ServiceNow: AI & Partnerships Drive $10Bn ARR Milestone

ServiceNow's remarkable 💎 26% growth in Q4, exceeding expectations, is making waves in the tech industry. It's a clear indication that their robust AI strategy and revamped focus on partnerships are paying dividends.

📈 Erica Volini, Senior VP of Global Partnerships, emphasized the strategic shift:

“Last year at this time [Jan’23] we made a massive commitment to our partner community by completely transforming our partner program to ensure that partners are front and center in everything we do as a company”.

Reflecting this transformation, ServiceNow's performance has been impressive. ServiceNow is on track to exceed $10.5Bn in ARR in 2024, joining the elite ranks of SaaS companies crossing the $10Bn threshold. Company also built a sales backlog (contract revenue to be recognized in the next 12 months) of $8.6Bn.

📊 As ServiceNow is scaling its high-performing AI products (that boast the largest net new ACV contribution), CEO Bill McDermott connects the dots between AI strategy and the company's partner-centric GTM approach.

He highlights the $3Tr AI market: “Gartner estimates $5 trillion in tech spending in 2024, growing to $6.5 trillion by 2027… nearly all of the growth in worldwide IT spending will come from software and IT services. And when you drill deeper into the Gartner forecast between 2023 and 2027, $3 trillion will be spent on AI.”

To capitalize on this potential, CEO stresses the importance of their partner-first GTM: “We see AI as a 360-degree strategic imperative…it's also why we are continuing to grow our strategic partnerships to ensure every enterprise can use AI as the cornerstone of business transformation.”

Today partners directly drive 21% of ServiceNow’s revenue, while influencing the majority of it. The goal is to increase partner-sourced revenue in the coming years.

🤝 Partnerships are crucial for AI expansion

Notable ServiceNow collaborations in 2023 included a partnership with NVIDIA to develop Gen AI capabilities and expanded relationships with Accenture, Deloitte, KPMG, and Cognizant.

ServiceNow also this week announced expansion of strategic alliance with EY to co-create Gen AI governance solutions, and a “market-making alliance with Visa” to offer AI-powered dispute resolution services.

☁️ Cloud marktetplaces are key for extending customer reach

In November ServiceNow and Amazon Web Services (AWS) announced a 5-year Strategic Collaboration Agreement to “co-develop and launch industry-specific, AI-powered business applications to host on AWS and list in AWS Marketplace.”

CEO highlights “Starting this month, ServiceNow will be available as a SaaS offering in the AWS marketplace,” broadening their market access.

McDermott reaffirms his commitment to partner-led GTM: “We also unveiled another major expansion to our partner program, the latest addition in a series of investments..."

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