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ServiceNow Reports Growth as Digital Transformation Demand Continues

ServiceNow sees demand for converged IT operations and service management capabilities as enterprises focus on the tools that matter.

Digital workflow vendor ServiceNow is continuing to grow even as fears of recession and inflation put pressure on IT budgets.

ServiceNow reported its fourth quarter and full-year fiscal 2022 financial results on Jan. 25. For the quarter, ServiceNow's revenue came in at $1.9 billion for a 20% year-over-year gain. Looking at the full-year picture, revenue was reported at $7.2 billion for a 23% gain over fiscal 2021.

ServiceNow is perhaps best known as an IT service management (ITSM) platform vendor, though the company has expanded its portfolio in recent years to reach into IT operations management (ITOM), development, observability, and workplace management. In November 2022, ServiceNow announced a series of new capabilities including workplace scenario planning and automated service suggestions for IT operations. The Now Platform, which is ServiceNow’s flagship offering, had its Tokyo milestone update in September 2022, bringing new enterprise asset, supplier, and environmental management capabilities.

The suite of capabilities that ServiceNow provides is ideally positioned to help organizations in the current economic environment, according to CEO Bill McDermott.

During his company's earnings call, McDermott highlighted the fact that digital transformation efforts will continue in 2023 at companies of all sizes. While IT budgets aren't growing quite as fast as they once did, the fact of the matter is they are still growing.

"The secular tailwinds of digital transformation aren't going anywhere," McDermott said. "So as businesses increase spending, the only question then is where will all that investment go? And this answer has everything to do with the great reprioritization."

ServiceNow Seeing Growth Beyond ITSM for Digital Transformation

While ITSM remains a cornerstone of ServiceNow offerings, the company is also seeing growth in other areas of its portfolio, notably in the observability space.

ServiceNow Chief Operating Officer CJ Desai said during the earnings call that he was encouraged by the fact that big customers were adopting his company's Lightstep observability tools in the fourth quarter. ServiceNow acquired Lightstep in 2021 and has been steadily expanding the capabilities of the observability technology.

ServiceNow will continue to expand Lightstep this year, adding new capabilities from log management software vendor Era Software, which ServiceNow acquired in October 2021.

How ServiceNow Is Supporting Digital Transformation Across IT Operations

McDermott noted that the theme of the World Economic Forum in Davos, Switzerland, earlier this month was cooperation in a fragmented world. In his view, that also includes fragmented enterprise IT.

"C-level buyers don't want long-term road maps to clean up a siloed mess of point solutions," he said. "They want integration, speed, automation, great experiences, and business impact."

By design, ServiceNow is now positioned as a "control tower" to help organizations manage and automate across any architecture, including public, hybrid, and multicloud, McDermott said. With IT budgets perhaps being a bit tighter in 2023, he remains optimistic that as organizations prioritize what they need, they will look at technologies that directly support improving business outcomes.

"I see commodity tech that was at the peak of the hype cycle during the pandemic being dialed down or eliminated, and I see that investment freeing up to platforms that actually matter," McDermott said. "Given the layoffs that we're seeing and the stories that we're reading, I clearly see that our company is rising accordingly."

About the author

 Sean Michael Kerner headshotSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.
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