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ServiceNow CEO Explains Partner Strategy

ServiceNow’s partner strategy is gaining momentum, and the IT service management (ITSM) software company is seeking to build $1 billion revenue partnerships with multiple IT consulting firms, global systems integrators and other strategic alliance partners, CEO John Donahoe asserts.

David Parsons, senior VP, ServiceNow

John Donahoe, CEO, ServiceNow

Donahoe pointed to such global partners as Microsoft, Deloitte, KPMG, DXC and IBM during ServiceNow’s quarterly earnings call on July 25.

“We’re now being far more strategic in our segmentation of our partners, because we work with the very largest ones,” he said. “Many of these partners say that we are the fastest growing practice in their organization.”

Led by Senior VP David Parsons, the ServiceNow partner program features a strategy to build billion-dollar practices with multiple partners over the next three to four years. Noted Donahoe: “David Parsons and his alliance team are doing a nice job of allowing us to be more focused, more strategic and more disciplined on how we’re going after it. We’re also trying to grow new partners. One of the biggest issues we have is that there’s a shortage of trained certified ServiceNow professional resources in the market.”

That’s a familiar theme from Donahoe, who in 2018 declared that 2019 would be the year of the certified ServiceNow professional.

ServiceNow, Microsoft and Deloitte

Donahoe spent ample time on the earnings call praising recent partnerships with Microsoft and Deloitte. The Microsoft relationship extends from private companies into the government market. “With ServiceNow available through Azure government, U.S. government agencies will be able to leverage the compliance coverage across regulatory standards available through Azure,” he said. Future moves with Microsoft will extend the relationship to Australia and additional markets, he added.

Donahoe also praised Deloitte during the call, recapping how the consulting firm is a launch partner for ServiceNow’s new financial operations management product. The companies announced the relationship and focus area during the ServiceNow Knowledge 2019 conference in May.

The move reinforces ServiceNow’s expansion beyond ITSM. In additional to serving financial operations, the company has also gained a foothold in such areas as HR operations and security operations.

ServiceNow Quarterly Financial Results, Competition

For its Q2 of fiscal 2019, ServiceNow’s revenue was $933.9 million, up 32 percent. The company had a net loss of $11.1 million for the quarter.

The figures beat Wall Street’s expectations but ServiceNow’s stock dipped a bit on the news, amid concerns that the company’s valuation essentially is sky-high.

New competition also is on the way. For instance, the new SolarWinds Service Desk offering, based on the Samanage acquisition of April 2019, specifically counters ServiceNow in the ITSM market.

Disclosure: The author (Joe Panettieri) is long on ServiceNow stock, but sold about 20 percent of his holdings ahead of the earnings announcement based on the company’s valuation. Panettieri has no plans to buy or sell additional shares within the next 90 days but will update this blurb if that changes.

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