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

Good morning, good afternoon, good evening. Thank you all for joining. This is the Xanadu release overview for our technology industry product team. Now the vast majority of what we're going to cover today is already released product. But in the event someone asks a forward-looking question, be aware, safe harbor applies. My name is Jason Occhialini, and I lead our technology industry product team.

My name is Ryan Palamara. I am on the outbound product management for technology industry team.

Thank you, Ryan. In our agenda today, we are going to talk a little bit about our strategy that we are using to enable technology providers and talk about some of the new product initiatives and capabilities, which align with that strategy. And without further ado, let's talk a little bit about some of the trends that are going on that are affecting technology providers. So technology providers are undergoing a transformation, and that transformation is driven by intelligence and a need to identify operational efficiencies, which save them cost, but also capabilities, which enable them to deliver greater experiences to the customers that they serve, bring new products to market and ultimately deliver a better end-to-end customer experience for the enterprise customers that they serve. Now our vision for technology providers is to bring intelligent workflow automation to those technology providers, and we're doing so through 3 primary product lines. We have sales and order management for technology providers, which enable technology providers to rapidly bring new products and services to market and then to manage the order management journey from lead management straight through order capture and order fulfillment. And then we have technology provider service management, which enables customers to connect their customer and partner ecosystem, deliver proactive service experiences and ultimately manage the success of their enterprise customers from the post-sale journey through hopefully, contract renewals. And this suite of product capabilities is enhanced and elevated with our Now Assist for technology provider Service Management, which includes generational AI capabilities. All tallied, these products enable our technology customer base to enable their customers to do more, to supercharge their agents' productivity and ultimately deliver customer experiences, which drive loyalty and retention. Now we have been on this industry product journey for about 5.5 years now, and we have delivered a great deal of innovation within our technology product lines. And that innovation just continues to elevate. And today, we'll talk about some enhancements to existing innovations like Service Bridge as well as net new innovations like our customer success suite of capabilities. Now our industry products are built on top of horizontal product lines. So when you purchase an industry product like technology provider Service Management, you get the benefit of the intelligent Now Platform, you get customer workflow foundational capabilities like customer service management, the foundational data models, which support our customer workflows and then you get our unique industry-specific innovations on top of that. So there's increased value with those industry product lines as a result of those capabilities, which extend the horizontal product lines on which our products are based. And all tallied, you're left with an architecture that looks similar to this. You get our intelligent cloud platform, our workflow automation capabilities, our single shared data model, single shared code base. You get all of the benefits of horizontal product lines like Customer Service Management and IT Service Management, the engagement layer, whether it be self-service or omnichannel capabilities like web, e-mail, mobile. And then you get our unique industry-specific capabilities that include initiatives like Service Bridge, account life cycle events and our proactive Service Management capabilities. Now I've mentioned our Intelligent Platform a number of times already. This is not a new journey for ServiceNow. ServiceNow began investing in intelligence more than a decade ago, and the rate of innovation has really accelerated over the last 18 months. And we'll talk about some capabilities that we have added to our industry product lines, which capitalize on these platform capabilities. So in the end, why would you buy technology provider service management? Well, it provides considerable value on top of horizontal product lines, which provide value in and amongst themselves. You get the single ServiceNow platform, purpose-built workflows for technology providers, which ultimately enable the technology provider to provide a seamless service experience from the front office to the back office and differentiated customer experiences, which is increasingly important for tech companies. And the strategy has proven to be pretty successful. We have more than 2,100 customers that are defined as technology companies and more than 3/4 of those customers use ServiceNow beyond IT or IT Service Management. Ryan.

All right. So we'll have this poll. We'll leave this for just a moment. Then we will show the feedback from that, so you can see the results. And then we're going to jump into our next component, which is really going to be proactive service management as the place that we will start. So please go through and from the features and the products that Jason just went over, what are the ones that are most interested for you? And then we will move on in about -- give another 10 seconds or so. All right. So moving on to our first application suite, I would say, within our service management product, which is Practice Service Management. So what is Practice Service Management? Just as a quick recap before we jump into the new features. Really, we're focused on those lines of business. As Jason just mentioned, what are the technology companies that are using beyond just internal IT. And these are the technical workers. Think of system administrators, developers, network architects that are doing technical work, but it's for the customer. It's the products, the services, that they are selling to their customers. And so it's really focused on how do we connect those types of technical personas, keeping them where they want to be working, but also understanding the customer, being able to communicate with them and really be engaged throughout the entire life cycle of an interaction with the customer. So what we built here is really building on top of service operation workspace was really the workspace that ServiceNow has built out for that technical persona to where they can see information coming in from ITOM on alerts on outages and have really the [ ITIL ] policies or practices that they are accustomed to working with. Now what we have done is taken that further though and really looking at it from the angle that those technical workers are working on customers. They need to understand who's being impacted, what is the business context of a particular customer and being able to put that all in one place so that they can give a better experience and have that context in a single location instead of having to navigate and reference additional places. So within the workspace and service operation workspace, we put in the ability to assess the incidents as they come in, also changes, see what is the impact to different customers, automatically generate cases proactively so then they can go ahead and notify the customers. You can drive the communication through the entire life cycle of working through an incident or some type of issue, work directly from their service operation workspace, communicate with one or all of the customers and keep them just within the workspace and the practices that they are familiar with. And then when everything has been resolved, everything is completed, being able to automatically close the case, the places for each of the individual customers. So really trying to bring all of that insight from a customer perspective directly into the workspace where they're going to be working, so they have one place, one command console, if you will, that they can see what are all of the details, both from a customer as well as the technology side. And so just a quick insight. This is kind of how we tie it all together. This is some of the goodness of what was put into this, is installed base, representation of what is each of those individual customers, what are the services or the configuration items, is it a server, an application that's impacted and who is impacted. So able to bring in, as Jason said, the base of customer service management, use that data model, then enrich it for workflows that are really common within the technology side. So the Account 360 is one of the pieces that we put in, and this was added in a previous release, and we built and enhanced on it. So understanding Account 360, this is within the service operation workspace again. You go in and you click on a customer and then you can see what are the contracts and what is their CSAT, what is the entitlements, all of these customer-facing elements to understand that business context and importance of the customer, but it's for those technical fulfillers. And so these are people that are, again, working for on customer work. And we want to give them the information in one common place so they can understand what they're seeing, what's the importance of the customer and really give a great experience. So what did we add specifically new in Xanadu? Building on top of that Account 360, we have added out-of-the-box dashboards that we have called Account 360 Analytics. And so these are out-of-the-box prime series data that's bringing in all of the information that's going to be important around the customer, what are their SLAs, what is the CSAT, what is the proactive nature of it. So we really want to bring in all of that information, give that visibility, over a period of time so they can see the trends, they can understand what is the quality and speed of the service that they are providing to the customer, and then ultimately be able to just lower the cost to serve because now we're bringing it all into one location. And also from an administrative side, these are key metrics that we find, speaking with our customers, that are used commonly across the industry that we can give right out of the box. The other element that we have added under this as well is there's a brand-new case type. So we have technology product support case. And so this is the case type that is going to be used for the technology industry where we'll be continuing to invest and add additional features and capabilities. So this is something -- a lot of this was built based off of interviews with customers as well as extensively working with our Now Support. So getting what is it that ServiceNow, what are other technology providers, what are the additional fields, what is the layout that they need. Technology industry, there's usually a lot more details that they need to see that are going to be compressed and consolidated within a case view that they need to really serve the customer. So think of the technology product support case as just the case type of the technology industry product within service management. We'll be continuing to add additional capabilities. We have additional functions, going back to the safe harbor, on diagnostic framework that we're going to have coming in the future. There will be more additional now industry -- or tech industry Now Assist capabilities that are coming. It's a case type, so it allows you to get all the benefit of the platform Now Assist capabilities. We have summarization. We have resolution summarization. You can have a lot of Now Assist business that's in there today, and we'll continue to have very specific tailored for the industry components that will be coming out. So new case type. This is where we're going to be focusing on, playbook experience and really just trying to put everything that we need from all the feedback from customers as well as internally of what they want within a particular case type.

All right. And the next new innovation that we'll talk about in technology provider service management as Xanadu release is Customer Success. Customer Success is a new suite of workflow capabilities, which comes as part of the account life cycle events application. And it's all about making the post-sales relationship successful for enterprise customers and the technology providers who serve them. This suite of workflows begins with onboarding. Very important to get customers onboarded rapidly so that you can drive engagement, understand the products and services the customer purchase, the key outcomes that need to be delivered, the milestones along the way and a plan to achieve those shared goals. We then move into an adopt stage where we're going to drive adoption ultimately with a milestone of going live. The goal is to drive that adoption cycle to get a faster return on investment for that enterprise customer, ultimately increasing their satisfaction with the technology providers' products, services and customer service. And the journey doesn't end there. You continue to monitor the customers' health, identify risk signals, proactively trigger workflow to mitigate any potential risk so that when we get to the conclusion of a contract rather than just renewals, those conversations pivot to conversations around expansion. This suite of capabilities was the single largest funded initiative that we had in the Xanadu release and something we're extremely excited about. So let's talk a little bit about that first stage a little bit more, onboarding. Onboarding is a set of capabilities that delivers a structured and repeatable onboarding experience. The goal is to identify key customer data and get that data imported into the system in an efficient and easy manner. You don't need administrators to drive this process. We have simplified the onboarding process. So agents and analyst-level personas are able to easily interact with customers, import relevant data and get beyond the onboarding stage. So ultimately, we can drive additional success stages. Why is onboarding so important? Well, customer churn is a real challenge for technology providers, a key performance indicator for technology providers and the cost of inefficient onboarding is significant. So ultimately, we've delivered a unique agent experience. It is another process-based experience, which is playbook and workflow-driven, which drives success agents through a series of steps to capture data and validate it before importing it to share any testing and training materials so that we get to a point where we're ready to start engaging with the customer further and understand key criteria to achieving success. Now why is customer success so important to ServiceNow? Well, we had a significant amount of customer demand for us to move into this space. It's a perfect complement to the customer workflow capabilities that we already provide in the form of case management and other customer workflows like field service management. And it's a rapidly growing market. And we feel like we've really got a key competitive advantage from any of the other platforms in this space for a number of reasons. But some of the data which is inherent to customer success, customer health and customer risk is native to our platform and our customer workflow capabilities. So ultimately, we are trying to create a set of capabilities that manages an end-to-end journey from the post-sales cycle right through adoption and going live, ongoing monitoring and health, the identification of any potential risk along the way so that workflow can be triggered to mitigate that risk and ensure that the customer remains happy and satisfied with your products and services. All right. So let's talk about some of the new capabilities that came as part of customer success. So the first thing is a comprehensive success data model, which extends our customer workflow account and customer data model. There is an object referred to as engagement, which is associated with a customer engagement and any customer account can have multiple concurrent engagements at any point in time. These engagements can have a number of different success objectives and outcomes associated with that particular engagement and initiatives and success tasks to achieve those outcomes and objectives. There is a data model referred to as touch points to capture key interactions with the customer. There are success cases and case tasks and all of those elements of the customer success data model can be exposed to the enterprise customer that's serving. Now there are also data constructs, which are intended to be internal only. So we have a task type called an internal play, which can have subtasks called internal play tasks. There are also risk signals that are an internal-only object. But the net-net of this is a complete foundational data model to support all of the various elements of that success life cycle I previously described. Now we've also created an all-new user experience for a persona called a Customer Success Manager within our CSM and FSM configurable workspace. This Workspace addition has a dedicated landing page for customer success managers. They have the ability to access engagement details, success blueprints, success initiatives and any relevant data associated with a customer account and engagement that they are managing the success of. All of our task type or case type experiences are process-based experiences. They are workflow and playbook-driven. And as we move into the second version of this capability, those workflows will be increasingly enriched with generational AI capabilities like summarization and record generation. Now we've also created workflows to define what we call success blueprints, and success blueprints are a structured series of activities to drive success with an enterprise customer related to a specific product or service that they have purchased. Each of these success blueprints that are defined drive that customer success manager interaction and responsibilities with an account that they're overseeing. And there is no limit to the number of success blueprints that a technology provider can define for the products and services that they sell to their enterprise customer base. We also have a capability to define, and a user experience, to define objectives and outcomes. Now these are the specific criteria which are associated with a success blueprint, which need to be achieved to achieve the shared goals and outcomes that are agreed to with that customer as part of the post-sales cycle. That is a repetitive slide. And with that, we'll move on to Service Bridge.

And so we've gone over a number of the workflows that we have within the product itself. But Service Bridge is a little bit different in that it is a way to connect those workflows and connect those experiences to customers. So Service Bridge really is a native application within the ServiceNow platform as part of the technology industry to be able to connect a provider to their customers that are running on ServiceNow. And so what we really aimed with this is to give the ability to connect seamlessly, make it an easy experience, a scalable experience, that is a first-party application instead of relying on external applications that are external third-party pieces, and allowing a provider to connect to their customers but also to their partners, to their suppliers. As we know that these days, everything is interconnected, want to move faster and to give a great experience. And so how does Service Bridge work? At the highest level, we are thinking of Service Bridge almost like an excellent extension of the ability of omnichannel. We can go ahead and have it beyond just being in a portal that a customer goes to within their own portal, within their own instance, that they're accustomed to going to every single day. So it allows customers to operate where they want to work, allows for really, say, reusable components that you can publish to one or multiple different customers. So we really want to make the deployment and the management of these integrations to 1 or 100 or 1,000 different customers as a technology provider, something that is manageable and scalable. So from a customer perspective, they can just come in, they go ahead and request to get connected, and then they'll get all this content that's pushed out to them for integrating with tasks or different service catalog items. And then they can, within their own instance, have essentially a native seamless experience that they just go and raise a support or raise a request and then that's going to go over to the provider and then be fulfilled and they're going to get the response back on their instance. So keeping everything central within that kind of enterprise service management experience for the customers on their instance and really want to remove the technology element or the technology consideration, if you will, out of the equation, make it easy for customers to adopt the integration, the Service Bridge connections that will be published out to the customers from a provider and just focus on what it is that they're getting, focus on the content, focus on the IP, not the underlying technology integration. So what are the use cases that you get with Service Bridge? So first one is Amazon-like experience. This is what we call remote catalog, where a provider can go ahead and publish catalog items, remote catalog items, from the provider instance out to the different consumer instances. And then when it is requested from the consumer, they're going to get now that data, they're going to get that representation, and the workflow is now going to take place on the provider side. Secondly is what we call proactive advisories, proactive provider tasks, where we're able to go ahead from a provider and push it out to a customer instance. If you think of those probably millions or maybe billions of e-mails that get sent out of upcoming changes or some type of notification, this is a lightweight replacement for that, where now it's going to be an actual task in the customer's instance where they can now have it within their workflow and take action on it. And then lastly is updating issues between a customer's ITSM or really any ServiceNow product, for that matter. This is most akin or parallel to traditional e-bonding where you're going to have collaboration on issues, on tasks between instances, and I can assign an incident over to my customer or from the provider or from the customer to the provider. Maybe the provider is supporting a particular function or service within an organization. When something comes in and meets that condition, now I'm going to send it directly over to the provider, and they can go ahead and work and fulfill it. So those are the 3 high-level workflows that we give really out-of-the-box experiences for. Now what do we add in Xanadu that's new to support those? So the first one was a really, really big technology undertaking. What we added is version mismatch support and configuration revisions for the content that we have within it. So you have your content as a provider that you're publishing out to all of your different customers. And as you have hundreds of thousands of customers that are going to be connected, how do we make that scalable? And so we've added in components around the different versions of the Service Bridge application. You might have some customers that are on one version, other customers on another. And this takes care of managing which customers, which features are available to which customers depending upon the version that they were on. So this allows as a provider to just build the content that you want to publish out to the different customers and then not worry about any type of mistakes or problems because maybe they are on a previous version. So that's something that is very difficult when you get into scale to manage. If you have hundreds of different customers that need to be on a similar version of an integration platform in order to work, becomes very difficult. And that's one of the main pieces, I should say, a key pillar, that we're building on with Service Bridge is taking care of those scalability concerns that you have with many other integration approaches. This also keeps configuration revisions, so you can have the versions that you have been working on in the past as well that comes with the version mismatch support to be able to track and have the auditability as you are making modifications to any of the Service Bridge content that you are publishing. Second enhancement we had within the Xanadu release is consumer preflows. So this is around the remote catalog capability. If you remember, the remote catalog is the Amazon-like experience as a provider, I push out content of remote catalog items that now are going to show in the service catalog on the consumer, the customer instance. And so end users are going to come in and request things. And consumer pre-flows are essentially an approval mechanism that you have on the consumer instance before that request is even going to be sent over to the provider. So this allows for approvals or complex workflows that you might have on a customer side before that request is going to be placed. Think about someone purchases a -- request a high-value item. That can go through into the approval mechanisms that are already in place on the consumer side. Maybe it's going to require 1, 2, 3 levels of approval based on the various conditions. So this pre-flow allows for that to be processed using the mechanisms that the consumer, the customer, already has in place before that request is going to even be ordered. And so lastly, jumping on to Now Assist component. So obviously, if you have seen anything in the news around ServiceNow in the past 6 months, Now Assist is a huge strategic investment that we have had. And we have partnerships with NVIDIA and many others and really have an accelerated road map of tremendous value that we're giving around Now Assist. And we're continuing to give more and more and more content on the Assist, and Xanadu has been no exception of this. And so each of these assists are an out-of-the-box function that someone is -- that you're going to be able to get value from pretty much immediately. I'm seeing implementations of a few days, a few weeks, that people are seeing real impact and real value from it. And so one of the features in Xanadu is e-mail recommendations. And so as you're working -- as we're talking about on the tech product support case, you're working within the case, as you go ahead and write an e-mail response, it is able to now go ahead for the agent and suggest a rework or rewrite of the e-mail message within the reply. So this really just helps accelerate people that are maybe not the best writers but are excellent from a technology perspective that now can go ahead, format and wordsmith that response, so they can spend less time worrying about going through and proof reading and updating their writing skills and focus on the problem at hand. So a great extension, especially within the technology industry. Next is around chat recommendations. So we have Now Assist capabilities that we have had for a Virtual Agent. And now we have recommendations that are going on the opposite side similar to e-mails, let's go ahead and give those rewrites, give those recommendations to the agent as to what they are sending and responding to within Virtual Agent. Then we have a sidebar summarization. So sidebar on the process-based workspace layout is where you have all of the actions that you're going to be able to take. And so now in the summarization, it's going to give a summary within the sidebar, which is where you have the action or the activity that an agent is going to be seeing. So bring all of that context into the workspace on the right-hand side, really enhancing that process-based layout. So just really focused on enhancing the agent productivity and experience as well. And then a big addition for Now Assist as well was in prompt configurability within Xanadu release. And so giving the ability within the Now Assist skill kit to be able to configure the prompts, the fields, what is being used and fed in to the Gen AI, the large language model, to be able to understand the context of the situation. And so this is an element that -- many of us, we have additional fields, we have things that we have configured within our instance. And this allows you to now take those additional fields or custom or extended and bring that context into what's going to be the consideration for a response or the action that Now Assist is going to take. So I think a really big stride forward in just expanding the capabilities of the Now Assist platform that we will see to come. And so we are going to jump to our last poll that we have before we jump into our Q&A section. So if you have any questions, please go ahead and put them into the Q&A, and we will go through them live right now. I'll give everyone just a moment to go over the survey, and then we'll move on to our questions.

Don't be shy, everyone. We've only had 4 people respond. Thank you.

So Jason, when we leave this up here. There's a question that came in from Matthew around the scope of customer success. Do you want to take that one?

Absolutely. I did answer that within the chat, but customer success is a suite of workflow capabilities, which is intended to help the technology provider manage the end-to-end success life cycle of an external paying customer. So an enterprise that they sell their technology products and services to. An example of that is ServiceNow and our Impact program. Impact is a success program that ServiceNow uses to drive success and adoption of ServiceNow customers. The Impact team will actually be adopting our customer success product in Q1. Workflows like internal employee onboarding or offboarding are workflows which are best handled and managed by our HR and employee workflow capabilities.