Welcome to ServiceNow's Financial Analyst Day 2024. Thank you for joining us today. Before we begin, I want to remind everyone that today's event will be webcast and recorded for future playback. Information pertaining to our forward-looking statements and a reconciliation of our GAAP and non-GAAP results are available on our investor relations website at investors.servicenow.com. We have an exciting agenda for you all, and we'll get started momentarily.
Please welcome ServiceNow's Chairman and Chief Executive Officer Bill McDermott and Chief Strategy and Corporate Affairs Officer Nick Tzitzon.
Great to see you.
Well, I'll say good afternoon and welcome.
Bill, I thought maybe just before we do anything, you might want to set the stage and welcome everybody yourself.
It's not lost on us. You could be spending your time in lots of different places, covering lots of different companies, but you chose to spend it with ServiceNow. We don't take that for granted. Thank you so much for your interest in our company and for being our wonderful shareholders. We are in your debt. Really appreciate it. Thank you so much.
Awesome.
Give yourself a round of applause. We can loosen it up a little bit in here, all right? Thank you.
So maybe just, I think, Bill, we'll set the stage today. You know, I think the financial community hears from you quarter-over-quarter, and you often say that even with consistent execution quarter-over-quarter, it can be difficult to miss the complete 360-degree picture of where the company is and where it came from. So we've got a graphic up here that tells part of that story, but you've been CEO for 5+ years now. Maybe give a little bit of a level set about the company in terms of where it was, where it is.
Yeah, sure. I think the most important thing about the company is I came into a company that was already very successful, and it had been highly successful since its original IPO. We have an amazing board of directors, an amazing founder, and I came into something that was hungry and humble and highly innovative. I think it goes back to the original idea of ServiceNow, which is to make technology for the average person in the office that would sincerely improve their lives and make their lives better. That was Fred's founding vision, and there's a great story that starts all that. I really inherited something that was beautiful, and my goal was to take it higher and scale it. I think that's what the board wanted me to do.
How I outlined that was, what are we gonna do with ServiceNow to make it the defining enterprise software company of the 21st century? Really clear, we're gonna win. And then the question was, how are we gonna win? Well, we wanted to be the trusted innovator to the C-suite, beginning with the CEO. We believed that we had a platform that could scale across the enterprise and all the personas in it in the global economy. We wanted to drive a world-class go-to-market machine where the innovation was quickly met by product marketing and a sales force and a services delivery force that was second to none. We wanted to force multiply how we focused on industries and our ecosystem.
We have amazing partners, and we wanna expand the reach of our company through lots of feet on the street that work for other companies that also feel what we do is super important. And we wanted to create product experiences that people who worked with the platform would truly love. They would love it. And that was a pretty uncommon goal as it relates to enterprise software. I think you all know that. And finally, we wanted a great team. You know, it's often been said that a team is only as strong as its weakest link, but it's also true that a team is only as strong as its strongest link. And we wanted leadership and great talent and a winning, passionate culture to carry us forward. And I think that teamwork has made the dream work. So I think that's baseline, Nick.
I think that's a good answer. You mentioned the board of directors. We actually have five of our directors over here: Jeff Miller, Teresa Briggs, Sue Bostrom, Anita Sands, and Paul Chamberlain. If you wanna just raise your hands, thank you for being here.
I do wanna say, you know, for me personally, that was one of the big things. The culture in that boardroom is unbelievable, and it's only gotten even stronger with the years and the trust that we have for each other. Thank you very much for coming, and thank you very much for all the support you've given management to create what today is a company really going places.
So let me you often talk about the Rule of 50, and I'll just show you I'll show you two things, right? Just a small representative sample for terrific software businesses. This is in 2019. If you just looked at the relative performance on a Rule of 50 basis, in 2019, good environment. Now, if you fast forward to 2023, the environment's a little bit different, and ServiceNow has really been able to maintain a standard that is the benchmark in this area. So when you think about that, explain why that's an important calculation for the financial community to shape.
Yeah, I think I think the main thing is the culture of the company. You know, it used to be that the Rule of 40 was really world-class. I think that's still true. So these other companies are doing important things also. But our culture is very focused, obsessed with the customer experience. And when you have a complete total focus on the customer experience, it inspires people to do their absolute very best work. And as a leader and as a leadership team, when things did get rough out there, we made a quick and clear statement, "There will be no layoffs at ServiceNow." And that's because we were very intentional about the hiring that we did in the first place. It was hands-on keyboards and feet on the street, and everything was geared towards getting closer and closer to being that trusted innovator for the customer.
CJ has done an amazing job with his leadership team, and you'll see evidence of that today, at building innovation at scale. We're really moving quite quickly on our plans. Paul Smith came to us, and he has done an incredible job, and I'm very proud of him and how he is globalizing our go-to-market strategy and inspiring our field organization. You're seeing us now really spread our wings in Europe, Middle East, Africa. Of course, the Middle East is a big opportunity, and I think Paul will talk about that. Also, places like Japan and how we're doing in Asia in general is quite inspiring. This idea of how CJ and Paul integrate between innovation and go-to-market is huge. Gina, I don't have to tell you, she focuses on profitable revenue growth.
So it's not just growth, but it's also the expansion of the margin profile of the company, the free cash flow of the company. And in unison, we're working together to create a great company. You know, one key piece of evidence, I'll tell you. I remember when, you know, we kinda moved out of the COVID period, and there was this whole big, you know, CEO sent the note to the company, "If you don't get back to work, we're gonna send the guys from Jersey to get you." And we basically took a different position. Society will solve a lot of its own problems, but our culture is people-based, and our platform enabled people to work from anywhere. But there was a time when we felt, "Hey, we can't let innovation slip back.
We need to get back into the office." We didn't have to do a memo. We do something called SNL, which is ServiceNow Live. We meet with the team. I tell them, "I'm back. I need you to be back. I need you to come in tomorrow." And everyone filled up the parking lots all over the world, not because we threatened them, because we have a great company, and we wanna make it greater. And that's the kinda culture I believe is built to last.
So I think a lot of investors, shareholders, financial analysts, just casual observers would look at generative AI, would look at AI in general, and say, "How real is this?" I think that's gonna be a topic throughout today. You've lived through secular transformations in technology before. How do you size up what we're seeing today?
This is massive. You know, we all know the internet. We all know the iPhone moment in 2008. We've seen the transition to cloud. This is as big, if not bigger, than all of them. I think it's bigger. And I want you to just think about this in the context of ServiceNow. Every business workflow in every company, regardless of industry and geography, will be re-engineered with generative AI. We're talking about a complete intellectual renewal, a renaissance of the enterprise, and this is the platform to do it. IDC, not Bill, but IDC, has forecasted an $11 trillion economy impact from AI in the next three years. Similarly, they have stated $500 billion will be spent on enterprise software in the next three years. We intend to get our cut. So what are leaders doing?
You cannot talk to a CEO who is not talking to a CHRO and their leadership team about upskilling the workforce and getting AI technology infused in their company to change the game. Two-thirds of the personas in the enterprise today will have their work radically changed by GenAI in the next few years. 70% of the nonsense and the soul-crushing work they have to do now can be alleviated with the use of technology and GenAI in combination for people. That's why we say, "Put AI to work for people." Think about the tech stack out there today. 1,200 CEOs were surveyed by EY. The question was, "Will you invest in AI?
Do you believe in Gen AI?" Out of 1,200, 1,200 said, "Yes." So there's a great reprioritization in the budgeting cycles in companies today, and the money's moving away from commodity and old tech to advanced cloud technologies and platforms and generative AI. In fact, I'm talking to many companies now that are pulling money from their R&D budget to put it into the Gen AI line item so they can get this, this going. Think about this. 80% of the CEOs in various industries today say, "Gen AI will disrupt my industry." 93% of them have said, "93%. It is a positive productivity driver for my company." So we're selling into a tailwind. This is not a headwind, and this is really big.
Let me ask you a rapid-fire round here just to set the stage for the rest of the team. So you'll hear from CJ and Paul and Gina about the increasing opportunity. And, you know, when you think about coming in, you always said, "Strengthen and grow the core, expand the platform, and scale the perimeter." Sorry, in reverse. Scale the platform, expand the perimeter. So when you think about the growing opportunity, what do you see here?
Well, I think you have to remember we are a platform company. The definition of ServiceNow is a platform. And what I believe makes ServiceNow so intriguing as a company is that that platform spans the enterprise on an end-to-end basis. So the AI platform for business transformation is what the ServiceNow Platform is. We are transforming business. CEOs have to clean up the mess. If you look at the bottom quadrant of that, there's literally hundreds and hundreds of brands that have been invested in because tech was procured by every department for every department's unique needs, and that has been going on for a good 25 years. Now, you combine that with 50+ years of big systems with brands that you easily recognize, and you have complete chaos.
That's why 85% of the digital transformation initiatives that go on in companies do not deliver a positive ROI. That's why ServiceNow is coming to the rescue. Help is on the way because with ServiceNow, you get a single pane of glass that resides above the mess and enables CEOs and leaders of companies to have a single view of their consumers, of their employees, of their partners, and ultimately of the entire business value chain. That's why when we get into our loyal customers, we expand our base, and now we're growing our large deals at such a rapid clip because we're now talking business transformation, not just digital transformation in a singular department. I think this is really important too. The C-level decision-makers have had it with the bad experiences because if the people don't use it and they don't enjoy it, it doesn't help.
In fact, it really hurts. Just think about this. The average employee in a company today swivels chairs between 13 separate applications a day. What does that mean? That simply means that if we work across these personas and only deal with a mild, I'm talking very conservative, view of how ServiceNow can improve the productivity of just the attendees at this event, just the attendees at this event, not the world. We've done the math. It's 1 billion hours of productivity, 1 billion hours of productivity. So we are playing chess, not checkers, and we are ready to take the world on, on the global stage with this platform, the innovation you're going to see, and the leaders that are gonna demonstrate the power of ServiceNow to you today.
Two more quick ones. One, it could be easy to get lost in all the executional levers in the company. You have the platform innovation. You have it by workflow. You have the go-to-market delivery and the ecosystem execution. Simplify this and put it in the context that, that everybody can sort of add up.
Yeah. I think the basic thing about a company, a great company, has to build great products. You have to make products the customer doesn't yet know they need, but once they have it, they don't know how they ever lived without it. So we're very much a product-centric company. Building great products is the hallmark. You also have to provide a great service. And what you see with ServiceNow is the way we work in harmony across our company. That's functions. That's tethered to industries. And that's ultimately delivering a great service, which is our own value and impact plus that of our partners. And if I think about our partners, I'll tell you, it wasn't too long ago, Nick. They would come into the conference room in Santa Clara and tell me, "I have a great idea." And this is, we're talking like 14 blue blazers, okay?
I have a great idea. I think we could build a $100 million plan with ServiceNow." I explained to them how many zeros they were missing. Now, every single partner up there has a multibillion-dollar business plan with ServiceNow, a multibillion-dollar global strategy with ServiceNow, and they're executing on that, training people, getting people ready for the GenAI revolution, and actually helping us sell that today, service that today, and deliver that today. Brands have to tell a great story. The World Works with ServiceNow . It's gigantic, gigantic. I'm proud to tell you that we just hired Colin Fleming from Salesforce, and he's becoming our new CMO. He starts today.
I think this is really gonna be very interesting because I love the brand, and we're gonna put AI to work for people, and we're gonna take the brand to new and imaginative places that's gonna stir the imagination of our customers, our partners, all of you as we go into the future. We also have brought on a great multiyear brand ambassador, a gentleman by the name of Idris Elba. Idris is a very interesting guy. He never forgot where he came from. He comes from Sierra Leone. He's not just a brand ambassador on a multiyear level because he thinks it's a good idea to talk about our brand. He learned about our company. He learned the product. He understands what we do.
And he wants to work with ServiceNow to build a smart city, in fact, the smartest city in the world in Sierra Leone. And we're his partner in doing that. So the authenticity of the partnership, the magnificence of the brand, and our great ambassador, I think, will tell a new story to the world. And we're building a great team. I mean, if you look at our leadership team and our innovators, and I'm talking across all functions, they're the best, and we're just getting better. I mean, we are getting better. And every day, we kinda say to ourselves, "We're better than the company we were yesterday, and we're not yet the company we wanna be." It's a drive.
That's why I think our culture, our people, our leadership team, and our partners will take us to places that you may not even believe that's how big it's gonna be.
So I'll leave you on this, and I'll qualify this upfront by saying we will leave all financial metrics to Gina's presentation. However, you did ask me to ask you a question about the future. I mean, you know, "DESCO21C " has been your tagline, defining enterprise software company of the 21st century. Where do you see this going?
Well, it wasn't too long ago that we were not even a $5 billion company. And this year, we're a $10 billion company. And soon, we'll be a $15 billion company. And then soon after that, we'll be a $20 billion company. And me personally, my vision is to be talking to you when this is a $30 billion+ enterprise software market leader. So we're just getting started. We're, like, really just getting started. And the consistency of the top line, the margin expansion, the free cash flow, loyal customers that love us, and loyal employees that don't wanna work anywhere else is what inspires me. Last year, we had 1 million applicants for jobs at ServiceNow, 1 million applicants. So getting in here is really hard. And when you do get in here, you're coming into a culture that's performance based. We love on people.
We bring out the best in people, but we expect people to perform at an extraordinarily high level. So this 50+ execution is what I'm interested in, and so is the board, and so is the management team. We've grown organically. We didn't have to buy any revenue. We built it all. Not that there's anything wrong with that if you do it properly, but I think it's pretty outstanding that we've gotten to this place, which no other company has ever done in enterprise software, and we're still forecasting more of the same without strategic M&A. And we're creating value. The main value is for the customers 'cause when the customers are happy and they're doing transformational things with you, the shareholders are even happier.
That's the formula: super happy and inspired employees that know what they're doing, customers that understand the loyalty effect as the net present value of a happy customer. We know that's the greatest asset we have. For our shareholders, we're just gonna give it all every single day to make this the defining enterprise software company of the 21st century. That is what we will do.
Well, Bill, I appreciate you know, it's a great way to set the stage to level set for the day. You're gonna come back up here in a little bit and take some questions?
Okay. Sure.
Okay. Thanks very much, ladies and gentlemen.
Thank you.
Our Chairman and CEO.
Appreciate your time. Thank you.
It gives me great pleasure now to introduce someone who's even cooler than Idris Elba, our President and COO, CJ Desai. Please give it up for CJ.
Hello, everyone. Oh, wow. Okay. Great to see you all. So I always start this presentation with a very simple line, which is, "We are a platform company." And this is how Fred started the company, and every single product has been built on this platform. And this is very important. You cannot go the reverse way. You cannot say, "We have a bunch of technologies, and we become a platform company." You can be a platform company and create a bunch of products on that platform. Why does that matter? Very simple. Number one, you have innovation velocity. Number two, your unique unit economics on the platform when you create a new product or enhance a new product are really, really good. And most importantly, the time to value for our customers when they deploy our products is also very fast, what I call speed to value.
So that's what it means to be a platform company. Platform companies typically have layer cakes. Bill just talked about this briefly. But let me start with, we are trying to innovate at every single layer of this platform. So let's start with ServiceNow Cloud. Of course, you have compute. You have networking. You have storage. And you have the cloud operations team that runs our cloud, as in ServiceNow service, 24/7, 365. And you see the introduction in the last year, we said just CPU. Now, we had GPU. But even at this layer, we are always trying to expand our TAM to go after new customers who would like to have cloud choice. So what we have done is, over the last few years, if you want to run ServiceNow in Microsoft Azure, that's possible. If you want to run ServiceNow in AWS, that's possible.
If you want to run ServiceNow in IBM Cloud, that is also possible. The reason this is possible is that the architecture simplicity of putting this architecture and making this portable to AWS, Azure, or IBM is very, very straightforward. Our engineering team has done an amazing job. Now, you look at the platform core. So the platform core technology, of course, has our CMDB, so asset repository, has cloud security built in, our data model, and our industry data model, okay? So we are innovating on the core of the platform as well. What you see new here is something called Project RaptorDB. This is a brand new innovation that engineering teams have been working on for a while.
They have done, and I started my career a long, long time back at Oracle Corporation, and what they have done here is combine the best of a relational database with a columnar database. What we were solving for is leveraging the new hardware architecture that continues to come out, beating Moore's Law every year. How can our database technology keep up with the hardware architectures on the relational side? But when it comes to reports, dashboards, replicas, and all of that, we can also take advantage of the columnar database. So you combine the two. This benefits our customers quite a bit. And it will be a premium offering that we provide to our customers so that they can leverage RaptorDB both for scale and performance.
When you look at the fundamental technologies that have been built into the platform, why we can create applications so fast, you see the list here. And what is new here is, of course, generative AI models. Generative AI is now part of the ServiceNow Platform. This is not something that you need to connect. You can if you choose to do so. But we wanted for our workflows to be fully defined and executed on the ServiceNow Platform among all other technologies that allow us to build great products, as Bill was saying, but our customers to build great products. And on workflow applications, it's been the same: Technology Workflows, Employee Workflows, Customer and Industry Workflow. And what you see here is the Creator and Finance and Supply Chain Workflows . So, Finance and Supply Chain Workflow is a new category.
Right now, we are gonna club it in this area for now. This is something that we'll share from a roadmap perspective on where we are going from a Finance and Supply Chain Workflow perspective. These are our workflow applications built on the same platform. They work with each other. We have compartmentalized them based on the segment they serve or the stakeholders they serve. Last but not the least, around 2019, we started building industry applications. The goal was pretty straightforward. We wanted to unlock lines of business. We have been doing a great job with IT organizations, HR organizations, and security organizations. But we wanted to expand in lines of business with the industries that you see here, started with TMT, and expanded to multiple other industries. This is the ServiceNow Platform at its core.
You have cloud, you have a core platform, you have workflow, and you have industry solutions on top of it. Now, as Bill outlined, we are a growth company. My first financial analyst day was in 2017. We have been very, very focused on two fundamental things. Number one, platform innovation, some of that you just recently saw, whether it was AI technologies, search technologies, and others. Number two, product and industry innovation. In 2018, right here, we said that we will introduce NowX, which was our incubation unit that created multiple new products. The goal was two, three new products every year. That has been driving the growth engine for us because of the new products we have created. That has allowed us to expand our portfolio significantly.
And then, of course, the AI innovation, starting with 2018 with Pro and then in 2023, Pro Plus. So when you think about the growth vectors, the core platform allows us to expand the TAM, product and industry, plus AI. Now, let's look at just a little bit of a history lesson here. So if you look at 2005, Fred created the company in 2004, 2003-ish, 2004. And then the first killer use case was IT service management, okay? And you see the ServiceNow TAM. I thought that looked like golf green. I'm not good at it. But just bear with me as we go through. So that's 2005. And then you go into 2018. You see the portfolio expanding and the portfolio, all organic innovation. And we introduced Pro in September 2018. Let's fast forward to 2023, which was last year.
The portfolio expands again, the addressable TAM expands, and we introduce Pro Plus. Now, if you look at 2024, as in right now, the portfolio expands yet again and the TAM expands. So we have been systematically behind the scenes. The growth company fundamentally needs to have constant platform and product innovation paired with unbelievable go-to-market execution, as Bill touched on. So what's the result here? The result is we have expanding reach in the enterprise. And now, when you think about industry solutions, so let's just touch on three of them. So when you think about telecom, public sector, and financial services, we never forget because the CIO is always our core buyer. So that's always the core buyer. We are obsessed on making sure that we serve the CIO really, really well.
And then, as you go from left to right, in telco, we are serving the B2B segment, B2C segment at some of the iconic telecommunications companies. When you think about the public sector—and the public sector is just not U.S. federal—you have to think about state governments across the world. You have to think about cities. So you have cities, states, federal. And we serve various stakeholders, even in the public sector. And in financial services, the CIO, Chief Risk Officer, Chief Information Security Officer—where some of you work there—very, very tough because they want the best product. It's not just that we can show up with a product and they say, "Okay. It's built on the platform. We are gonna buy it." We still have to deliver an amazing product. So in financial services, we are now—and some insurance companies are also processing claims.
So that's how we have expanded. So when you put the numbers that Bill showed—and these are the numbers we have shared with you—from $39 billion TAM in 2015 to now, 2026, $275 billion TAM. And the reason the TAM expansion is higher between 2025 and 2026 is because of the AI opportunity, okay? And Gina is gonna touch on our AI opportunity and specifically give you some of the data points on how we think about AI. But this has allowed us to expand because of the innovations in the platform and the product. And when you look at specifically each individual workflow, they are how we bucket them from $100+ billion on the Technology Workflow to $84 billion on the Creator and F inance Supply Chain Workflow. So that's how the math adds up to $275 billion.
Now, if you look at our portfolio again, this is our current portfolio. You see the industries. Retail is a new addition, that just got introduced, a few quarters ago. You look at it on the left side, new products. You look at the Customer and Industry Workflows . And now, you know, what I will say, I'm gonna introduce two leaders on my team. First is Pablo Stern. Pablo Stern is going to come here. Pablo has been with ServiceNow since 2017. He has been on the left side as in Technology Workflows. And if you look at the systematic execution by creating new products like asset management, you look at products like risk, you look at products like Digital End-User Experience , OT, observability, he has been focused on expanding the TAM when serving the CIO, CTO, Chief Information Security Officer, Chief Risk Officer.
So that's Pablo Stern, seven years, great engineering leader. And then we also have John Ball, who has been focused on customer service and industry solutions. And he's gonna introduce a new product line that he's really excited about. So without further ado, please welcome Pablo Stern.
Thanks. So when I first started talking to many of you five years ago, I came to talk about digital transformation in IT. I talked about our IT workflows and how IT workflows could help IT teams and employees get jobs done, get to their outcomes. But our vision was much broader than that. Our vision really was, how could we help all technology? And so you'll remember, a few years ago, we rebranded. We rebranded to Technology Workflows with the goal of helping serve really the connected world. And so today, I'm excited to be here to talk about one of the use cases that our customers have pulled us into. And that is where that physical process meets the digital technology. And you think of this as, you know, a manufacturing floor.
So, you know, your next dishwasher is coming through with all the molding, the systems as it's getting connected, the screws, the testing, the programmable logic controllers that are building it out as it goes through the assembly line. And that system is a system that connects both IT systems, servers, to operational technology, programmable logic controllers, sensors, and the rest. And the same thing for the next toaster you have or your favorite chocolate bar or your beer. All of those go through manufacturing processes. But those processes extend much further than that. They also extend into critical infrastructure like pipelines that are being more and more connected or automotive and the next car that's coming off the factory floor. And so this is a world that we've gotten pulled into by our customers. And the reason for it is there's a convergence.
Part of this convergence is due to a few things that are happening in the industry. One is, as the world becomes more and more connected, these two worlds of IT and OT that have historically been separated at the network layer are coming together. There's a lot of efficiency that companies can drive by that interconnection. And it also brings the data together to deliver better outcomes. Now, the reason why we're getting brought into that conversation is because in the world of IT, since 1989 with the IT Infrastructure Library , all the processes of managing technology in IT have been codified. And CJ presented some of the things that we do and the products that we have that are serving those spaces. And that world is exactly what the OT world needs. It needs a system of record. It needs to have those processes.
And a lot of that is being driven first by security. And I'll tell you why. So if you think of the personas that we're serving, and I'll talk about one of the largest consumer packaged goods companies in the U.S., and I was talking to the CIO there. And he has responsibility for all of IT. And he also has responsibility for all of security. And what he told me was that the board has given him the responsibility of not only security over the IT estate but also over the revenue-generating estate, which is larger and has impact on the business if anything goes wrong. And so these are conversations that we're having with more and more customers. And they're bringing us in to talk to factory owners, to lines of business where there's IT estate and there's OT estate. And it's large. And the risk of ransomware is real.
But not only that, they need to have all the same capabilities that ServiceNow has had in the IT space. They need visibility into the estate. They need to manage the asset life cycles of those estates, service management and incidents in the estates, security, risk controls, all the things that you know ServiceNow does are processes that are applied into this space. And so over the last couple of years, we've built out some technology in the space. We have now the ability to drive visibility. We can help you manage the services in those estates. And we also have the ability to get vulnerabilities and protect those environments. And later this year, we're gonna be coming out with asset management for those estates as well. And so the great thing about this space is, one, for ServiceNow, it's an easy parallel into what we already do.
The processes we brought to IT, we can apply to this revenue-facing estate. We've got some great customers that started this journey early with us, companies like FedEx, Bosch, and others. I really love the Rexroth example. Rexroth, that helps build hydraulics and manufacturing, started with us early in the journey with the goals of understanding visibility around that estate, service managing it, and driving security. What they're able to achieve with ServiceNow is both a view into those critical incidents and resolving them more quickly and also that estate, which historically was really captured in tribal knowledge, now actually is digitized. They can actually drive views into incidents and problems that they've had they didn't have visibility into before. We're still early in this space. But it's growing rapidly. We're getting pulled into more and more of this.
And so hopefully, you share my excitement because this is a place where we're helping fulfill this vision that we have for Technology Workflows to really connect and digitize the connected world. So with that, I'm gonna hand it over to my friend John Ball. And he's gonna come on stage and talk a little about Customer and Industry Workflows and some of the new products that we have there. Thank you.
Pablo? All right. Good afternoon, everyone. I'm excited to share what's going on in Customer and Industry Workflows and why we are just so, so bullish on the opportunity we have ahead of us. So let's start with just recapping what Customer Workflows is all about. It's all about helping our customers deliver awesome service experiences to their customers. Now, it turns out that delivering awesome service experiences is a need that literally every company on the planet has. So we're operating in a huge and well-defined market. In 2023, we crossed through $1 billion in ACV. We became the fastest provider ever in the history of this market, the customer service and support market, to do so. So we started in B2B support mostly for tech and telco providers like BT, AT&T, Equinix, and Zoom.
But we then expanded rapidly into other industries like the public sector, insurance, banking, manufacturing, healthcare, and more. We then took on frontline B2C service. And we even extended to the point of physical service with Field Service Management . So clearly, our approach is working here. But before I get into how we're expanding our functional footprint even more, I wanna first touch on why our approach resonates so well. And the answer is actually really, really simple. We focus on helping companies drive a great end-to-end customer service experience. And that is different than traditional CRM in a subtle but very, very important way. You see, traditional CRM, it's all focused in the customer service process about the intake, the first step in the process. So think omnichannel with email, web, chat, phone, and today, messaging. And while omnichannel is really important, it's only half the story.
The other half of the story is how you actually get the work done to resolve and fulfill the customer's request. Whether it's a dispute in banking, a question about a missing or damaged package in logistics, filing an insurance claim, or making an order for a new telecom service, these are all examples where the work that's getting done is getting done in multiple departments and multiple systems. And so before ServiceNow, this part of the market was massively underserved. And you had what I call swivel chair human middleware where you're trying to glue together all those processes with shared inboxes, spreadsheets, sometimes even Post-it notes, believe it or not, and a whole lot of tribal knowledge. Well, that's bad for the customer. It's slow and inconsistent. And it's super expensive for the provider.
We solved this problem by leveraging the power of workflows with automations, integrations, and dedicated experiences that drive that end-to-end customer service experience. That's how you deliver awesome customer service. So as you can see, we've been on a journey systematically expanding our functional footprint, starting in middle office service, then going to frontline service, then building industry solutions that make it easier and faster to deploy. So you might be asking yourself, what's next? Well, we asked our customers, what's next? And they told us that they actually had that same human middleware problem on the sales and commercial side of the house as they did on the customer service and support side of the house. They had challenges with sales exceptions. They had challenges with Service-to-Sales use cases. And they asked us for help. So we got to work.
I'm very proud to introduce to you Sales and Order Management. This is a massive step forward in our functional footprint. It allows us to take on and solve a lot more use cases at our customers, especially in the sales and commercial side of the house. So with Sales and Order Management, our customers can create and manage opportunities. They can define the commercial catalog with dynamic pricing, then leverage Configure, Price, Quote and Guided Selling for order capture. And they're doing it all on one platform, one consistent configurable platform, no assembly required. We believe that that is a unique differentiator. And it's really part of the reason why we're so fired up about this opportunity. So before we get to the demo of Sales and Order Management, I just wanna briefly explain a strategic partnership with Genesys that we're gonna be announcing tomorrow.
You're gonna be hearing a lot about at Knowledge. So the rationale for this partnership is really very straightforward. We're getting more and more into the front office. We're expanding rapidly in the front office. Well, contact center is often very important in the front office. But contact center integrations are complex to set up. It's hard to maintain. And so we're coming together with Genesys to take the best of Genesys and the best of ServiceNow and build a turnkey solution that's fast and easy to deploy. Our customers love it. We're super excited about it. We think this is gonna be yet another tailwind for us going into the front office. And you'll hear more about it during the week at Knowledge. So to tee up the demo, I wanna explain a little bit where we are focusing initially in Sales and Order Management.
We're obviously entering a new buying center with new personas. So focus matters. We're gonna be laser targeted, laser focused on the sales exception use case and the Service-to-Sales use case. Sales exceptions is all about when you have a problem or a change to an existing order. For example, a retailer orders 10 pallets of something. Only eight show up. They have to contact the supplier, create a case. That whole process is either manual today or it's custom code. We can replace it with product. In service to sales, this is all about leveraging the fact that the customer service rep has just resolved your problem. They're in an awesome position to upsell you. Think of a newlywed couple. They contact their insurance provider to add a driver to the policy.
Well, that's a great opportunity for that rep to then add additional valuable insurance coverage to the policy as well. Or all of you have probably contacted customer service at some point for your telecoms provider or your internet provider. And you've seen or been presented with bundles with additional products and services like home security or a mobile phone. And it's that second example that is the inspiration for our demo today where we're gonna take you from a service use case to sales and then all the way through fulfillment. And again, on one configurable platform, no assembly required. And with that, I'd like to introduce and bring up on stage Terence Cheshire, Vice President, Customer Workflows. Terence, take it away.
Thank you, John. In this demo today, a small business owner reaches out because she's experiencing slow internet to her local telco provider, Tulane Telecom . She reaches out through the website and interacts with their virtual agent. After going back and forth, she's presented with an offer and is asked, "Would you like to talk to a live agent?" She says, "Yes." That chat gets routed to a sales representative, John. With that, let's start the demo. On the left side here, you will see the chat has been summarized with the power of Now Assist. This is a tremendous time saver and productivity boost for John because he doesn't need to scroll through the entire chat history to understand what was covered. Right there, he sees the level of bandwidth and the products she's interested in, Managed Wi-Fi and Point of Sale .
On the rest of the workspace, he can see comprehensive account overview, including case history, current products she owns, and support entitlements. But let's focus on exactly what she's interested in and have John start working the opportunity. This is our new Commercial Product Catalog . It allows Tulane Telecom to define their products, product bundles, pricing, and special offers. This is where, in real life, John would be chatting back and forth with the customer to understand their specific requirements. But for the sake of time, I'm simply gonna add that product bundle and move to quoting. Quoting is where we can give precise pricing. It is a starting point where the bundle gets broken down into those default products. But because John is such an awesome salesperson, he convinces her that premium support would actually better suit her needs and that her customers deserve higher internet bandwidth.
With that, John can update the pricing to get the latest and final pricing and generate a quote. In the real world, this would be routed to Julie through an e-signature provider, say, Adobe. I'm gonna simulate that here and say, "This looks really good. I'm gonna accept this quote." And with that, John is able to complete the order. And what we have now is a customized, tailored order with all those specific products. But what's more important is what our platform has done. We have generated the sequence of activities that need to happen to activate this service, starting with even the onsite install through field service work orders through the backend service activation. And what this leads to is that Julie gets her service faster. And Tulane Telecom can recognize revenue sooner. And that is a whirlwind tour of Sales and Order Management . Back to you, John.
Awesome job, Terence, as always. So we picked this very real use case to illustrate the power of what we built. We started in service, went to sales, created a custom quote, and then took it all the way through fulfillment, including the field service work orders. That is unique in the market. And we believe that this is gonna really unlock a huge opportunity for us going forward. Again, no assembly required is gonna become our tagline. It's really, really important. And with that, back to you, CJ.
So that was pretty phenomenal. OT is the next IT and has massive TAM across multiple industries. Now what you saw was a brand new innovation that just came out in Washington, D.C., released in March, which is Sales and Order Management. John is one of the best when it comes to customer service and CRM. We are very glad that John and his team continue to innovate in mid-office, back office, and front office area. Now, bless you. On generative AI, this continues to be a catalyst for our ServiceNow Platform. Simply put, our AI strategy is intelligent workflows in the flow of work. That's it. Intelligent workflows in the flow of work. As Bill said, regardless of the processes, regardless of where work is flowing, we want to provide intelligent workflows. That's our strategy. Now, why is this strategy very unique to ServiceNow?
First, let me start with our teams. We have world-class teams with a series of great pointed M&A that we have done over the past few years where we have gotten AI expertise from research teams to science teams to engineering teams, product teams, experience teams, all of them working really, really well together for many, many years now. And that is truly unique about ServiceNow that, first of all, we have a great team because without a great team, nothing happens. So when I boil down the actual execution path on AI, I would first say it starts with GenAI models, which I'll go into the details in a second. Can we go back? So first is GenAI models. Number two is intelligent workflows. And I will go into the details on intelligent workflows as well.
When we can deliver value for our customers, we will productize it via Pro Plus, okay? So generative AI models, intelligent workflows that leverage generative AI models. And if we can deliver value to our customers, we will productize it via Pro Plus. So why is this unique? Why GenAI models is unique? This great team that I just talked about has figured out, basically, how to leverage the best of general-purpose model plus use case-specific or domain-specific model, combine the two, and what I will call this as SLM or small language models or just small models because language is very limiting. And we run this in ServiceNow Cloud. So first of all, we control our destiny. We exactly understand how to take the foundational models. Many of them are open-source models. We take them. We fine-tune them.
And not only do we fine-tune them for our use cases, we fine-tune them for our data types. We understand what ServiceNow data types are, whether it's a knowledge base article or whether it's a specific task type. Whatever the case is, we will take this combination of small general-purpose model as well as domain-specific model. And this great team continues to execute on it and make this available not only to our customers because it's in the platform, but sometimes we even push it out in open-source community back. Why does this matter? You'll say, "CJ, okay, got it. That's a lot of details. But why does that matter?" It actually matters a lot. It matters because when you have a small general-purpose model, the user experience is much, much better. When you have a 170 billion parameter model or trillions of parameter model, the performance is not great.
Bill talked about user experience and how we want to delight our end users. Performance matters. Innovation matters. Why does innovation matter? If we look at every single use case, John talked about Sales and Order Management . Somebody said, "When are you doing this for risk?" I had a customer ask me yesterday, "When are you doing this for security?" If we have this model, we can create Pro Plus much faster for that specific use case. So this strategy allows us to create faster innovations. Of course, the models need to be accurate. So that's why we train them, tune them. Data privacy because we run in the Cloud. So data does not leave the ServiceNow Cloud perimeter. And we run on customers' data. And that data is protected and private. And last but not the least, low cost.
We have figured out how to run them on certain models on A100s from NVIDIA and certain models on H100s. But the cost, when you have a smaller model, the cost to serve is low, right? And we have the best-in-class gross margins in the SaaS community. And we want to continue to deliver on that as we continue to innovate on AI. Now, when I think about this, there are certain classes of customers who would say, "CJ, that's great for ServiceNow use cases, ServiceNow data. We want to use ServiceNow models. It makes sense. And you are, you know, productizing it via Pro Plus. But we have already leveraged, you know, Hyperscaler 1, Hyperscaler 2, Hyperscaler 3. Can we still use that?" Absolutely. You can use that. Our platform has always been open. You can connect to whoever you want to connect. You are not gonna control experiences.
You are not gonna control the outcome. And gee whiz, if you're a financial services company, are you okay with your data going somewhere else? Once I say the right side, for the most part, most people are on the left side. Okay, I'm confused on left and right. But you understand my point. So that's our strategy that we want to absolutely control our innovation destiny with AI. And that's why we have created the models we have created. Now, intelligent workflows, in terms of intelligent workflows, the first thing that we want to introduce, you know, Bill McDermott, a few years ago, told me, "CJ, you know what I have realized? We are a knowledge company." And I thought he was playing on words because it's a knowledge conference. No, he actually meant it that we are a knowledge company.
Our customers, whether it's large banks, governments, healthcare organizations, and others, have lots and lots of data, systems of record, asset repositories, and people hierarchy in ServiceNow. What we have done in the engineering team, not only can you retrieve that information via Knowledge Graph, you can also retrieve third-party information via ServiceNow, which you will see tomorrow in Bill's keynote. Knowledge Graph allows you to really go across your knowledge repository that's very unique to ServiceNow because there is already a lot of knowledge that exists in ServiceNow. But it also allows you to go to a SharePoint, a Box, or OneDrive, whatever the case might be, to pull the data from other systems because our platform, being open, integrates with so many systems around the world. Second, we use that data. Then we apply reasoning logic to it as in intelligence.
Okay, I retrieved the data. Okay, so you did some search with some combination of generative AI. But now you want to apply some kind of intelligence logic to that data. So that's the second thing. And the third thing, most important, knowing is one piece. You need to act on it. And ServiceNow is a workflow platform. So once you retrieve the data, you apply the intelligence. And then you act on whatever the service request could be, saying, "Process my refund. Give me this laptop," whatever the case is. That's basically what intelligent workflows constitute. And that's why we are so unique, having every single product built on the platform with all the data of our customers that they own. We have all that knowledge repository. You apply reasoning logic. And then you act on it. That's the power of ServiceNow.
So our Pro Plus roadmap is very ambitious and very aggressive. Given what I just shared, we have been able to execute in the last 9 months, 7 months or so, when we first released it in September of 2023. In the first half, we released ITSM Pro Plus in March. And we are releasing SPM, which is our portfolio management product, Strategic Portfolio Management, this week. And then when you look on the right, this matches our product portfolio slide. So when you go back, we are going to be releasing additional. This is only possible because of what I just shared. And the Pro Plus advantage, when you think about our stakeholders, is very real. So if you are service agents, whether you are employee service, IT service, or customer service, it doesn't matter. We are ServiceNow. We know how to do service.
We are doing a lot of innovation for the service agents, transfer of calls, what John showed, summarization, and many other things that we will show throughout the conference on what we have done with our shipping product. For an employee or an end customer, when they request a service, again, we say, "We know you. We are gonna serve you. And we are gonna delight you," right? Very simple. And that's what we do for employee service or end customer service. And last but not the least, just imagine, okay? So I spoke to a large financial services institution. They have a ServiceNow Platform owner. They are using ServiceNow for IT, for HR, and for security. She tells me, "CJ, I want to put so many processes on ServiceNow. And I'm so backlogged because I don't have enough people who know ServiceNow," which is a real problem, right?
And she said, "I need to recruit them. And then I need to retain them." What we have done with generative AI is very special. What we have done is now, we say, "You should just focus on the process. And that process will allow you to then, using just plain, simple English or language, whichever language you pick, convert that to a workflow, convert that to a code, convert that to a playbook, whatever you want. Our goal is from text to something or from image to something." And this allows her innovation velocity to speed up on the ServiceNow Platform, which means more workflows on ServiceNow, which means she doesn't have to depend on highly skilled resources. She can do this with college interns, high school graduates, and college graduates. And this will allow her to really speed up.
And when we showed her some of the demos, she's like, "This is exactly what we need." We have been in the market now for approximately 7-ish months. We have many customers who have gone live. And when it what it boils down to, you see some of the examples here, what it boils down to is productivity for agents. At the end of the day, they are all focused on mean time to resolution because that's what the CIO expects to go up. And we are seeing very, very good results on mean time to resolutions going up besides agent productivity going up. Number two is employee deflection. We have now done all the investment that our customers have made in ServiceNow catalogs. You can just deflect them via ServiceNow Pro Plus. So there are a lot of self-service deflections.
Most importantly, what I said is your velocity on ServiceNow continues to be high because of all the text-to-innovation. We are going to be very, very aggressive as an engineering team to continue to innovate really, really fast so that we can deliver value to our customers via generative AI. We work with our customers. We understand what is going well, where we can improve. It's a very fast cycle. We do weekly meetings across engineering and product lines with our customers and learn from them and execute so that we make this product better because it's been only seven months. The next thing is some of the Pro Plus adoption dynamics, which some of you have asked us for. We still have Gina will share these numbers. I'm just gonna keep it at a high level. We have standard SKUs, Pro, and Enterprise SKU.
The Pro Plus works with both Pro and Enterprise SKU. We still have a significant installed base on standard that she'll share. What we have seen with Pro Plus, though, is the way the engineering team has created this product line to turn on is very easy. To get to value is much faster on Pro Plus. Once you are on Pro, going to Pro Plus is very, very fast. A very, very large organization went live in less than four weeks on Pro Plus and is already giving us feedback on how it's going. That's second. Some of you last year asked, multiple times. Our seat count is continuing to go up. The reason is very simple. The reason SKU is going up is because the number of digital services that our customers are dealing with has gone up.
When the number of digital services goes up, customer requests go up, and employee requests go up because everything is digital. Hence, what we are seeing is very high volume on the ServiceNow transaction. Then on price realization, which Gina will share, we are seeing Pro Plus price realization to be higher than Pro. This generation is very important to us, which I shared with you last year. We showed you right here text-to-code. Look at this roadmap. Bless you. Look at this roadmap. When you look at this roadmap, whether it's text-to-code, text-to-workflow, text-to-playbook, or text-to-analytics, these are the objects that continue to get created on ServiceNow by our customers.
If we can figure out how to make this simple by using text-to or image-to or whatever, this will be a game-changer on the innovation velocity to get efficiency for our customers when they use the ServiceNow Platform so work gets done faster, right? This is a very aggressive roadmap. You see the dates here, between this month, August, and November. We are gonna do what we did last year. You'll have to bear with me if the demos don't work because this is new code. This is not our shipping product. We are actually gonna show you this product in action. You have to be patient with us when we try this out. We are going to show you a couple of these generation things here. I'm gonna introduce two special people.
Amy Lokey, on my team or our team, is very focused on delivering a great, delightful experience. And when it comes to AI, it's even more important. And Joe Davis, who runs our platform and AI engineering team, they both are gonna show you live demos on what this really means. So please welcome on stage Amy Lokey and Joe Davis. Okay. So one of the questions that our customers ask us all the time is we don't know how many laptops our employees have, how many mobile phones they have. During COVID, they may have gotten multiple monitors. And we want to really figure out, how do we do proper hardware asset management and software asset management, basically to save cost, okay? So if this problem is something that our customers are solving for, where do they typically start? They'll start on a whiteboard. They'll start on a whiteboard.
They'll draw out the process. Once they draw out the process, then they will go to ServiceNow. They will do a lot of engineering work, write some code in JavaScript and others, and try to create a workflow. Then they have to maintain the workflow, give the user experiences, and so on. So first, three of us, I don't have a good penmanship, so they do. We try to create a process diagram on what does it mean to return a laptop? How can you reclaim the assets? So I want to introduce one more person. That's the whiteboard. That is very important. So can we bring the whiteboard here? All right. So this is a process that you will see in action here on which we are gonna create a workflow, right? This process means workflow. And work gets done. Joe Davis, fingers crossed, let's do this.
Thank you, CJ.
All right.
Okay. So everyone's seen text generation before. We're gonna show you we've added a new type. You can just take a picture. So I'll just take a picture of this process that we drew on this whiteboard. And if I get it right, okay, I'm gonna go ahead and upload this to the machine right here. I'm gonna give it a nice, friendly name. Okay. If we could jump to the workstation here. I'm in Workflow Studio. This is a new IDE that we have as of March. Let's go ahead and create a playbook right from that image that I just took. So, okay, pay attention. This is gonna be very fast if everything works. This is gonna save people a lot of time. And I'll zoom out here so you can see what happened here.
We just created that entire process that we drew on that whiteboard inside of this playbook. That saves a lot of time. So far from what we're seeing, this saves about half the time it takes to create one of these. It doesn't stop there. That created an overall skeleton. You can see there are individual steps that I still need to provide input for. I can continue to use Now Assist to accelerate how fast I can create and flesh out this entire process. I'm gonna show you a couple of examples. The first one I wanna show you is very classic. It's flow generation. I don't have to be an expert in ServiceNow constructs. I can just use natural language. This is the prompt I'm using here. I just wanna look up a serial number and send some notifications if I find it.
I'm gonna just go ahead and make sure I give this a unique name. And let's go ahead and build this. Now, what the system is doing is it's taking that natural language description, and it's converting it into actual workflow constructs in our system behind the scenes. And, again, this is very, very fast. And it really accelerates the ability for you to kinda get a flow created. I'm gonna show you one more example. It's not just about low code on our platform. You also have access to the full coding environment. So I can open up a different step. We're very excited about this capability. And I can use Code Edit to ask the system to refactor code for me. This isn't just about generating new code. I can now ask Now Assist to improve the output message here if I can type correctly.
What Now Assist is doing is it's actually looking at the code that I have here. And it's gonna recommend changes for me. And you can see it's improving the output error message a little bit here. And again, I can just do that in a few clicks. We're really excited about how fast you can create playbooks. And then within those, you can continue to use flow generation and code generation to build those out. And it's gonna be a lot faster for developers.
That's right. Yeah. Joe, that was awesome. You ready for me to show something else?
Yeah, please. Maybe you can show us what does it look like as an end user to actually run through the process that we just digitized?
Exactly. All right. So I'm an employee. I use Teams to do a lot of my collaboration. Leading into Knowledge, I've been using my laptop quite a bit. I've been having some issues with it. It's been overheating, the battery's running down. But I'm so busy at work, I do not have time to deal with this. Today, I come into Teams. There's a proactive notification from Now Assist. Now Assist has detected these exact issues with my hardware. It knows even ahead of me that there's an issue and that I need help. I can go ahead into Teams here and kick off an ordering process for my new laptop. I'll go ahead and click Yes. Let's get that started because why should I procrastinate any longer? Now, Now Assist knows what device I'm currently using.
It can also suggest maybe an improvement here. So it says, "Hey, I'm using a 14 in laptop. Would I like a 16 in?" Absolutely. So I'll take the biggest laptop here. And so Now Assist is basically confirming my order here. This looks like exactly what I want. And I can go ahead and kick off another workflow. Now that I've done this, I've actually triggered the process that we've designed here. And we can go through and detect that I'm not actually using all the software that the company's paying for for me right now. So there's a few applications here. I'm not using so much anymore. And I could actually relinquish these back to the business. So I'll say, "Nope, I'm not using these anymore." Now Assist can go ahead. It can actually remove those applications from the new machine. It won't install something I'm not using.
But it can also suggest something that might be useful to me. Most of my team is using Miro right now for collaboration. I know I've probably needed it for a while. I can go ahead and get this issued on my new machine. This looks great. I'll take this. All right. Now Assist, since it knows where I live but it also knows I'm coming into the office, gives me a choice. Would I like to book time to pick this up or have it shipped to my house? I'll say I'll pick it up. I can specify what time. If I'm thinking about my schedule, how about the first thing on Thursday I'll be in? Because of our integrations, Now Assist can actually hook right into my Outlook calendar, book the time on my calendar.
And it can also let me know who will be available on the IT help desk schedule to see me and have my laptop ready. This is fantastic. Oh, but it's caught something else. I have about three other devices in my office desk drawer, literally, that I haven't used for a while. And I can bring these back. And this helps the money or it helps the company save a lot of money. So I can say, "Yep, when I come in, I'll bring in those unused devices that have been gathering dust. We can use them for somebody else." And now that I think about it, actually, that's not exactly a good time for me on Thursday. I wanna go back and change that appointment. Let's see if I can do that. Can I come in, Tuesday at 10:00 A.M.? Let's see. Fantastic.
It rebooked my out my appointment just like that. Another thing I can reflect on in this conversation, it shared with me my address. That's actually an old address. I've moved. Now, changing my address across multiple systems also seems like a hassle, not something I've had time to do. But let me see if I can do that here. Great. Now Assist can also update my address. So I'm not gonna tell you guys exactly where I live. But this seems like a pretty good spot, right? All right. Fantastic. So Now Assist, again, because of those integrations and that power of the workflow, it's actually updated my address across multiple systems: ADP, Concur, Workday. I didn't have to go into any of them. My information's up to date.
And then, last but certainly not least, now that Now Assist knows I'm coming into the office on Tuesday instead of Thursday, it can suggest there's a great event happening on campus. I can go ahead and register for event for the event, and attend, all because it knows what's happening with our facilities that day. So that takes that fantastic process that we just designed, proactively puts it in front of me with Now Assist because it detected the hardware issue, triggered something that then goes into an automation that's gonna save the company a lot of money. I think you're gonna show how much in just a second here. But it saves the company a ton of money through recouping those unused licenses, the unused devices, and still gives me great service with the software and the hardware that I need.
That was a great demo, Amy. Thank you. And that, I'm glad that worked. So basically what happens next is a lot of our customers, they wanna optimize and monitor that process. And typically what they'll use for that is dashboards. And what we've seen is our customers, they create a lot of analytics. So across the customer base last year, we saw 1.2 million dashboards created. And of those 1.2 million dashboards, there was about 10 million data visualizations that were powering those dashboards. So there's a big opportunity for us to use generative AI to help people create dashboards, create analytics and data visualizations, and accelerate how fast they can monitor and optimize these processes. We wanna show you what that looks like. So if we can bring up this workstation here, you'll have to kinda bear with me here. We just built this right now.
It's day one, May 6th. So we're gonna time travel 6 months in the future. So it's gonna be November 6th. And I'm actually looking at a dashboard over the last six months, if that makes sense. So we're basically looking historically, assuming that today is November 6th. So what you're seeing here is there's a few data visualizations on here. And a lot of times what happens when somebody comes into a dashboard is they need help getting up to speed and just what's the top insight. So that's one of the new capabilities that we bid in is insight generation.
So I'm just gonna go ahead and ask Now Assist, "Is there something that I should pay attention to in this dashboard?" And Now Assist is gonna interpret this question, try to understand my intent, look at this specific dashboard, and try to figure out what are the top insights that it can generate based on the dashboard that I'm looking at. And you can see here, it's highlighting one of the insights, saying that this process, we should take a look at how much excess devices this process has helped us return back to the company. And it's highlighting that we've basically reclaimed about 50% of the excess devices with this process, which is pretty cool. Now, one of the other things we're seeing here is I have a trendline, software and hardware costs. And it's going down. So we're saving money.
But it's not clear to me how much we've saved. So I'm gonna go ahead and ask Now Assist, "Can it help me track how much money we've actually saved here?" And if Now Assist is again, it's gonna interpret that question, try to understand what I wanna do, look at this dashboard, and then help me get an answer. In this case, I'm getting an answer. It's saying, "Hey, the best way to do this is with a single score." So we get a single number. So I'm gonna go ahead and respond, "Yes, let's let's have a single score here." And if this works correctly, what we should get is a single number that tells us how much money this process that we just created saved. And I can do something like, "Add it to this dashboard." So there was about $1,200 saved per employee.
And over, you know, if you add that up, it can be a pretty big cost savings across all of the employees in this case. So you can see kinda how easy it is for Now Assist to help me understand and generate analytics. And I think that is really what we wanted to show with analytic generation and just how much productivity and time savings that can help with developers.
Yeah.
That was fantastic. Those are live demos. Thank you both for taking that risk and show what's coming this year.
Thanks, CJ.
Thanks to you.
So coming back to Knowledge Graph, this is a brand new introduction of a group of technologies given how much access we have to the data. We are a system of record for IT. We could be a system of action, like you saw, with the update of address for multiple HCM products. And we integrate with many, many things, across the industry landscape. So Knowledge Graph is the data layer. And if you think about Knowledge Graph, if you can build this out, it's basically I'll let it build out. There are three things, okay? One is the services, as in the service management or services you request. Could be Service Graph , could be service management, multiple aspects to the services. Number two, the integrations. And number three is people. So what you see is let's talk about Amy. Amy requests a laptop.
Now, you could think of this as, "Okay, Amy's requesting a laptop." So what ServiceNow will do with Knowledge Graph right now is that, "All right, we know exactly how to service that request. But what you just saw is possible because of Knowledge Graph." Not only tells you that, "Okay, she's gonna replace her laptop." But you see that she has another laptop that is inactive. She has a mobile phone. She has a monitor. This is all in ServiceNow CMDB, okay? And also, she has this bunch of software that she's using as a designer. Some are in use. And some are inactive, some of that you just saw in the demo early on. So for Amy's service request, whether they are across HR, across IT, across legal, we have access to lots of data in Knowledge Graph. And our customers can leverage that to make intelligent decisions.
Number two, on integrations, typically, we are a system of action and system of record. So we are accessing multiple other systems. Could be Splunk. Could be Microsoft Active Directory. Could be Concur. Could be Fidelity. And typically, employee requests are very simple. What is my 401(k) match? Do I need to change my contribution? I need to book travel. We are Concur expense reporting. Once I book a travel, I want to request time off. All this knowledge we have about Amy on what she uses, frequent integrations, her code path goes through, and the data associated with it. And the last thing, on people, how does Amy work with other people? Because we have access to multiple systems of record. So you can see she engages with the product team. She manages her staff. She consults experts. I think I do more than just approving her requests.
But I am also sometimes approving her requests. So this is a combination of services, integrations, and people all combined in Knowledge Graph. So what we are gonna show you now is the phenomenal art of possible for an intelligent workflow. Onboarding today, even in 2024, for most organizations is a big challenge. So leveraging ServiceNow's Knowledge Graph, intelligence layer, as well as workflow, what would onboarding look like once all these technologies come together? So Amy is gonna show you that right now.
All right. Thank you, CJ. Okay, I think this is one of the most fun parts of the whole day 'cause I get to show you what's ahead. So I'm really excited to get to do this. So like we talked about, our Knowledge Graph delivers proactive, personalized, and actionable AI experiences to employees. And this is what we've been calling intelligent workflows. And here's how we're going to redefine the employee experience with My Assist. We are putting AI into the hands of every single employee and creating the personalized assistant for work. So as CJ was talking about, we know that one of the many moments that really matters for an employee is when they onboard to a new company. That's their first impression. And they wanna get productive to make that great first impression back to their employer.
For our customers, like CJ talked about, getting new hires productive can deliver material business impact. We know many customers who are onboarding thousands of employees a month. Let's take Mira. Mira is an ITSM manager. She's coming in to manage a team at ServiceNow. Today is her first day at work. Let's see how that looks. She opens up her ServiceNow app on her mobile phone while she's on her way in. She needs to continue her onboarding journey there. Today's her first day. She knows before she gets into the office, she needs an employee badge. My Assist has taken Mira's passport photo from her employment verification, sprinkled in some AI magic, made it a beautiful, polished badge photo. Mira's really happy to use this picture. It looks 10 times better than the passport photo.
So she can make a beautiful employee digital badge with that right here. Now, on top of that, from the badge, My Assist does a little bit more for her. It actually creates an avatar of Mira just as an employee perk that she can use across her digital applications. She loves this too. And she decides to use it. And My Assist can publish this out to all the other applications she uses to do her work. Now, another fun part of this is Mira can customize the experience of her app. She can choose a different look or feel.
And she's actually choosing between a number of admirable ServiceNow executives to personify her ServiceNow assistant. So after reviewing all these great-looking executives and themes, she's chosen Chris Bedi. So he's the leader of her organization.
CJ, you chose me on purpose 'cause I was not good-looking and admirable.
All right. There's some similarities. All right. Chris is gonna give Mira a fantastic employee experience. And now, on top of that, My Assist, because it knows where Mira lives, says, "Hey, time to get going to work. Your orientation's coming up." All right. So let's fast forward. Mira's gotten to the office now. She opens up her beautiful new laptop and goes to her Employee Center Pro homepage. And she sees here some of the typical content that you'd expect, some great campaigns, office activities, things that are relevant for her. But she also sees that personal assistant right there ready to help. My Assist has already provisioned her with access to the most important tools that she needs to do her job. But Mira knows that she also likes to roll up her sleeves and help her team troubleshoot employee issues.
So she wants to know what software do they use for that. My Assist can let her know that her team uses ScreenMeet. And My Assist can install it right there for her. My Assist suggests a few other things that she could do to keep onboarding. But Mira's got something that's bothering her. She's a little anxious. She booked a vacation right before she started this job. And she's not sure what the policy is and if she can keep this trip. So she asked My Assist what the policy is for taking time off. My Assist can summarize information from a number of different sources, a knowledge base article, the holiday calendar, even a PDF stored on Box, and provide her with exactly the information she knows. So she can see here she's got flexible time off, big sigh of relief. She can take her vacation.
Now, she can focus back on work again. She's wondering what the standard practices are. My Assist can help her book one-on-one meetings in the same pattern as other folks like her, other ITSM managers. It not only sets them up, it can set out one-on-one meeting invites and schedule them for her. Now, it's scheduled them for the first week of work, which is a little too soon. Mira feels like she might wanna push that out a little bit. She can go up here. She can edit her input, modify it a little bit. My Assist will regenerate the results, giving her exactly the outcome that she wants. It's rescheduled the meetings now a week further out. All right.
So Mira, as an ITSM manager, knows that one of the most important metrics her team needs to track is mean time to resolution. She wants to know how they do that here. My Assist, just like you just saw in the live demo, can create a data visualization for her. And she can pin it right to her homepage so she can see that every day when she gets to work. She also wants to know, where is her team doing work? Can she start to get caught up on some documents? Can she start to see what they're up to? My Assist does another enterprise-wide search, pulls across the Microsoft ecosystem, gets her, you know, her SharePoint site, an IT email alias. And she can save those for future reference as well. Now, My Assist knows that she doesn't necessarily have access to these documents yet.
We're respecting those security controls. It can act as her proxy and go ahead and request access to those documents. When she does click into them, she can jump right in. All right. Continuing this onboarding playbook, My Assist prompts Mira to send a welcome email to her team, a really nice touch. It can generate the draft for her. It can also let her do some lightweight editing or adding a photo here to personalize it. She can send that off. Now, My Assist lets her know it's nearly time for her orientation. With that, there are the directions. She doesn't even have to worry how to find her way with our facility mapping. It can show her exactly how to get to the orientation. Before she gets up to go, though, there's one last thing.
She wants to know a little bit about her manager so she knows what he's like. So My Assist can summarize information about Chris Bedi. This is stuff that's available inside the workplace as well as external, LinkedIn results, Google search results, even Chris Bedi's last all hands. It can provide a ton of helpful information from that enterprise-wide search. And on top of that, even share some photos of Chris in the workplace, including him serving tacos to his team, which is a great representation of the culture that he's built. So she'll favorite that. So I just showed you a lot in terms of what our vision is for the future of My Assist. And I wanna recap that because of that Knowledge Graph that we have, we can deliver an exceptionally personalized experience.
The assistant knows who Mira collaborates with, the resources and services that she needs, and anticipates how to keep her productive. It's incredibly efficient. With AI layered on top of that, she gets time-saving summaries, insights into her team's performance, answers brought to her fingertips, and emails written for her. And then because of our unique workflows, she can take action across her work experience and her systems of record where her assistant can become her proxy and complete work on her behalf. So that's what we call intelligent workflows. And we believe that's putting AI into work for people. So thank you.
Thank you, Amy. That's wonderful.
Thank you.
So we are really excited, as you can see, about innovations in our platform, new products like Sales and Order Management or OT, and the opportunity it creates for ServiceNow. But most importantly, the problem it solves for our customers. And with AI, we have been at the forefront of innovation, releasing products that deliver value for our customers. Via Pro Plus, Now Assist is the name of the technology that our customers can configure, rename however they want. And most importantly, when it comes to knowing things about our customers' data that our customers can leverage themselves and creating that personalized assistant that gives you the experience almost like a human because that's the high bar with AI.
Can I get a human-like experience when I'm chatting with the bot and it kind of knows what I'm trying to do but also tells me what I should do so that I can get work done? So excited about the innovation. You saw some live demos of the technologies that are coming out this year with a very incredible and inspiring vision on where we are going with My Assist. We are gonna break for 10 minutes. Thank you very much. Done. Good luck, brother. Crush it.
Please welcome ServiceNow's Chief Commercial Officer, Paul Smith.
Thank you. Well, good afternoon, everyone. It is, it is great to be here with you all. CJ and team took you through what is simply a phenomenal wave of innovation. So now we're gonna talk about how we take that out to the field and put it to work in service of all of our customers. We have an absolutely incredible opportunity and exceptional momentum. Over the last three years, we doubled the number of customers over $20 million of ACV in ServiceNow. We did the same thing with our next largest customer segment, those over $10 million of ACV at ServiceNow. If I look at our overall customer base, about 70% of our customers in 2023 increased their overall level of spend with ServiceNow.
We've been able to drive material, sustainable productivity improvements within the global sales organization while continuing to invest for the growth that we need in the future. Now, Bill and CJ showed this slide. I love this slide 'cause I genuinely think we are just getting started. Whichever way you choose to measure this TAM, it is it is vast. The one thing with my global field organization that we do not lack for is opportunity. Pretty much every geo, every industry, every customer segment, marquee, enterprise, commercial, there is a ton of opportunity. It's all about just how do we unpack that opportunity. One way that brings that TAM to life is looking at our existing customer base. So we have a little over 8,000 customers today.
The number 1 thing I want you to take away from this slide is the cross-sell opportunity that exists inside our existing customer base, the TAM that exists inside our customers today. Here in this second row, these are the customers that I would call truly multi-workflow customers. They're using three or more of the workflows that CJ and team were going through earlier. Some combination of Technology, Creator, Employee, and Customer , just putting them to work, to solve some of the biggest business problems that those companies face. That number of 2,000 is growing very quickly. One thing we are very good at is cross-selling that innovation that you saw earlier into our existing customer base.
So I want you to think about what the business looks like when those 2,000 multi-workflow customers genuinely using ServiceNow end-to-end to solve some of their company's biggest business problems, what that looks like when that number of 2,000 goes all the way across the 8,000. At the bottom as well, you see, the 55 customers in our single biggest deal band of $20 million+ net new ACV. Like I said at the start, that group of customers has doubled over the last three years. My organization is targeting 500 other organizations inside our customer base that have the same capability to spend above that $20 million ACV level. Now, will I get all 500 to $20 million and above? Maybe. But certainly, we're gonna get a multiple of the 55 that we have already.
So we're gonna see some significant growth as well in that largest customer band inside ServiceNow. Gina's also gonna share some numbers in a moment because what this slide doesn't show is what happens when you move our customer base through the additions of ServiceNow from Standard to Pro to Plus. And the dollar value that gets unlocked in this customer base when you elevate those customers through those as well. And Gina's gonna share, say some more on that in a moment. So, you know, that's the TAM inside our existing customer base. But we also have this opportunity to acquire still a very significant customer base. We are targeting a population of 50,000 customers sorry, 50,000 companies and hopefully 50,000 customers. And of course, there are many, many more that we could go after.
But we're intentionally focusing on those that have more than 1,000 employees and $100 million in revenue. So from a customer acquisition perspective, it is very much about quality customer acquisition. So when I take all of that in totality, huge TAM, incredible cross-sell opportunity inside our existing customer base, a target population of 50,000 companies that we are addressing and seeking to acquire, we've got this phenomenal opportunity. And these are the five growth levers that, as a go-to-market organization, we're focused on to make sure we unlock that opportunity and capture our fair share. So it starts with international. How do we build on the strength of our international business? How do we accelerate our rate of new logo acquisition?
How do we continue to scale the overall go-to-market organization and do so as efficiently as possible, unlock massive amplification from our partner ecosystem, and then, as you started to see earlier as well, become even more obsessed from an industry perspective, both in product and how we go to market? So I'm gonna step through these five individually. We're just gonna start with our international business. Now, we have a strong international business today, and it is getting stronger. It is home to some of our biggest customers and fastest-growing markets. That, population I showed at the start of 55 organizations spending more than $20 million a year with ServiceNow, 30% of that is outside the U.S. in our international business. It actually includes our single biggest customer as well. So that is a very, very healthy population.
Our international business, by the end of 2024 alone, will be a $5 billion business. I see plenty of upside there. In terms of, like, how we really get this upside from our international business, we have a very, very deliberate strategy. It's focused around the 11 countries and territories that you see here. Now, of course, like, the U.S. is still our largest market. It's, it's the core of the core. We're gonna continue to invest in the U.S. business. I see a very bright future of growth ahead of the U.S. business as well. There are also countries that are not on here that are gonna grow phenomenally quickly over the next few years. But these 11 are where we have a very, very specific focus.
'Cause on the left, the six on the left, these are our future billion-dollar businesses and some of them billion-dollar businesses in the very near future. So the ones you'd expect: U.K., France, Germany, etc. And what we've done with these is we have moved a lot of decision-making locally down into these countries. We've also resourced them such that they're able to execute autonomously for their customers locally. We've invested in data centers. We've invested in product enhancements as needed to make sure it's appropriate for the local marketplaces. And we've also been, over the last few years, on a sustained journey of elevating the headcount in those regions. And I now absolutely believe that we have best-in-class, bar none, talent leading those six countries of any enterprise software organization on the planet.
True GMs able to take those entities through a billion dollars and on a very, very long path with ServiceNow. And then on the right, these five countries and entities, these are the ones that are gonna deliver very significant double-digit growth for ServiceNow for years to come. So, we have invested in significant data investments in Saudi Arabia, in Brazil, in India. In Singapore, we're partnering with Microsoft and Azure on some infrastructural work we need to do to unlock the government market in that landscape. In all of these countries, we've also invested all of the resources, both marquee, enterprise, commercial, and all of the surrounding resources such that they're able to execute at scale. And it's working. Like, in our earnings, we announced some very, very significant wins with NEOM in Saudi Arabia, with the central government of Australia, with the São Paulo government in Brazil.
We're seeing tremendous success. I remain very, very bullish about our international business. Second, second growth lever, and that is accelerating our new logo acquisition, going after those 50,000 target companies that I described earlier. We have a very, very deliberate strategy here. Here's, here's the focus. We've invested in a pure new logo sales role and organization. That's all that these teams do. One quarter of all of the new territories that we have created are now new logo hunter territories. A very, very significant headcount investment. That's in the field. We are also tripling the size of our inside sales organization. So, and focusing that organization on new logo acquisition as well. About 25% of all the new logos that we secure at ServiceNow come from this inside sales organization.
That is a very, very efficient route to market. Third pillar here is around partner resale. So within our overall partner organization, we have created a specific team that is focused on just partner resale. We've changed some of the partner program terms to make new logo acquisition much more lucrative in terms of incenting customers to bring in new logos. Right now, our partner organization, our partner resale organization, is responsible for about 13% of the new logos that we acquire. And next time I'm here with you, I expect that to be a much, much more significant number. Okay. Third lever. Put very simply, you know, we will continue to invest in the overall go-to-market headcount within ServiceNow. Like, other organizations have stumbled. They've entertained layoffs.
We have consistently hired and invested in and grown our go-to-market organization every year over the last three years. When you have a great TAM and you have momentum, you keep investing. Like, this is actually a very, very simple formula. If we can maintain and increase sales productivity, which we are, and you have the TAM, say you can add capacity, then the multiplication of that means that significant net new ACV is going to follow. We are doing this in a very, very disciplined coverage model. Marquee accounts at the very top, enterprise accounts, commercial accounts, exactly the same model in every single one of our tier one markets to make sure that we have the right resource, the right cost profile against the right account for the right outcome.
A critical part of this (and I referred to this once already) is that we are investing in our inside sales organization at a rate of three times of the overall go-to-market organization. So why are we tripling our rate of growth in that inside sales organization? Well, it's really two reasons. Like, firstly, as we think about that population of 50,000 companies that we are targeting, it is a very, very cost-efficient route to market to go and acquire the base of those new logos. And if you think about all of that innovation that CJ and team showed earlier, it is also a very, very cost-efficient mechanism to cross-sell every single iota of that innovation into our existing 8,000 customers and more as that base grows.
So I am confident that we have the right balance of focus at the very, very top and the right investment at scale to unlock this market in the most efficient manner possible. Okay. Our fourth group, our fourth lever for acceleration is around how do we accelerate this partner ecosystem. And of course, we are gonna continue to invest in the big SI relationships. We now have seven of the SIs fully committed to building a billion-dollar-plus business with ServiceNow. And you'll have seen from the recent announcements with Deloitte, with EY, with Accenture, with Cognizant, and others that they are all in on our GenAI strategy and how to take Now Assist to market. But the area that I'm really gonna call out here is how do we unlock more value with the hyperscalers?
So last year, we announced the availability of ServiceNow on Azure through the Microsoft marketplace. And earlier this year, we announced the availability of ServiceNow through the AWS marketplace. Absolutely fantastic work from our engineering team to do this so seamlessly and so quickly. But it now means that as a prospect or a customer, you can choose to buy ServiceNow through your own hyperscaler of choice. But most importantly, you can use the existing spend commitment that you have with that hyperscaler on that ServiceNow acquisition. So one anecdote in Q4: the biggest new logo acquisition ever in the history of ServiceNow was in our Q4 at the end of last year. And it was a well-known U.S. auto company. And that was on Azure through the marketplace.
So these partnerships, both AWS and Microsoft, are absolutely gonna unlock pipeline and opportunities for us. Okay. Industry focus, industry obsession, fifth and final of these growth levers. Wherever we focus on industries, we accelerate. Like, industry line of business products and services, like we saw earlier, they just solve bigger business problems for our customers. So if you take TMT, for example, in these six industries that we're focused on, within TMT technology customers, when they take that industry SKU, we typically see a 90% uplift in net new ACV for those customers 'cause they see the value in that industry-specific SKU. And when I also look at some of our biggest Now Assist wins, you know, we announce wins with Novartis in healthcare and life sciences, with Siemens in manufacturing, with BNY Mellon in financial services.
So these six industries are also a clear, clear focus for us around our GenAI and our Now Assist strategy. So to show you how we are approaching this industry-first strategy, I wanna put a focus on our most established industry vertical, which is our public sector business, and specifically our U.S. federal government business, which we started with first. And this is where we made the product, the market fit, the team investments to really better serve federal customers in their particular missions. And that all starts with also having truly exceptional leadership of these industry verticals. So it gives me great pleasure to welcome Steve Walters, SVP, U.S. Public Sector to the stage. Steve, come on up. Steve.
Thank you, Paul.
Welcome.
So Paul, thank you so much for the opportunity to talk about the U.S. federal business as an example of what we can achieve when we have an industry focus. What I thought I'd do is break this down into really three different parts: talk about the federal business, talk about our selling motions, and then the future of our business. First of all, the U.S. federal business has presence in all 15 cabinet-level agencies and sub-agencies. Okay? That's over 400 separate contracts and customers in every branch of the Department of Defense. And in this engagement, we're pushing further and further outside of IT and engaging more on mission outcomes and mission applications. And we're engaging with all the different types of personas across the enterprise. Now, I bring this up for two main reasons.
The first is it demonstrates the penetration that we have in this market, right? All 15 cabinet-level agencies, sub-agencies, 400 contracts and customers. But it's also important because this is gonna be a key part of our selling motion, which I'll get to, momentarily. Now, for us to be able to do this, we've gotta have two items: one, an investment financially and in engineering in the regulated clouds. And that's exactly what we've been doing over the last decade. And I think a great example of that is our investment in our IL5 DoD regulated cloud. Not everyone in this industry can say they have an IL5 cloud environment. We do. And I'm excited about the momentum we have in this space and the fact that we're gonna have a significant amount of servicemen and women consuming this cloud by the end of the calendar year.
Now, it doesn't stop just there. We also have GenAI. We've made an investment in that. And we're gonna have that available in our regulated clouds, in the not-too-distant future. But it also starts with verticalization. The federal business is a vertical within verticals. We have financials. We have healthcare. We've got legal, logistics, DoD, you name it. And we've made an investment in our organization to verticalize to best serve our customers and our partners. And I don't think there's a better example of our presence and the impact that we're making in the Fed space than our recent Federal Forum . We had over 3,000 registered, almost 40 partner sponsored, and over $400 million influenced by that event. Now, I've been in this industry for quite some time.
I'm gonna tell you that I would argue that this was probably the largest Fed forum in recent times. Now, let's talk a little bit about the selling motions. I mentioned the presence that we have across this space. Okay? We're having more and more customers come to us and saying, "Hey, let's take this partnership to the enterprise level. Let's consolidate contracts. Let's talk about having a core set of products across the enterprise. Let's standardize on that. Let's have price parity on those price products. And then let's go ahead and have a vehicle to get to additional capabilities." And we're doing that in the form of enterprise software agreements. It's a win-win for the customer and for us. For us, we get volume and commitment, volume and commitment with base-plus option year contracts.
Our customers get price parity, standardization on a core set of products, a vehicle to get to additional products, and price predictability. So win-win. But the second thing that we're doing is that we're really positioning our platform to help accelerate the transformation journey that our customers are on. Okay? Our platform brings—and this is important—interoperability between people, systems, data, and organizations across the enterprise. And we bring that back in a consumable manner that allows our customers to then have mission resiliency, continue their mission whenever there's digital disruption. It helps improve the employee and constituent experience. And then it also helps accelerate the digital transformation that they have with application modernization. I'm gonna give you a quick example of where we did this: the VA, Veterans Affairs.
This one's near and dear to me as a combat veteran, what we were able to do: 500,000 employees supporting over 16 million veterans. Okay? They made an investment in PeopleSmart, what, Peoplesoft, and what they call HR Smart. And instead of ripping and replacing that investment from over a decade ago, they selected ServiceNow as the engagement layer to help improve the employee experience, to help modernize their workflows, and bring that interoperability piece that they didn't have, which improved the reporting capabilities across the VA. Just an awesome opportunity. Now, let's talk about the future. The U.S. federal government is the single largest employer in the United States. Okay? About 6 million between civilian agencies, DoD, and contractors. And if you do just simple math, 6 million across our four major workflows, for a price of a cup of coffee over 52 weeks, that's $5 billion.
I didn't even talk about all of the other components around SPM, HAM, SAM, FSM, so on and so forth. So you can see where the numbers can get really big. This also doesn't include the 19 million state and local government employees or the fact that we can touch 360 million constituents through the IRS and SSA. So you can see that the opportunity for us is huge. Now, what I'm really excited about is how we're gonna be bringing together our state and local teams along with education to form public sector. That makes a lot of sense. There's tremendous synergies between our federal agencies and our state and local governments and with education. Think about what the DoE does with academia or what HHS does with local, HHS organizations. I'll give you two examples.
We're engaged with a very strategic partner right now to help address the fentanyl crisis. That takes coordination with multiple federal agencies and multiple state and local agencies. They all use different systems. But we're being positioned as that engagement layer to bring the interoperability between people, systems, data, and organizations. Just an awesome opportunity to do good. The other thing is we're taking best practices, and we're sharing that with each other. The state and local team has done a great job of figuring out how to do grants management. We're taking that to our federal agencies, and we're engaged with some very senior-level enterprise opportunities around that. Okay. So let's talk about where we are today. We are a $1.5 billion public sector organization. We've had 30% year-over-year growth. We're proud to be engaged in that model to take some of these best practices across ServiceNow.
In fact, just last week, my DoD team was working with the U.K. MOD team on some of the best practices around ESAs, mission outcomes, and special SKUs that were taken to our customers. So with that, I'll turn it back over to Paul.
Thank you, Steve. Well done. Have another round of applause for Steve. Phenomenal job there. So I think also what you see there is just the level of depth and precision that when we take on one of these six industries that we're gonna focus on, that we go to in terms of the sub-verticalization, but also candidly in terms of the caliber of leadership that we've got focused on these industries. So I'm incredibly excited to see where Steve takes that next, but also the best practice that we can share for our Canada public sector business, our U.K. public sector business, our Australian public sector business, and beyond, right? So as I wrap up here, we have multiple dimensions of growth within this go-to-market organization from a geographical perspective, from a customer segment perspective, new logos, new solution areas.
I firmly believe that we have the right go-to-market strategy to fully, fully take advantage of that. To bring all of this together with what you also heard from Bill and from CJ earlier and to bring us home, I am delighted to pass the baton now to our CFO, Gina Mastantuono. Gina, please, come on up.
Thanks to all of our investors joining us today. Thank you so much for being here. Reflecting on all the great innovation and opportunities shared with you today, I'm sorry. I'm more optimistic than ever about ServiceNow's future. At the end of today's presentation, my goal is that you'll walk away just as confident along with three key takeaways. One, innovation is seeding growth. GenAI and our new product launches continue to expand our massive TAM. Two, the power of the platform is a key competitive advantage driving best-in-class renewal rates, larger deals, and robust expansion opportunities. Finally, we're maintaining a disciplined approach to investments and uses of capital to drive incredible shareholder value. Focus on innovation means fast, measurable outcomes that enable customers to do more with less, improve productivity, and innovate new business models for future growth.
That's why we've been able to deliver such impressive growth rates: subscription revenue at a 28% CAGR in constant currency from 2019 to 2023. In 2023 alone, we added another $1.8 billion of subscription revenue, all organically. That's more than ServiceNow's entire subscription revenue in 2017. Pretty amazing, I think. Looking forward, we're confident in our ability to continue to deliver. The durability of our revenue growth is supported by the strength in our remaining performance obligations. We grew RPO at a constant currency CAGR of 29% over the last four years to $18 billion in 2023, with almost half of that current. What's more, our 2023 RPO growth accelerated again to 29% year-over-year, providing even more visibility into our future growth. How do we do that, you ask? We partner deeply with our customers. You heard that message over and over. We're such a customer-centric organization.
Our customers are increasingly building a multi-year roadmap with ServiceNow as their intelligent platform for digital transformation. And that has driven a material uptick in contract duration. Similarly, our already best-in-class renewal rates have steadily improved over the past three years to 98.5% in 2023, as ServiceNow remains a mission-critical component of our customers' business strategies. With this sticky base of customers to grow from, we've also focused on keeping our top-of-funnel healthy by implementing the go-to-market strategies Paul highlighted earlier. As you can see, those initiatives are bearing fruit. In 2023, we saw over 400 net customer ads driving our total count to over 8,100 worldwide. It's not just the number of new logos. It's about landing larger customers. In 2023, we saw a 25% increase in enterprise new logos with 5,000 or more employees. This has meant bigger initial deals with more products and higher ACV.
In fact, last year, we saw a 25% increase in the average first-year ACV from new customers as well. So clearly, we are leveling up. Last year's Analyst Day, we showed the momentum in our new logos with over 250,000 in ACV. Today, we're showcasing the 500,000 and above ACV cohort. The mix of new logos above that threshold has doubled over the past four years. This is a fantastic outcome showcasing the effectiveness of our laser-focus on landing the right customer. So what are these customers buying? In a word, everything. The strength of our core Technology Workflows, particularly given our dominance in IT, provides a consistently reliable entry point. We're also seeing an increasing contribution from our Customer, Employee, and Creator Workflows.
In 2023, we saw over 45% of our new logo ACV come from non-Technology Workflows, showing the power of our emerging products and the broadening coverage of our portfolio. In fact, for 2023, CSM caught up with ITSM as our top net new ACV contributor for new customers for the first time. With all the great things you heard earlier from John, it's no wonder. There's a massive opportunity there, and it continues to grow. While we've heightened our focus on acquiring high-quality new logos, our expansion within existing customers remains robust. In 2023, nearly 70% of our installed base spent incremental dollars with us, and over 85% of our net new ACV came from existing customers. Let's dive a little deeper into the positive trends impacting our net expansion. Our newer cohorts are landing larger and expanding at higher average ACVs.
The 2018 to 2020 cohorts have a greater average ACV per customer that is 30% higher by year three when compared to the 2010 to 2017 group. Not only are our newer cohorts landing larger, they're showing a consistent improvement in the time it takes to hit $1 million in ACV. Comparing our 2020 cohort with 2010's, we see that achieving this milestone takes only a quarter of the time. That's only two years versus eight years back in 2010. The power of the platform is resonating. It's not just our newer cohorts that are demonstrating strength. Our older cohorts continue to drive impressive growth too as they adopt new products and SKUs across the broadening portfolio. A customer that spent $100,000 with us in 2010 is spending over $3.2 million with us today, 32x where they started. Let me do the math for you.
That represents annual growth of over 224%. 224. It's pretty cool. Even our cohort from a decade ago is growing over 20% in the latest year alone, which helps sustain our net expansion rates above 120%. The Now Platform is strategically relevant, and it's clearly resonating across the entire customer base. 98% of our net new ACV was from multi-deals, multi-product deals, sorry, in 2023. 82% were from deals with five or more products, up from 77% in 2022. What does this tell us? The ServiceNow portfolio is truly better together. It is a platform story through and through. So let's see how all of these trends play out through a real customer example. Looking at this financial services software company, I'd note the size and breadth of the initial deal. We landed with 10 products across three workflows with a total net new ACV of about $700,000.
In less than a year, this customer came back and grew with us to $1 million in ACV. Six months later, we saw meaningful license expansion across the company's entities globally, displacing a handful of legacy vendors. They also added our Source-to-Pay Operations product. In just five quarters, they reached $5 million in ACV. This is not the exception, but rather a great example of how customers are landing with larger deals, more products, and growing ACV much more quickly. These bigger multi-product deals are evident in our large customer growth. As of the end of 2023, we had 1,897 customers paying us more than $1 million annually, and ACV from this group grew over 25% year-over-year. The average spend of our largest customers, with over $20 million in ACV, grew over 40% last year alone.
The spend for our $5 million+ grew up over 45% in the past four years. And what's more, these largest customers of ours aren't anywhere near their full potential. We see consistent progression up the pyramid, particularly with our most strategic marquee customers. These 200+ companies have the highest total addressable market where we have the potential to drive the most incremental value. Over the past year, we've been able to shift customers up into higher and higher ACV buckets, with 18 crossing the $5 million threshold all the way to three passing the $75 million, well on their way to $100 million+. And clearly, we don't expect them to stop there. For example, we have the potential to double one of our $75 million+ customers based on license expansion and SKU upgrades within their existing products deployed alone. So what does this tell you?
The opportunity with even our largest customers is still so big. Now let's dive into what's fueling that expansion engine. Our Technology Workflows will continue to drive growth. As CJ and Pablo highlighted earlier, there's tremendous runway ahead for both ITSM and ITOM. But our emerging technology products are also demonstrating tremendous momentum. Taken together, ITAM, security, and risk products have grown at a CAGR of 50% over the past four years. As we innovate and add to our technology product portfolio, we continue to increase our addressable market. For example, as Pablo highlighted earlier, the addition of OT has increased our Te chnology Workflow TAM by $5 billion alone. Our AI-powered experiences also continue to provide opportunities to upsell our existing customer base with higher value offerings.
Within ITSM, we've now crossed 45% of the customer base who is now on Pro, and we continue to see a 25% price uplift as enterprises see tremendous value in our offering. Approximately 65% of our new customers are opting for our premium SKUs, up from 60% just last year. As you think about the opportunity for generative AI, our Pro SKU is a necessary steppingstone and a likely beneficiary of that journey. Speaking of generative AI, and it only took me 12 minutes to get there, our new offerings are off to a strong start. Pro Plus net new ACV to date continues to trend ahead of any new product family launch for the comparable period, including our Pro SKUs, which did extremely well as well. Price uplift has been very healthy, with Q1 deals seeing over a 30% price uplift.
Although it's early and two quarters do not make a trend, the accelerated uptake and pricing are a strong indication of the value and ROI our GenAI products are providing to our customers. You heard CJ talk about customers being live already, really fast. While it might take some time to have a material impact to the top line, the opportunity is massive. If we just take our service desk products across ITSM, CSM, and HRSD and assume the current Pro users, which account for about 45% of those combined seats, upgrade to Pro Plus with real-world pricing, we could see north of $1 billion of incremental subscription revenue. Taking that a step further, if our Standard users move to Pro Plus, that takes the total top line opportunity to more than $2.5 billion. That's only our service desks.
Future GenAI products across the rest of the portfolio would be incremental opportunities on top of that. As you've heard us say before, we are injecting GenAI capabilities across the platform. Outside of these upgrades, adoption of GenAI more broadly creates a significant pull effect for all of our core products. Large language models are only as powerful as the platform they are built on. Businesses need an end-to-end workflow platform that can power AI-driven actions across the enterprise. Our workflows are designed to do just that, deliver supercharged experiences to create extraordinary value. ServiceNow also has plenty of extensibility beyond our Technology Workflows in GenAI. In 2023, our non-technology products saw strong momentum, with customer penetration increasing from 20% to 25% year-over-year.
While penetration has increased five points, we continue to innovate and bring additional products to market, such as Accounts Payable Operations , Clinical Device Management, and Employee Growth and Development, resulting in even more cross-sell opportunities. That flywheel of innovation constantly refreshes our addressable market and extends our long runway for growth. It's clear there's a lot of upside with our non-Technology Workflows. Last year, C reator crossed $1 billion in ACV in Q3, followed by customer in Q4 growing over 30% year-over-year. Employee Workflows followed a similar growth trend, exceeding $850 million in ACV, putting it well on its way to our next billion-dollar business. Our newer finance and supply chain products have the potential to grow into their own workflow category. We've expanded our offering with Clean Core ERP, Accounts Payable Operations , all in our Vancouver release.
Our source-to-pay operations business grew 150% year-over-year and showed strong momentum with a 3x increase in deployed customers in 2023. While still early, the traction we're seeing is very encouraging. You've heard about our growth factors. Now we can drill into profitability. We've talked about how we're using GenAI to drive value for our customers. Now let's see how we're using it internally to optimize our own cost structure. As many of you know, we're Customer Zero for all of our products. I like to say we drink our own champagne here at ServiceNow, and GenAI is no exception. We've implemented more than 20 use cases for Now Assist across our organization that is delivering $10 million of annual benefits already across both employee and customer use cases. That's a 7x ROI. This is only the starting line.
GenAI deflection rates have doubled for both our employees and customers, and they're getting better each and every month. Software engineers are also accepting 48% of text-to-code generation. As our Now AI models continue to improve, we expect the savings and efficiency will only go in one direction, up. But I get the question all the time, Gina: At what cost? How are the GPUs you're buying going to impact your gross margins? Our smaller domain-specific large language models allow us to optimize the value we provide to the end user. With GPUs, we've already seen more than 20% improvement in the performance-to-cost ratio over the past couple of years alone. Although costs have gone up 70%, performance has more than doubled. Given this, we expect the unit economics of our GenAI business to improve over time as it scales.
In addition, our sales and marketing productivity is also trending well. With our better-together approach to selling in our land and expand motion, we also see leverage on the sales and marketing line. Our sales efficiency continues to be strong and increasing at 3.8x in 2023, above our at-scale cloud peers, which average at 2.9x. Efficiencies like these highlight the power of the Now Platform and exemplify why we're able to drive consistent gross margin expansion while investing for growth. We grew operating profit at a CAGR of 35% from 2019 to 2023, driven by more than a 600 basis points improvement in margins for an average of 150 basis points per year. That improving profitability also converted into free cash flow, which grew at a 29% CAGR over the past four years despite incremental cash tax headwinds.
In 2023, we generated $2.7 billion in free cash flow at a 30% margin. In 2024, we will maintain that world-class execution with constant currency subscription revenue growth of 22% at the high end of our guidance range, along with strong free cash flow generation of over $3.3 billion driven by a 31% free cash flow margin. Taken together, this combination of growth and profitability has allowed us to sustain a Rule of 50 plus even as we cross $10 billion in organic revenue. That durability is a true reflection of our focus on maintaining a healthy balance of investment for growth and operational discipline. Longer term, our strong execution, GenAI advantage, and new product innovations give me incredible confidence in our full year 2026 subscription revenue target of $15 billion+ .
I would emphasize the plus as we expect our CAGR over the next three years to be north of 20%, partially reflecting the early momentum we are seeing in our GenAI products. Along with our revenue growth at this scale, we expect continued margin expansion, operating margin expansion of 100 basis points per year on average for 2025 and 2026, driven by the inherent business model leverage I talked about earlier. For free cash flow margins, on average, we expect 50 basis points of annual expansion despite incremental cash tax headwinds of 100 basis points in 2025 and 200 basis points in 2026. I'd also note we're driving this free cash flow margin expansion while making all of our incredible investments in GenAI, which I think is pretty phenomenal. Longer term, we remain laser-focused on delivering that same balance of growth and profitability you're accustomed to.
You've seen our execution in the past. Our approach going forward will be just as disciplined. That includes stock-based compensation. We've made steady progress in reducing stock-based comp as a percentage of revenue, which is on track to fall below 15% by 2026 and below 10% longer term. Furthermore, we're reducing our annual dilution target to less than 1%, down from less than 1.5% previously. While investments in innovation to drive organic growth remain our top priority, with our strong and growing cash position, we continue to use some of our free cash flow to manage employee dilution. As you've seen over the course of today, and really over the past several years of successful execution quarter after quarter, we're continuing to drive towards our goal of becoming the defining enterprise software company of the 21st century. Our constant innovation is creating new growth vectors.
The power of the Now Platform yields strategic business model advantages that are showing up in our results. We are focused on executing against all of this in the right way to drive incredible shareholder value. Thank you all for joining us today. And with that, I'm going to call Bill, CJ, and Paul back on the stage to open it up for Q&A. Thanks, everyone. All right. I think we have some mic runners, lots of questions, hands going up. We love it. Okay. Come on. Hi there.
Hi. Samad Samana from Jefferies. Thanks for taking my question. So Bill, you're going to get a lot of AI questions today. But what stood out to me was the talk about the front office. That seems like something that's a clear message that you're sending to the market, to your shareholders. You showed us some products today. But how should we think about the broader strategy with ServiceNow? Is that a different persona? Will you sell to a different type of person? Do you have the tools today to target the front office more meaningfully? Help us think about the strategy there.
Yeah. I will just open it up by saying, and then I ask CJ and Paul to jump in also. There's no doubt we're going for the front office because we can. It's time. We wanted to let you see the product before we started doing the talking. But if you think about even Field Service Management , take a company like Bosch as an example. They need to grow. Post-COVID, direct-to-consumer is a huge part of their business, especially in the United States. Just take that as a case study. With GenAI, you now have the capability with Field Service Management to sell a high-value, high-price service agreement along with the hardware. Because now, with GenAI, you can move much faster. You can route people properly. You can fix things before they actually break. But when they do break, you get it right on the first call.
That's a 50% margin improvement. ServiceNow is the only company that can go across all the complexity to give one consumer experience in Field Service Management . I'm just giving you one example. I think the big point today in seeing these products is the value we're unleashing for the customers. I think now the customers and the markets are realizing, "Wait a minute. We saw them in IT. We saw them in the employee experience. Now we're seeing them in the customer experience. And that's the biggest TAM of all. And we're coming." Guys?
The simple answer is we have a right to play. We started with customer service in mid-office and back office. And then we moved to the engagement layer eventually. As John explained, for sales, order management, things, there is a lot of decomposition of orders that happen, how do quotes get converted to order, CPQ, we have a right to play right now in that messy middle. That's where we are starting. We have significant opportunities in certain verticals where we are already very strong. And then once we prove the use cases and customers getting value, then we'll figure out where other areas to expand in.
I think the only thing I'd add to those two answers is we're doing it already, right? So if you recall last year, and I was here with Stefan Henkel from Siemens, Siemens Healthineers are already using ServiceNow, front office, middle office, back office, all the way through. So for me, this isn't necessarily about, "Are we moving into the front office?" It's about acceleration. It's accelerating what we've already got. I lived in that world for a long time, for nine years. And we're ready. We're ready. It's going to be great.
Yeah. Hi, Bill. It's Stefan Slowinski from BNP Paribas. Good to see you. Just wanted to go back to your opening comments and talk about brand. So it looks like you feel like you've got the culture right. You've got the product right. It feels like now you want to double down on getting the brand right. Why is now the right time? Why is that important? And what do you think that can deliver in terms of helping you expand the business?
Thank you very much, Stefan, for the question. I appreciate it. Good to see you. The company is ready now for mass scale. I think we've been working for the last many years to get the company in a position where we're a true platform company where, as Gina put very elegantly today, we're a multi-product company. As Paul talked about the coverage strategy, we're spanning the global economy now. Our footprints are going geographically everywhere. As CJ pointed out, we're deep in six industries. And we have permission now to play at a grand scale. The world works with ServiceNow was probably two years ahead of where we were then. But where we are now, the world's waiting for us. And the tailwinds I tried to express today are waiting for us. So I believe that the world works with ServiceNow.
Give me a great brand like JPMorgan Chase works with ServiceNow. Give me a great CEO, Jamie Dimon, works with ServiceNow. Lori Beer works with ServiceNow. And we'll take it all the way down to the individual lives that we're touching and the impact it's having on their work. Tomorrow, we'll announce in my keynote a board of directors for the ServiceNow User Grou p. That's never been done before because we want to get even closer to the customer, even more intimate with the customer. And I think Idris Elba is the perfect messenger for the reasons I stated this morning, but also the fact that it's an authentic partnership that we have to truly change Sierra Leone in a smart city context as we did with NEOM or we're doing with NEOM in the Kingdom of Saudi Arabia.
So we need a noisier brand to create more awareness and consideration because once we get in there, we just grow and grow and grow. And we're ready to take the world by storm. We're going for it. We're not just going for incremental here. We're going for it. We're going for the fences. And now it's time to make our move.
Thanks so much. Brad Sills from Bank of America over here. Question for you, Paul, perhaps. You outlined 55 customers with greater than $20 million ACV. I think you called them all-in on ServiceNow customers, another 500 that you think you can go get. What were some of the successes in those accounts that got to that level? And how repeatable is it? There's so many ways we could see ServiceNow getting to that. But was it the customer success organization? You obviously partner very closely. You've got a number of modules across employee, customer, IT. Just curious, what's worked there? What's repeatable? And what does it take to get a customer there? Thank you.
It's a great question. Thank you. And I always have to be careful about saying something like, "There are 500 customers that will absolutely get there," because Bill remembers that. And so that's just now the hard number. Typically, those customers have been on a journey. It's not a long journey. Some of them have gone to that level of spend in three to four years. Others, it's taken a little bit longer to get there. When I talked about that new logo win in a U.S. auto company, they've signed a five-year, I think, $100 million TCV contract. And they will be at that level of spend in about year three and four. So some are just architected that way. And they will get there. Others, the real differentiating factor is where we've been able to elevate our engagement to a true strategic C-level engagement.
Because when we have that level of engagement, then there are very few CEOs and boards of directors and C-suites on the planet that don't see what CJ's team presented today and see how it can transform their business and how it can transform their business quickly. So we land. We deliver real measurable success. In some cases, we land already with a pre-architected three-, four-, five-year journey with that customer that absolutely gets them there. In others, we land. We demonstrate success. And then we really capture the attention of the C-suite. And then we're just off. Then we're off to the races. And it's because the platform that CJ and team have built, it works. And it delivers value quickly. And so that allows us to ramp those numbers really fast. CJ, anything you want to add to that?
I think fundamentally, we still start a lot on the Technology Workflow side. To answer the question, when we see the expansion on some of these customers, which are massive brand names, it very systematically, with the great go-to-market team, expands. Even within HR organization, we have multiple modules. In customer service, as Bill shared with field service. And for industry, we have modules for those industries, which are premium-priced products. And you see that math adding up really fast. And then you add Finance and Supply Chain Workflow or Creator Workflow. So it's still the innovation across lines of businesses that we have not just on one side.
One last thing I would share is that what also allows us to expand, what Gina shared on, is consolidation of multiple-point solutions, which has allowed us to grow at the rate we have grown even during 2022 and 2023.
Just one other little ad. Thank you, CJ. $20 million is definitely not the ceiling, by the way. So those organizations, they're going to continue to grow and scale as well as they just bite off more business problems and solve even bigger business problems. We've got many, many larger customers than that. But that's just the cohort we chose to highlight today.
Thank you. Over here, Mark Murphy with JPMorgan. Bill, I'm wondering how commonly are you being pulled into sovereign business where it feels like there's a different sense of urgency and a different budget? Because we're hearing from the hyperscalers that this cycle feels more sustainable. It feels different because they're viewing AI as a strategic national interest with very long-term commitments. So I'm just wondering if you're sensing a different type of a mandate with these country governments.
I think for sure, Mark. There's definitely the sovereign mandate. We saw this in KSA, which was quite amazing. We obviously see this in the U.S. We see this in France, U.K., Australia. That's certainly a movement. We had one business case in public sector that I reviewed this weekend that had GenAI at its core, where this organization was taking out $3.9 billion in cost. And the fraction that we were getting for that is so tiny in comparison. Yet it could be really high movement on the needle at ServiceNow. So we're walking into crazy stuff. Whether it's commercial or sovereign, these scenarios are unbelievable, literally hundreds, sometimes even thousands of disparate applications out of control, data out of control, security out of control, chaos in terms of working across functions and actually working in teams to accomplish something.
It's not unusual to walk in on the CRM question with 175 different instances of one vendor's CRM or another one where you'll have 200 instances of a vendor's ERP. And none of them are integrated together. And ServiceNow comes in there with that clean pane of glass and that workflow orientation. I thought Steve gave a great example on the Peoplesoft example that he gave in government, where they simply take the data, move it into the ServiceNow Platform, and reinvent the employee experience, and do that in a way, as CJ showed with the technology, that is extremely secure. We're working with their data. It's rocket-fast. And it's inexpensive to run. Those are winning formulas in this marketplace. So we see it in sovereign. We see it in many branches of government. But we see it across all commercial entities across the globe.
I remember times where I would go into situations, have the CEO phone call or the CEO Zoom. They really didn't know ServiceNow so well. Literally, once we engaged, six months later, they're asking me, "Where have you been?" "We've been there. But now they're pulling us in. We're finally at that phase where we're getting pulled in at the C-suite.
Hey, guys. Alex Zukin with Wolfe Research. I guess I'll ask you the AI question. So you shared a lot of first of all, great job today on the entire presentation. It's compact, impactful, as usual. You shared some stats around Pro Plus realized pricing, 30%. You showed a pretty substantive graph about how far ahead Pro Plus is versus Pro. You even dropped some numbers, $1 billion, $2.5 billion. When you look at and the $2.5 billion even suggested 100% adoption, at least, of the products today. So how do we think about the pacing? How do we think about the unblocking?
When we talk to customers, everybody wants it. Looks amazing. Demo's great. It's not cheap, is the feedback that we get. What's the unblocker? How do we pace that and connect that to that when on the $1 billion and the $2.5 billion?
Do you want to start on?
Oh, you start.
OK. I'll start. Well, it's a great question. What I'll start by saying is that customers are loving the product. They see the value. They see what productivity, efficiency, what gains. I mean, they're real. We've launched them internally. And by the way, because we're Customer Zero , we can show the proof points, which is really helpful in the value sell that we're doing. Some customers are going to be really ready for it. And some customers are going to take a little bit longer. And so if you think about what the ramp for Pro was, right, we got to about 45% in five years. We never told you exactly how but we told you every year where it was. So you can kind of pace that. It is moving faster. How much faster? That's the big question.
What we're trying to do is really remove all barriers for customers to be able to get their hands on it, use it, understand it so they can get ready to deploy. You have customers who bought Pro early and are the first hands raised to get Pro Plus. You have other customers that are still on Standard and realize, "Oh, boy. I got to get ahead of this." And they're talking to us about skipping to Pro Plus immediately. Then you have others who are like, "I'm going to wait and see." And so what we try to do in framing the dollars view and framing the opportunity, as you think about the longer-term opportunity for ServiceNow, it's greater than ever with GenAI. How fast that $1 billion or $2 billion comes to fruition, two quarters in, is really hard for me to give you a guide.
But what we try to do is say, "Hey, listen. By 2026, it's definitely going to have some impact to the top line. We're very confident that our CAGR is going to be above 20% for at least that amount of time. Some of that is GenAI ramping up." And so the question, how quick? I'll come back with probably a better answer next year after we have 8 quarters. But what we're seeing so far is great. The traction, the uptick in pricing, the adoption being faster, all tells a story that GenAI is going to be infused, as Bill says, throughout every workflow in every industry in the next some odd years. And so ServiceNow is positioned well to take advantage and be right there to help our customers through that transition. I don't know if you wanted to add anything.
So Alex, one of the things that we are seeing in the first seven -ish months is also customers are asking us for help. So a large financial services company, they turned it on. They saw really, really good results for service agents and for employees. The CIO told me that he has once a month meeting with the board on all different AI initiatives and needed our help to articulate the value, the productivity gains that they are getting with ServiceNow. And they may be doing it with other things. So what I'm seeing, first of all, is that demand signal is strong compared to what you would see in Pro. When we launched Pro, folks were like, "OK, this seems a little too cute initially in 2018." Then eventually, we proved it out. So that's number one.
The second thing that we are very, very cognizant because it would be very easy for us to do this and we do not want to do this is announce end-of-life for Standard and force folks to shift right with Pro or Pro Plus. We want to deliver clear value in Pro and Pro Plus where a customer says, "I do want to." Last year, we were at 40% on a large base. This time, Gina shared 45%. So that's one thing. Some of the software companies take that stance where they end-of-life X to grow Y. We do not want to do that. And I think Bill made a clear point. We want them to go through Pro journey. Pro has a lot of other things. But then turning on Pro Plus is very fast.
The time to value that I showed, we have now customers going live in 4-6 weeks for the initial set of results. They're like, "OK." They work with the engineering team. We are involved with most of the early-on deployments so we can learn and figure out how we can help the customers. Trendline-wise, a couple more quarters before we can say, "OK, now one full year is done." What's the demand signal? The deployments being fast is definitely helping because customers are asking, "Hey, this was turned on at this customer. Can you tell us what really happened?
Alex, I want to just thank you for your very nice comments because I'm so proud of this team. This is a great team. And to have it acknowledged by someone like yourself means a lot to us. And I really think the big thing here is awareness. When you can get mass awareness and GenAI, instead of just becoming a tech buzzword, actually is in a business process. And you can demonstrate a workflow. And you can show people how this technology takes 70% of the soul-crushing work out of their life. And you can create a movement with the users. The senior executives are already looking for something to talk to their board about, doing everything on GenAI. Let me show you what I got. It's the users that you have to touch and show them that their lives can be substantially better.
The business cases, I hear this a lot with the price. So I definitely want to take it on. The price is a fragment of the value the productivity delivers to these businesses. Please don't worry about the price. It's basically showing the technology, getting the adoption in the demonstrations on the user experience. Large pharma company, life science company, great CEO, swarm in January, CJ and the team, they have them live on GenAI. And maybe clinical trials shouldn't take six and a half years. Maybe it should take six and a half months. It could change the world. These are things that change the world. These are not incremental sales of technology. These are business processes that fundamentally re-engineer the way work is done. That's the big picture that we have to stay focused on here. I am unaware of an enterprise software company that can enable that like ServiceNow. None of them. Period.
Thank you. This is Peter Weed from Bernstein. I think you did an amazing job showing the leverage that could potentially go on in the business as you expand relationships with solutions integrators to hyperscalers and so on. One of the impressive stats you said is you've got almost 10, I think, SIs out there saying they're going to build $1 billion+ practices. How should we think about that and conversion of dollars to ServiceNow? For every dollar per year the consultants get, is that 20% new ACV for ServiceNow? Or how do you think of that opportunity to ServiceNow?
I'll give that to Paul to share some of those heuristics. But I think it's also important that ServiceNow and our time to value and our cost to implement compared to things that these customers are used to looks like the best bargain in town. So I think it's really important that these projects are short cycles with rapid time to innovation and rapid time to value so they recognize this is no 20th-century tech company. This is a movement. This is a new tech company. This is a cloud company born in the cloud and on the fly, not something that's just going for the old, let's bring in the busload of consultants. I just really want to make that point. So our cost to implement compared to all the other ones out there that you know from the 20th-century is like this big. And then, Paul, you want to add some color to that?
Yeah. I mean, I think if you look at it back from the other direction and you go, "OK, for every dollar of net new ACV that ServiceNow sells, what is the opportunity for the partner ecosystem?" Well, that's typically a multiple of three or four of that initial dollar of net new ACV. So we go and drive $1 billion of net new ACV. There is between $3 billion and $4 billion of services for the ecosystem to execute. So you can kind of work back into the number from that. But I think the key thing for me and remember as well, yes, we've got seven of the large SIs committed to billion, in some cases, extensively plus practices on the Now Platform.
But then also outside of that, our ecosystem in terms of the breadth, in terms of the Indian SIs, in terms of the mid-sized SIs, the third areas of the world, and those kind of folks, it's phenomenal. I think the other key point, though, that I'm relying on from our partner ecosystem is typically right now today, they source about 15% of our opportunities. And we encourage them to do that. That's actually higher than a lot of our industry peers. So our partners are actually actively out there sourcing new opportunities for us. Personally, I think that 15% number can be a lot higher as well. And it will grow higher. But anyway, hopefully, that gives you some of that data there.
Peter, just one final thing. RiseUp with ServiceNow, I think, is something we told you about last year that we'd have 1 million. We're well on our way to achieving that. If you think about the Kingdom of Saudi Arabia, as an example, we're setting up a learning institute in their Garage project in KSA to train the entire IT professional pool of talent on ServiceNow. If they come to work for ServiceNow, great. If they go to work in some institution, public or private sector in KSA, great. If they go to work for one of our consultants, great. We're bringing them into the movement.
I think we're going to be doing that by the thousands. We'll do that in geographies such as the ones Paul focused on in his presentation today and also net new ones. Africa is one example. We don't have that up there. That's a market of the future. We're putting a lot of thought into it now. Next year, that'll be up there.
It rises up with ServiceNow. Kash Rangan here, at Goldman Sachs. It is truly spectacular to watch a company. I don't think anybody, not certainly me, estimated the company to be $10 billion in our models many years ago. So congrats on the growth at scale. You've laid out targets to hit 50,000 customers. That's in how many years it takes. But you've been such an enterprise player selling these big deals. As you go down market, Bill, how does the playbook change? And CJ, for you, when and if that playbook changes, how does the product strategy evolve? It certainly has to be more simplified, watered down, if you will. And Gina, does that have any impact on the financial model? Thank you so much.
Kash, thank you very much for your comments. I'm sure it's like a proud day for a founder, Fred Luddy, and our great directors to see the company. Many of them have been there for the whole journey to where we're at today, 10, and on our way to 15, 20, 30, and beyond. Pretty beautiful moment. Think about Paul's slide in terms of marquee, enterprise, commercial. That has been the major focus of ServiceNow. Think about the six focused industries, lots of focus and execution in there. But I think Paul can make some comments on the inside sales part of this. I think that there is a lightweight model waiting for us. We haven't even had to pull that switch yet. But there's a couple of partnerships that we're working with because we do realize that there's a great market down there for us.
If you think about tele, if you think about young sales professionals, if you think about various partnerships that we could get involved in, look at that as upside and gravy with a lower-cost sales model, very turnkey on the implementation side, and focus it probably by the strategic industries where we either know what we're doing or we do it geographically. And we just go for market share where we can. A lot of times, I'll walk into companies $1.5 billion. They're making a mess of things, not because they don't like ServiceNow. They don't even know we're there. So there's a lot of potential to go into those markets. And I know Paul's got plans for that. Paul?
Yeah. And I think one thing, Kash, that we absolutely see when we start looking at those customers that may have been smaller than a historical ServiceNow customer, still a significant customer, 1,000 employees plus $100 million in revenue. And I'm thinking of two very specific examples in my mind, one, a large global law firm, another, actually, a fast-growing technology business. What's interesting is both those two organizations are significant, low single-digit but million-dollar customers now of ServiceNow. So it's still a significant revenue opportunity. And typically, what we see at that end of the market is these are customers. They then go end to end with ServiceNow. They go across the Technology Workflow, the Customer Workflow, the Employee Workflow, Creator, Finance, and Supply Chain.
Actually, what excites me about that marketplace is we can instantiate our vision around ServiceNow being the service layer for the enterprise and the way you truly run your business. We can make that real, really fast in that segment of customers. So that excites me. And of course, there'll be smaller customers. There'll be run-rate business and so forth. But that really excites me about being able to go wall to wall, truly be the enterprise platform for that market segment. And we can do that very, very quickly. And to double down on Bill's point, it's the reason why I'm tripling the rate of growth in our inside sales organization because we want to be able to do that without disturbing any of the economics that Gina went through. And I truly believe we can do it without disturbing those economics.
To be clear, sorry.
I just want to say one thing. They all get a kick out of it when they hear that we have a finance system at ServiceNow. We have an HR system at ServiceNow. We have a CRM system at ServiceNow. And we also have nearly 25,000 people that don't know that because it doesn't matter. They run the whole show on ServiceNow. And that's all they see each and every day: gorgeous dashboards, great user experience. We got 20 GenAI projects going on in the company. We're running fast. We're running lean. And that's really the Now on Now philosophy that Chris Bedi has built into the company. We show them demos. They're going to have 110 Now on Now demonstrations here, meaning customers are coming here, 110 of them, with their executives in numbers, show me how you run ServiceNow. OK, we will.
And if you do that, you're going to run a lot leaner than you are now. You're going to get to value very quickly. People are going to love it. So are your customers. So that's really a part of the story that we really need to amplify. And we will.
Kash, I just want to answer before. You asked a question. Will we have a different product? What Paul outlined is still commercial segment, which is 1,000 and above. We are not going to create different products. That would be a mistake. We have tried that before many years ago to limit the functionality, sell it at a lower price. It does not work. Our goal is, what Paul said, provide service management for employees or for end customers across all lines of businesses. There is still a significant number of new logo opportunities for ServiceNow: US commercial segment, U.K. commercial segment, Korea. You look at India, look at France. I can go through T10 countries. We still have a lot of opportunities in that 1,000+.
But to be clear, it's a business we're already serving. That's our commercial business. And we're serving it well. And so from a P&L perspective, it all works within what you've already been seeing. It's one of our fastest-growing businesses as well. So it's not something new for us, no new products, more salespeople to go sell, of course. But it's what we do.
It's what we do.
It's what we do.
Hi. It's Gregg Moskowitz from Mizuho. Thanks very much for a terrific presentation. So I have a question for CJ. A lot of workflow automation in the area of customer support, especially with the emergence of AI, has been about case deflection. And in fact, with each passing year, it just seems that the chatbots that we all engage with, if anything, just make it harder and harder to connect with a live agent. So one of the examples that you showed earlier, which I thought was really interesting, was a new service to sales use case where it was the opposite of deflection. It was elevation to a sales rep to drive upsell. And so when you look at the custom LMs that you've built, how sophisticated are they today?
When is a realistic time frame when customers using Now Assist can truly optimize when to deflect and when to pivot to a revenue generation opportunity? Thanks.
It's a great question. First of all, we have always known that service opportunity is a sales opportunity when it comes to end customer request. As John walked through, initially, our customer service product line was very focused on mid-office, back-office workflows. It was just the past few years that we actually moved to the engagement layer. On the engagement layers, things that could be deflected, as you outlined, we are already deflecting. On your question around LLMs, or we just call them GenAI models now, these models will continue to improve. What I really like about what ServiceNow has done innovation-wise is that not only are these models smaller, use case specific, like figuring it out, hey, at this point, there have been seven, eight interactions back and forth with the Now Assist. It is time to elevate to live agent.
And oh, by the way, let's create a sales opportunity in what John and the team showed around quote and so on. So coming back to our use cases and our data types, I think we are just a few months away before we can make that call that this now requires some customer service reps are not also sales reps. So they will transfer you. We all experience it. You're trying to get service requests. And they're like, hey, I want to add a new line. They're like, please hold. And you repeat the whole darn thing again. So that's what we are trying to summarize, pass that information, as you saw, and get there. And pretty ambitious roadmap that we just launched the product. But that is a very important transition. And I feel very good about Generative AI roadmap there.
Right here. Hey, Tyler Radke from Citi. Thanks for doing this good presentation. Gina, I really appreciate the 30% realized pricing. I think that was a popular slide among investors. I'm curious how you think about the sustainability of that. Would you be willing to sacrifice a lower uplift for faster adoption? Then secondly, CJ, we talked a lot about Pro Plus. But I'm curious, as you look out three, five years, what comes after Pro Plus? Is there an Enterprise Plus? I know we're still early. But we're all long-term investors here. So I would appreciate your thoughts.
Great question. We launched the Pro SKU in 2018. We're five years out. We're still seeing that 25% price uplift. 30% on this Pro Plus SKU with the incremental value creation, I feel pretty confident that that's going to be sustainable given the value add. Five years after Pro, we're still at 25%, I feel good about that 30%. To your question on pricing versus adoption, I think we'll see. Right now, as Bill indicated, that 30% is a sliver of the value. We did the exact same thing when we priced the Pro Plus SKU that we did when we priced the Pro SKU. That was about value added. We give 90% of the value to the customer. We take a little bit.
When we have these conversations with customers, when we show them the value, and they buy into that value add, it's not as difficult to sell as you would think. It's pretty straightforward. And so if you think about the incremental value add, right now, we're seeing really good uptick. As I said, two quarters do not a trend make. But early days, and if you go by what we've done with Pro, I feel pretty confident that the pricing will be sustainable as long as the value add is sustainable.
Tyler, so 2018 Pro, 2023 Pro Plus, one of the things that we shared today transparently is our Pro Plus roadmap in terms of which other products are being enabled. And Gina shared that that does not even cover our industry products that we have created. Maybe it is for public sector or telco. So from an opportunity perspective, there are still a lot of other products where we will have a Pro Plus edition available over time. And from innovation and engineering perspective, the goal is pretty simple: how many products we can enable where it adds the value for the customer with Pro Plus. That's job one. Make sure that Pro Plus delivers the value for customers so we can have this kind of realized pricing, which is always work in progress. We did that with Pro. We are going to do with Pro Plus.
But I think the beauty of that whiteboard and being able to take that picture and convert that to workflow, what Bill shared, every process in the organization, in our customer base. Imagine that you can just do that, convert that to workflow for the products that we don't ship. And now you have ability to drive that part of our Pro Plus curve in a significant way for processes that people didn't even imagine that they could put on ServiceNow. And I think that's the big unlock that we are looking forward to.
Keith?
Excellent. Thank you, guys. This is Keith Weiss from Morgan Stanley. Thank you for the really expansive presentation. It really shows the scope of what ServiceNow can do in trying to touch every person within an organization, and particularly with some of the demos, the second demo of the Now Assist and how, in the future, it's going to be in front of the employee all throughout their day. When I'm thinking about who else could provide that potentially, maybe Microsoft, maybe some of the other hyperscalers. And it's only Microsoft and maybe Google because they have the productivity suite and something that we're using all day, every day. So the question is for CJ. Is ServiceNow going to be competing more with Microsoft on that vision on a go-forward basis?
If so, what's the competitive advantage that ServiceNow brings to the table if they're bringing the productivity suite and the fact that we use them every day?
So first of all, Keith, we have a great partnership with Microsoft, Bill with Satya, us in the engineering team with Scott, Rajesh, and everybody over on the Microsoft side. And we do consider them as good friends, good partners when we think about innovation. The question that you just asked is the same question that Paul relayed to me, that a lot of our customers were asking our sales teams. And in working with Microsoft engineering team over the past few months, there are two things I'm going to share. We are going to announce this on Wednesday. So number one is the Copilots from Microsoft are now integrating with Now Assist. And that's the live demo we are going to show on Wednesday, that Microsoft says that, OK, here is where we stop.
Here is where we pass on the baton to ServiceNow to get the work done from a service management perspective. So it is an and, not an or. Microsoft, if you look at their roadmap, which is ambitious, Microsoft for Sales , Microsoft for Service, when you even look at those roadmap items, what you find is that ServiceNow is an and. Satya Nadella, in the last earnings call last week, said that even for Service Copilot, they are working with ServiceNow, which is absolutely true. Just last weekend, Microsoft, for one of their key ServiceNow environments, turned on Now Assist. They are going to do that for others. So they are seeing that even internally, that it is an and story. So now it comes back to your customer question. We are very clear that this is an and. Here is where M365 stops.
Here is where Now Assist starts. Here is where Teams Copilot stops. And that's what we are going to show you in a beautiful demo on Wednesday.
What I'm also seeing, and it is a great question, is this is also now coalescing in our customers' minds as well. So I have this conversation multiple, multiple times a week. And what I'm seeing our customer base do is they're now coalescing around one or two critical platform choices. And I absolutely see this being an and equation. For most of our customers, it's going to be, we use Microsoft for these use cases. And we use ServiceNow for these use cases, just how we're going to use it internally. I'm going to use Copilot for Microsoft Dynamics. And I'm going to use ServiceNow for actioning all of the other tasks I need to do to run my business. And so it's very interesting.
And how it's evolved in the last six months, the customers that are really making progress here are like, yep, we're going to make this platform better with them. We're going to make this platform better with you, Paul. We might use one or two very specialist models over here for solving a very, very specific set of processes. And quite frankly, there's just too much noise everywhere else. And this is how we're going to make fast progress from a GenAI perspective overall across the enterprise, coming through crystal clear now in all the customer conversations.
Keith, you're 100% correct. Employee productivity, most people will think the Office suite. And then ServiceNow is typically in the service of employee for service management. We have started conversation with G Suite, as in Google Suite. And we are in early stages to do the same. But this integration that I just outlined with Microsoft Teams that we are showing would have not been possible without our friendship and doing the actual engineering work because you cannot do that without the actual engineering work.
Excellent. Thank you, guys.
Hey, thanks very much over here. It's Michael Turrin with Wells Fargo. Great content, as usual. I appreciate you doing this. So I want to ask the similar question that Keith asked, but in a more open-ended manner. And you have very strong core positioning within IT and IT Service Management to draft off of. As you extend into areas like Customer Workflows, Finance, Supply Chain, you run into other pillars and other areas. And so I'm wondering, more generally, how you think about co-opetition versus competition and where you see replacement opportunities versus opportunities to partner, and what informs that.
I'm going to start. I think the world is, Michael, I think the world is now seeing that it takes a long time to rethink what it took a half a century to build. And nobody wants to slow down to speed up.
So they want to adopt the GenAI renaissance in their enterprise. They know it's coming. They may not know exactly what it is. But certainly, to Keith's point, Microsoft Copilot is known. They did a very good job of that. Very happy the integration with Microsoft has gone so well and we're such close friends with Microsoft because that's what the customer wants. But they are seeing now it would take years to upgrade complex systems. They don't have years, especially with GenAI. The pressure is on. If they fall behind, they lose the market. So this is one of those do or die moments. There hasn't been a lot of the do or die moments. 2008, the movement to the cloud, obviously the internet. This is the moment. So I think what's happening now is we're going to be playing in all those TAMs.
I was a little shy when I put up the $275 billion. I thought I was playing a little conservative because if you think about the ERP TAM, it's $0.5 trillion. Yeah, that $275 billion, pretty soon, we're really rolling. So I think what you're going to see is key business processes will be rewired with new workflow orientation, leveraging customers' own data to radically simplify on a simple platform the way the operation runs. And they want results now. So if you don't have to undo that, maybe you don't even have to upgrade that. But you could put that clean pane of glass to achieve a mission, like Steve said, as it relates to the agencies and how they're leveraging those old systems with a new way of doing things. This is the new frontier.
I think the forcing function I've been talking about it for five years. But I think the forcing function is now GenAI because they know they have to do something. It's really a great moment in time. I think you'll see us you see finance. You see supply chain. You see front, mid, and back office and CRM. You see absolute innovation. Take a picture. Write a code. You don't have to be a great engineer to do that. Probably, we could have analysts outside your office do that.
They do.
Now they're rewiring business processes. I met recently with a bank CEO at the top of the house. He talked about doing things quickly, that he learns more from watching what the secretaries are doing than he does his executive team. And he said, "I can learn." I asked him to 10 things that are messed up about the company. "What is it you don't like about your job?" He walks away from that conversation knowing more. Now I know what I got to do. This department isn't talking to this department because these things are standing in the way. Integration remains the biggest issue in the enterprise. The number one GenAI use case is optimizing the processes. It's the number one thing. We got this.
So our whole thing now is to keep doing what CJ and his team is doing best in the business, keep doing what Paul's doing, working closely with CJ on the go-to-market and how we get this product into the market. We just need education. And that's where the brand comes in. We have to educate the market to get mass awareness, mass consideration, then mass scale. This isn't like every other moment. And it won't be like every other moment from an incremental versus breakthrough. It's just a question of when it happens. And it'll have nothing to do with the price uplift or nothing to do with anything other than, does it work? Does it make the work better? Can I move out and get the job done now?
Probably, how can I not do what I was thinking I was going to do because I'm going to spend a whole lot of money and not move the ball down the field? That's what's at stake here. $275 billion, very conservative, much bigger, much bigger.
OK, great. Karl Keirstead at UBS. This one's for Bill. Bill, I want to ask you, generally, how content are you with ServiceNow's pricing model? Because if you're going to rewire all these workflows, you've got a shot at rewiring the way you price, actually. I don't mean that as a negative. You're going to be under pressure, actually, as an opportunity because you can move to a model that's less correlated, essentially, with customer headcount growth. I'm sure ServiceNow's always got a team that's evaluating these things. I'm just curious, what's the current state of that thought process?
I think that's a brilliant question, Karl, really, because let's just say you're dealing with an insurer. And you say, let's rewrite the claims management process for, let's say, a $20 billion insurance company. That could probably save them billions. Maybe the workflow orientation of that key business process for the underwriting process for insurance should be a SKU. And it should be a turnkey solution. And it should include not just the licensing but also the implementation and the full delivery of it. I think we're going to see the evolution of new breakthrough pricing based upon new key business process or workflows that change the dynamics of an entire industry. If you change the clinical trial process for the life sciences industry, it's worth billions and billions and billions. Same thing for the underwriting process for insurance, billions and billions and billions.
So it has to be another frontier in pricing if we can think through the end-to-end value proposition, turnkey it, and get it done in a short period of time where they can start realizing value fast. They'll pay for it. I know they'll pay for it. And we're going to get there.
OK, thank you.
Thank you.
Hey, Raimo Lenschow from Barclays. Oh, on this side.
Hi there.
CJ, or for all of you, actually, last year, I had the first question here in the Q&A session. I asked about P times Q. I don't remember. I think the market has moved on quite a bit over the last year.
Thank you.
Just think about more broadly, not about P, more the Q part. It looks like, actually, and you mentioned it earlier, that we're kind of expanding Q, actually. And I'm trying to bring Paul in a little bit. It's on a per employee. There's more. But if you also think about going into smaller accounts, does the GenAI capabilities that you guys can offer that will be relatively unique in the market actually help you to expand the Q, not just in the accounts but in other accounts? Thank you.
Do you want to go first?
No, you go first.
OK, I'll go first. So I think there are a couple of little known pricing models that are already out there inside ServiceNow. One is a transactional-based pricing model. I'm thinking of a very large global bank based in London that is using that transactional pricing model around using ServiceNow for trade settlement exceptions. So small team, massive impact. And obviously, we're working with a transactional-based model there. Another pricing model that we recently launched is more on a commit-to-consume basis that you'd be very familiar with from Azure or an AWS kind of model, where we've now got a number of large enterprises that know that they're all in on ServiceNow. They know they're going to consume a certain amount of this over the coming three, four, five years. They want the flexibility to use all of the innovation from CJ's team inside that.
They don't necessarily want to have meters against things. They're going to commit to consume a certain amount of product from us. Great. So we're going to see a lot more of that. But I think this links back to that very first point, which is particularly when and again, I'm thinking of maybe a small digital bank, might have only a team of 800 people, 900 people. But it's acquiring a massive, massive customer base. And the work that we are doing is phenomenal value for them. Then we will be moving more to that transaction pricing model as well. And I think the key thing to take away is this is not new. We are already doing it. But what we're seeing now from GenAI, Now Assist, the value it brings is it's an accelerant to those kind of pricing models. They exist.
We're just going to start accelerating using them because you're absolutely right. The value that is created is disproportionate to 1,000-person seat count. But we have the mechanisms to capture value from that.
I would just say that given that we are adding new products every year, our TAM, even if it's a smaller enterprise and Bill McDermott had this line that everybody who is small still wants to grow up to be big. So we never worry about that piece. But we continue to add multiple products so that even if Q remains the same, you still have P1 plus P2 plus P3 if we can deliver value for them.
Hi, guys. Kirk Materne, front row. Thanks for having us. Thank you for your time this afternoon. CJ and Paul, I was wondering if you could just talk about the operational technology opportunity. There's a lot of uncodified business process at the edge. There's a lot of workflow that could be better captured through your system, I imagine. What is the opportunity there for you all over the next couple of years? Is it a rip-and-replace opportunity? Is it mostly greenfield? And Paul, from an industry perspective, can you also talk about just this? It seems like something that's tailor-made from an industry perspective to go after. So could you guys just talk about that a little bit? Thanks.
Yeah, absolutely, Kirk. So I'll touch on what Pablo said. Operational technology is pretty much in every industry that you can think of, whether it's manufacturing, auto, aerospace, defense, pharmaceuticals. We did a POC last year with a very large pharmaceutical company where they are creating, of course, drugs and so on, utility companies. We have customers in oil and gas that bought the product last year. So first, what I would say is the applicability to different industries is very high in OT. So it's almost horizontal, except like a financial services company or a consulting company. But most of the industries can benefit from OT. This is not a replacement. As Pablo shared, this is driven either via cyber resilience that if my utility plant goes down we had one large public sector customer in the U.K.
They were trying to solve for all the smart meters, traffic lights that they put on highways in the U.K. system. So when I think about it, the TAM is massive. I know Gina shared the TAM number. Most of the time, there is no system. So discover the assets, service the assets, and make sure the asset stays secure, which is the final frontier. That's what we are doing. And we are literally, what Pablo said, 10 years behind. I would say 20-25. The only thing I would caveat is it's a slow-moving space in the sense if you are manufacturing your core product line. And now we say, OK, we are going to roll out ServiceNow to look at the assets and all that, they'll say, OK, you need to make sure there is no downtime, et cetera, et cetera. But pretty big TAM.
Yeah, everything CJ said. I think industry-wise, we're absolutely seeing manufacturing move quickly. We're seeing automotive move very quickly as well and then oil and gas and utilities like you were describing. I think two things have surprised me here. I think one is the size of the initial lands. I'm thinking back to the energy company we landed a quarter ago. This is a $4 million-$5 million net new ACV initial opportunity lands. They see immediate value. They want to go and do it. And off they go. But I am seeing a bifurcation in customer behavior around OT. We see some like that. And it's a significant multimillion-dollar opportunity from the get-go. We also see some. And again, I'm thinking of Bosch. We've got a very close strategic partnership with Bosch. They've got something like 212 factories globally.
And so some of the initial implementations is in factory one, factory two, factory three, to your point, CJ, assess the results, see how it's working. But then the landscape and it is, I think, a greenfield landscape because we're doing something that just hasn't been done in these environments before. And for reasons of resilience, cyber, and general efficiency will now need to be done. There's now a greenfield of another 200 entities to go out. So this is one where I think we were conservative on the TAM when we put not to play to Bill's desire for bigger TAMs. But I genuinely think we were conservative on the TAM on this one.
Kirk, one last thing. Paul knows this. But in Q1, so typical ITSM in the initial days were $100,000-$130,000 size deals per year. The two significant transactions that closed in Q1 on OT, one was oil and gas. One was a large utility company, multimillion dollars. I mean, that's because the number of OT assets are typically higher than IT assets when you think about oil and gas or utility companies.
These weren't necessarily huge ServiceNow customers in other areas. This put a multiple onto the amount of spend they have with us. It wasn't like a $50 million customer that added $4 million. It was like, no, this has taken them dramatically higher.
Unfortunately, we are out of time. But our executives will be available afterwards at Sushi Samba for joining us today.
Thank you all very much.
Thank you.