we kind of look at this as what we would call the front office. On the left, you have a CRM that is where sellers, sales reps, leverage to create an opportunity and then put together and configure a quote. On the right, you have e-commerce for self-service from buyers. We have channel partners, resellers, and we have marketplaces. And at the very bottom, we have the back office, right, ERP and other order fulfillment, billing and revenue management systems. And in the middle, in the center, acting as a commercial hub is CPQ, Configure-Price-Quote. And so capabilities like configuring and pricing a solution are critical for that revenue life cycle management that end-to-end process. If we can't do it very quickly, accurately, profitably, right? Then we create either a bottleneck in the process or a bad buyer experience or we minimize our odds of being able to convert that to a win, and that's just for the first sale. We don't -- if we can't do that well, once they're already a customer, that's also going to impact our ability to upsell, cross-sell, right, and grow that customer and retain them. So this is -- this represents kind of -- from a big picture and everyone's environment, the key elements that are there with regards to CPQ kind of sitting at the middle. But the more relevant point here is that today, CPQ these configuration capabilities, the pricing, the quoting, these become composable services that can be extended. So that CPQ, that -- you've seen the P and the Q, right, those applications, those services can be extended to an e-commerce site to a marketplace, to a partner portal. So the backend of how we configure, how we price and how we quote, we can manage that, and we can do that centrally, but the front end could still be unique and personalized for the different partners, for marketplace and so on. So the ability for an organization to scale very quickly and deploy new products and offers is made much more possible and to be able to do that in a way that is consistent without having to replicate multiple instances of pricing logic and configuration logic and the like. So a lot of capability in terms of the role that CPQ can play in enabling new product offers to go to market and enabling, having any channel to support a business and driving the productivity as well as the agility for the organization. All right. So let me kind of just wrap up this segment by saying, all right. So what are some of the potential impacts that streamlining this lead to revenue process with CPQ can have on the sales organization alone, again, with our finite time just looking here at sales. Well, Forrester has been doing sales activity studies for years. And again, with about 30,000 reps as a part of that makeup. When we look at just the last three years, sales reps are spending -- in terms of how sales reps are spending their time, what we find is that sales reps spend almost eight hours a week in total on internal activities that could be reduced with the CPQ that is integrated into their back office systems. Each week, on average, sales reps spend about half of Workday, right, 3.7 hours on internal selling-related activities, things like doing configurations, things like getting deal pricing approval and the like and putting together the proposal. They also spend another half day workday or about 4.1 hours on non-selling related activities, things like order booking, billing issues, customer service issues, things that often happen when a configuration, "when an order is generated or created incorrectly or something happens across that process." And even though there are service teams and places to go to, to get resolution on that. Many times, customers will come back to their sales rep, their account manager, account executive and say, "hey, what's going on here" and now reps get engaged. So we have almost one day out of the entire work week that sales organizations are spending, trying to address these kinds of issues and CPQ can play a significant role in minimizing this productivity sync and creating much more selling capacity for the organization. So with this, I'll go ahead and wrap this portion and A.J., I will turn this over to you. And maybe we can just start for a second, A.J., is in this context that we are talking here a little bit about CPQ. If you can maybe share a little bit about ServiceNow in this space and how this offering is somewhat unique in its place in the market.

Yes, sure. Thank you, Robert. That was fascinating research. I had not seen before. I learned a lot. So some of you may have known about ServiceNow, heard about us as a company. Let me maybe spend a little bit of time talking about the evolution of ServiceNow from predominantly IT, technology workflow companies to, right now, enterprise workflow company in which customer workflows is the fastest-growing business unit. We started in 2012 as many of you know, early 2010s selling largely to IT teams who wanted to manage assets, front operations, provide excellent customer service. And from technology workflows, we've diligently built applications on top of the same platform, employee workflows, upgrader workflows, finance and supply chain workflows. And few years back, we started actively investing in customer workflows. And today, we have customer service management, field service management. And earlier this year, we launched a new product line called Sales and Order Management. So maybe I want to give you a little bit of context on why we decided to build it and what does Sales and Order management actually mean. So similar to what Robert said, we think of SOM, or Sales and Order management, as essentially a way to manage the commercial life cycle of a customer relationship. So one of the feedback we received from a lot of our customers is that they have systems that are lead centric, like marketing automation, opportunities centric like Salesforce automation, but they wanted a coherent way to connect, lead all the way to renewals in a system in which the hero of the story is the products and services that you sell. Because of product catalog, we offer catalog is at the heart of how companies make money. And one of the key insights we got out from our customers is that they have many Best-of-Breed systems for different parts of the lead to renewable process. But as deep as each of those capabilities may be, they had a hard time putting it all together because of the high cost of integration, because of the lack of coherence. And so the -- one of the different streams of feedback we got was, yes, it does work for us, but we have challenges when it comes to handling variations. So as we know, the complexity in CPQ is all about how do you manage differentiation of your products and services versus your competitors and differentiation is a function of variation. How can you bundle differently? How can you price in a dynamic way? How can you handle eligibility? How can you show the same experience in different flavors for different customer segments? How can you have a completely different dynamic process if you happen to be selling to a Walmart versus SMB and handling variability has to be done not by code, but by metadata, by data, by configuration. And this is [indiscernible] existing customers are having lots of challenges with incumbent vendors. The second issue that we see is that people want to solve a problem. They see this as an end-to-end workflow. It is not just front office or middle office or back office, oftentimes serving a customer means pulling up invoices from SAP. Doing a renewal often means going into a subscription management system that could be a backend. So the one feedback is we want to use the silos into one continuous connected flow and how can we do that. And the last point, which is aligned with this is that they want a coherent view of the customer journey. What did we quote them? What did they order? What [indiscernible] did they abandon? What did they contract? How did they connect to what was fulfill, what was invoiced, what was written. What was fake. And a lot of them had struggles and getting a view of this end-to-end view of the customer journey, largely because they were done in the front systems, but also because the systems were not always talking to each other, and there was a lot of disconnects within that vessels in a fractured experience for the customer. So the Sales and Order Management product is a new suite of products that we launched earlier this year starting Feb 2024 and it goes all the way from lead-to-renewal expansions. So we have a capability for capturing leads and processing a lead to an opportunity. We also have a module for opportunity management that includes foundational SFA capabilities. Then it goes to a code where this is where the CPQ capability comes in and having multiple solutions of the code, having a configuration experience of the product catalog itself and having different U.S. manifestations for that, having APIs that can be called by backend systems so that the same catalog can be not just sold by a sales rep, but we could also have a partner putting a custom presentation component on it or maybe you could put it on your self-service website. And then it integrates into the order management process, which is all about how do you decompose, orchestrate, and fulfill sales orders that have been captured either in ServiceNow or maybe in a [indiscernible] system. The one key point I want to emphasize is this is all built in a way that is highly composable like Robert said, and the big feedback from our customers is that large companies have heterogeneous landscapes. You do have messy landscapes that have been accumulated over a long period of time and no one is going to come and change it overnight. So any vendor has to learn to coexist and adapt to what exist. So you could decide to use just parts of this or have an end-to-end flow in ServiceNow, depending on your particular situation. A couple of points I would also make is the full key use cases we focus on. One is a lot of telecom tech companies value the native integration between CPQ and order management. Because oftentimes, it's not just for yourself, but how can you fulfill it seamlessly. Often it is zero touch calling APIs on demand. So having offer catalog and a technical catalog on the same platform goes a long way. The second kind of use case we focus on is for heavy equipment, CPG, office automation kind of companies in which they want to have visibility of order to cash end-to-end. So this is not traditional CPQ, but this is how do I manage exceptions for my orders and invoices and contracts? And how do I connect data from my back ends, my billing system, my ERP system and data from my front ends into one seamless process that I have full visibility into. The third part of it is people want the service agents to sell and sales agents to service. So if you happen to be a field technician going on site to service something, you want to have the ability to look at recommendation, be able to upsell, cross-sell, create a code and even consummate a transaction. And the last use case is for companies which have many disconnected systems, often that does come a point in time in which they say, "hey, do I go to a fresh stack, a cleaner stack, which is more coherent, that is more connected." And we do have some examples of customers who come to ServiceNow and ask us to help them with the sales fulfillment service stack that is end-to-end, that is multichannel across all customer segments. The last point I want to make is, and this goes back to what are the land mines CPQ needs to avoid in the space, because this space has a tortured history as many of you know. And often, customers feel like vendors overperformance and under deliver, the complexity of a project is much higher than what they anticipated. And we feel like three key dimensions have a disproportionate impact on whether a product is successful or not. The first one is, is the application you're implementing coherent? As in, is it built on one data model? Is it one architecture? Is the platform itself built in such a way that all these different components are interconnected. The second question is one-off, do you make a lot of distinction between what is front, what is middle and what is back? Are you focused on it as one continuous workflow? And then the composability part that Robert alluded to as well, is how can [indiscernible] CPQ capability can work in the context of many other applications that exist, can you build a completely new component and make it work with what the vendor has delivered. And you use it as a starting point, is the code black [ boxy ] or can you actually look at the code and be able to extend it. Those all become very important questions to answer when it comes to the success of the project itself. So having said that, that was the overview of SOM, Sales and Order management, that we launched -- we launched in ServiceNow earlier this year. I will turn it back to Kathy to look at what questions we may have.

Thanks, A.J. So we've got a few questions that we want to address here. And the first one is what are some of the top factors that enable companies to have a successful CPQ deployment? And along with that, what should they watch out for? Are there any land mines to avoid. So who wants to jump in on that one?

I'll take a start at that one, Kathy. And it's an important question because organizations that are going to be deploying CPQ either for the first time or if they have a CPQ that may be, they deployed many years ago, and it doesn't have all the latest capabilities and they need to relaunch, it's still relevant for them. What I would say is be very clear in defining the use cases that you're looking to sell for, understand the existing platforms that you're going to need to be integrating with like your CRM, your ERP, e-commerce, other systems and set a minimum viable solution capability for the initial rollout, you can have a wide and very ambitious vision, transformation initiative, but start with a very defined. If you get too ambitious and you want to launch it in all at once, it doesn't -- that's not generally optimum to be able to have quick learnings and then scale, quick learnings and then scale, right? So I tried to define that initial scope a little tighter. And those additional capabilities and enhancements can follow. The other thing is be sure that this is not done in a silo. I think we all understand that we have a lot of different stakeholders, but be sure that the product team, the sales team, engineering, finance are all a part of it because we're designing solutions based on product, right? We are bringing them together in a bundle or in an overall solution that's going to have to be presented with sales. They're going to be priced in a certain way, right, even if there's a list and then it's discounted to margin, right, where you want to finance and those kinds of things. So be sure we have all the stakeholders. And the last thing I'd say is allocate the appropriate level of a dedicated appropriate set of support and resources to manage the project. Because you want to ensure you're going to have someone for the life cycle of this deployment, not something that's just going to be added on to someone else in addition to what they may do full time. So those would be some of the key things I'd call out. A.J., what else would you add?

Yes. No, I would agree with what you said, Robert. A couple of things I would add. One, from a business perspective, I would say, having a clear view of the intended experience for each stakeholder pre and post is very important. And most people who start the project, say they have it, but oftentimes, it's a little bit muddled. So you need to know what good looks like for your customer, for your sales rep, for your finance person, for sales opts, pre and post implementation. And even if it is a North Star, which you achieve in multiple phases, at least you have clarity. The second thing I would say from a product perspective is, I think it is [ hard ] to evaluate vendors as what they give you needs to be seen as a starting point, but ask is the business logic of Blackbox. Can you extend the engine. Can you add new behaviors? Can I use a custom presentation layer on top of what the vendor has given you, right? And can it be composable? Can it work with something else at a pricing engine? So all these happen to be pretty important questions in an implementation. So the use case at the vendor demonstrates is one thing, but then deep diving and double-clicking and asking these questions about composability and customer presentation layers and availability of APIs, that goes a long way in ensuring that you can actually make it work within your landscape.

Great answers. Thank you both for that. I mean that sort of relates to the next question. And that is what factors or requirements lead a company to select the Best-of-Breed solution versus a suite or a platform solution. So A.J., do you want to start off with that one?

Yes, thanks Kathy. Yes. That's a pretty interesting question to think about. So again, the space has had a history over the last 20 years, and I feel like initially, a lot of people wanted best of three because you felt like the depth of capability goes a long way in reducing time to value. But what people have figured out over time, I think, is that the composability of the underlying platform itself has the biggest impact on TCO as well as time to value. Because oftentimes, just to give you an example, one of the CIOs I was talking to last week was telling me that just for opportunity to order, they have four systems, which is pretty common in large enterprises. They have one system for the opportunity management, one system for the CPQ, one system for CLM, which does the contract management and another system for managing entitlements, right? And then they have a few more for order management as well as service. Each one is a best of three, right? Very powerful branded solutions with a lot of depth. And they have spent maybe the last five years trying to make it all work together. And it has resulted in a lot of pain because each one has its custom object. Each one has its own cloud operations. Now you have to do a lot of work to tie them all together. And now he was telling me that with the benefit of Finesight, you would say that going for more coherent solution that went end-to-end even if it lagged that in certain domains, would have been the better solution over the long term. So I don't feel like a lot of CIOs are now coming to ask the question that is the additional depth worth it if vessels in a disconnected stack. I also want to say there are some situations in which Best-of-Breed can also be the right choice if there's a particular landscape in which something is missing, let's say, as an example, you happen to be a high-tech company, and you don't have pricing optimization and you're looking for a solution that can complement your existing stack on pricing optimization. It might make a lot of sense to get a best of the pricing optimization solution. And that would be true for, say, discount guidance. There's lots of particular cases where this Best-of-Breed frankly benefit. But anything that is more transformational that goes into and in which you're trying to change the experience for your customers or the sales reps and you have a long-term orientation, I would make the case that picking a platform approach would be a better choice. Robert, I think I would love to hear your thoughts on this as well.

A.J., great points, and this is actually an old debate, but certainly has even more relevance in this space, not necessarily a debate, but certainly, an area where there's pros and cons, obviously both. I think you made one key point that I think is at the heart of this, and this is understanding, are we trying to provide a solution to address a specific process or capability? Or is -- are we looking at this as trying to address a need within a broader, more end-to-end process holistically. Are we trying to optimize for the end-to-end? Are we trying to optimize for a finite process? And ideally, we would want to -- the answer would be, well, both. We want to do both. We want the best process here and we want end-to-end. So I think that's -- my guidance for technology leaders, rev ops leaders, sales leaders that are maybe trying to assess some of these decisions is to, number one, factor and consider what is the suite that you have today for most of your offerings and capabilities and understand when it comes to CPQ. If that's going to be added, what is the strength of that current suite to support that versus bringing another solution that maybe might be "Best-of-Breed." There are going to be some capabilities like the example you cited pricing optimization, where that is a complementary solution, but that can be added on to either environment without necessarily compromising on some overall capability. So again, I think the guidance says understand what we're trying to solve for and optimize for. And when you look at any kind of solution, also understand whether it's a suite or whether it's more of a stand-alone. In both cases, be sure that there's an understanding of what are the APIs that are supported to be able to integrate across all sorts of systems and what is its ability to support composability and headless environments that provide that flexibility across the board. So yes, something certainly to be taken looked at carefully to assess what is optimum for each environment.

Great. Thank you both for those insights. I want to squeeze in one more really quick question and it's, I'm going to send this one to Robert. And that is what other trends, you've mentioned self-service, headless APIs and that kind of thing. Are there any other trends you see impacting CPQ and revenue life cycle management?

A few here. I would say, certainly, one is industry specialization. There is a shift towards more and more decision makers want to be sure that when we deploy solutions, this has already been deployed in a customer in a similar industry to ours, and we understand that business specifically. So whether it's manufacturing, whether it's telecom, whether it's pro services, what have you, having a CPQ solution that's already been configured for those kinds of environments, even though it would still need to be customized or adapted, but that, that solution set is one that's already proven. The other one is just ensuring that there is composability, much more of a multi-services API first headless architecture that ensures longevity that, it's going to be able to grow into the future and continue to drive value. So those are two from a connectivity. And I think the third would really be just associated with its ability to leverage AI. AI is a factor that's increasingly becoming a part of every road map. And so we want to be able to understand where AI would play over time in adding value across that end-to-end process. A.J.?

Yes. No, I would agree with what you said Robert. I would echo the industry specific aspect of it. One thing I see is that, for example, if you sell to [ Telco ] compliance with TMM standard is a big deal because all the applications in your landscape on likely talking the language of [indiscernible]. If you sell into the semiconductor industry, maybe you want to be compliant with the [ versatile NET ] standard so that your distributors can sell you orders according to that standard API. So being industry-specific also matters from -- in terms of deep capabilities while just selling into insurance, a [indiscernible] card process and how can you have eligibility by calling multiple systems on the backend, be able to manage process variation. This is a really big deal. Without that, the solution would not even stand. But if we are selling into heavy equipment or manufacturing, your integration to SAP and your ability to manage variations and make to order kind of environments becomes a lot more important. So I definitely think industry-specific CPQs is a way to go. The one other point I would make is that to your -- AI-related point. NBA is coming -- is kind of making a comeback and that's what on the AI, I think we've had this in this industry for a long time going back to the early 2000s. But I think now people are talking about NBA not just in the context of CPQ, up-sell, cross-sell, but what is the next perception to take for the sales for an opportunity maybe from a sales development we're going lead, what white paper should I send in or the next action to progress the deal. And also intelligence on renewables and up-sell, cross-sells in terms of the life cycle, I think there's a lot of opportunity, though. I think companies have tons of data not fully well exploited or not fully built translated into actions that can have certain tangible value. So I think all those would be opportunities for both customers and vendors like us.

Great. Thank you both. Well, it's time to wrap up. I want to thank both Robert and A.J. for sharing their insights with us today. It's been really interesting to hear both of them. And just as a wrap, we have lots of great assets for you if you're interested. These are in the deck that you could download or in the console as you're watching you can download any of these assets, and I think there's even more available. So we also have some on-demand webinars. You can jump into at any time to catch replays of all the ServiceNow webinars that have been done. So thanks again for attending, and we appreciate your attention. Thank you.