All right.
Absolutely excited and delighted to welcome Bill McDermott to the ServiceNow keynote-
Thank you.
at the Goldman Sachs Communacopia Conference. Bill, thank you for being here so many years in a row. We really appreciate your time.
Thank you, Gabriela. Great to be here with you.
Bill, the conversation we were just starting to have off stage, when we think about the promise of agents, and we've seen select examples in the developer community about where the technology is and how sophisticated it's become, then we turn around and come back to our enterprise environments, and there's a massive gap between the potential and what we see on the ground. Talk to us a little bit about your conversations with CIOs and CEOs. Where does ServiceNow help bridge that gap, and is the gap starting to close?
Yeah. The enterprise is a whole different scenario from the consumer experience. I think for years, the complexity of the enterprise has surprised people. We've moved from an environment of, I would say, token maxing to token economics. Every CEO wants to grow their business, they want to expand their margins, and they want to do everything in a highly secure manner. What we're seeing is you have to manage the identity of humans and agents and robots and thinking machines and do this all on a common platform. I guess our moat is context, because we have 100 billion workflows doing eight trillion transactions in the global economy right now.
That configuration management database knows all the people, places, and things that are going on in the enterprise, and it's that rich context engine that understands the rationale of how that work is flowing, to whom it is flowing, why it is flowing, and everything has to be auditable and highly secure. I like to say we're the rules and rails of the enterprise, which is very different than the do-it-yourself vibe slop that's happening in a lot of companies today, creating even more technical debt and risk than ever before.
Well, let me ask you about less the risk of ServiceNow being replicated or displaced, and more the question of what happens to the agentic workflows that perhaps get built outside of ServiceNow, such that there's value abstraction away from the ServiceNow platform. Maybe push back against that
Yeah
hypothesis a little bit.
Well, first of all, I think vibe coding is happening everywhere. What you're seeing in enterprises today is a lack of visibility. 90% of the organizations in the world economy today do not have visibility on the agents, whether they're bring your own agents or the enterprise agents in an enterprise. Just think about that risk, just for a second. We don't even have to get into the Hugging Face example or lack of kill switches, which obviously ServiceNow has all of that.
I think what we're seeing here is initially, companies were very interested in this because they're like, "Hey, can I do it better, cheaper, faster by vibe coding myself beyond these enterprise platforms?" What they found out was that there's a five to 10x TCO difference, meaning it's five to 10 times more expensive to even try that than actu`ally use a proven platform like ServiceNow, because you have the integration challenges that have been around for 60 years. You have the security challenges that are getting more and more relevant every second of every day. Then you have the ongoing support and maintenance of these systems. Of course, if everybody is doing their own thing, nothing actually integrates at a business process or an execution level from one department to another.
If I vibe code myself to a sales question and say, "How are sales doing today?" I might get an answer that sales are up or down, but it's not looking into the product development cycle, the supply chain, the ad campaigns that may or may not be running, and what's going on with the coverage strategy in the company, who's in what phase of what pipeline. Ultimately, after you make the sale, that's a good thing, but now we got to get the customer live, productive, adopting these things and being successful, which is going to touch every department in a corporation. So when we talk about enterprise, we're talking about a whole another ballgame from experiencing the convenience of these great thinking machines on your living room couch on a Saturday afternoon. That's the bottom line.
You've mentioned security twice in the last few minutes.
Yeah.
As someone who's spent time in security over the last decade, a lot of our conversations used to be about network, they used to be about endpoint, they used to be about identity. Today feels a little bit different.
It's become a lot more about visibility. It's become more about governance. Right at the same time as you've acquired Armis and Veza. So historically, I would've been skeptical about an application software company getting into security, but it feels like the domain is changing around us. So talk to us a little bit about that.
Well, if you think about security, the surface area of these attacks is expanding every moment of every day with the power of AI. What we've learned is having a broad security operation of our own, which ServiceNow has had for many years, where we integrate with all the major security players in the world. We always had that uber vision of what's going on in the security landscape in a corporation. Keep in mind, the average company is using 47 different security tools in their enterprise at any one given time. That's already a point solution mess. Now, we have that uber view of security operations, but now we have built and are well on our way to building the most integrated, secure enterprise security platform the world has ever known.
Because you have security operations, which was already over a billion-dollar business for us. You have identity management, you have asset management, you have operating technology, which takes into account IT, IoT, medical devices, critical infrastructure, networks, devices. We already have seven billion devices under management, but there'll be another 40 billion more that come into our purview in the next few years. We are the fastest growing enterprise security company in the world. That's just a fact. We're now the eighth largest with an ambition to be number one.
I think that's well within our reach and we're going for it because the customer wants not just to know what the security issue is, but because of our workflow automation platform, our unique CMDB and context engine, we not only can find the problem, so we identify the problem, but we can put the workflow into action to resolve the problem and close the loop in a fully audited, secure manner. No other company in the world can do that.
To what extent is that vision complementary to those other 47 point product vendors?
The fact is, it's not interesting actually to compete with the other 47. It's actually to make them all work better. I've always said if every enterprise software company would just adopt ServiceNow as the platform of all the platforms or the AI of all the AIs, their growth prospects would go up dramatically. If they do that, we partner well with them. If they don't do that, the customer has us do it anyway. But that's why we just keep winning.
Let's talk a little bit about the vision with ITSM.
One of my favorite parts of the Knowledge conference was when you talked about the pilot customers, and I think you had a couple of flagship examples of the before and after. When you actually go through automation on the ITSM platform, the ROI gets better, you could see the productivity improvements, the business gets stronger, all that good stuff. Maybe for those of us who weren't at Knowledge, talk to us about what the customer journey on ITSM looks like.
Sure. ITSM is our service management platform, and that is the core of the core. What's extraordinary about it is not just that it's a multi-billion business, but also that it grows in steep double digits. I always like to think of the core of any company as the moat that you really build everything else on. As you think about ServiceNow being able to service the business, manage its assets, manage its operations, do all of this in a highly secure manner, that extended out into the employee experience. So how I recruit, how I hire, onboard, provide all the services to an employee, or how I onboard a customer and I fulfill their order. Configure pricing and quoting supercomputers is pretty hard to do. That's why NVIDIA uses us and does it in seconds instead of days.
You fulfill the order and obviously service the customer all on one common platform. What you are seeing now in the global economy is this need to get away from all of the platforms and center your focus on the vital few where you can really put AI to work. Put AI to work for all the personas in a corporation. The extensibility of our platform, whether you are taking someone else's data from an ERP system or an HR system or a CRM system and operationalizing that in our workflow, or you are simply doing it in ServiceNow, you are autonomizing entire companies now. We have 20 level 1 employees that are agents badged into our company. 90% of our customer service, our employee service, and various tactical things that used to require tremendous human labor is now being done by level 1 agents.
We have airlines now wiping out call centers, basically doing everything on AI Voice with ServiceNow. I am talking about millions and millions of calls. The word is getting out there that we are on the move, that our AI actually really works, which is why it is up nine-fold in nine months. Why our CRM is doubling on a year-over-year basis, and it has crossed $2 billion in ACV. The same is true also for the employee experience. The integration power of that ITSM platform is everything. Let me help you out with another thing. It is very clear that people want these simple AI security desks or these simple AI help desks. We have something coming for all of those people. We are going to take it to 500,000 mid-market customers globally.
We are now in a very, very highly exciting beta with many of the biggest companies in the world, and we are going to be able to take this now to 500,000 customers globally. Also the existing customers will be able to integrate it back into the ITSM core. They can actually use a simple AI help desk for simple AI tasks and then integrate it back in with pure visibility into all the assets, into all the logs, into all the actions in a company in a fully audited manner, so it is not a one-off point solution. I think this will really change the market dynamics for some of the point solution providers that have a good time copying all of our information as if it was theirs. It is going to be a lot of fun. It is coming to a theater near you real soon.
Stay on this beta, because I can tell you are excited about it. What is unique about the way that this beta addresses the problem of ITSM that has not been done before?
Well, I think it just makes it clear that you can do very large-scale things. If you choose to do smaller things in, for example, a satellite operation or a satellite department, there is nothing wrong with doing that, but having it integrate back into the core system so you do not have the vibe slop that is getting created now. I was talking to somebody earlier today here at this conference where one of those vendors walked in and they said, "Oh, let me do something for you. I can do that." The decision-maker in the company basically said, "If I wanted to vibe code it, I could have done it myself. You did not do anything. That is nothing.
What we are looking for is can you do something at an enterprise scale level?" The answer was, "No, we cannot." I think to have it both ways, to have total choice, is something we want to bring to the market.
There has been a lot of debate just in the past two weeks on what a healthy relationship between an application software company and a frontier model looks like.
Yeah.
Would love to hear your comments.
First of all, this is a terrific thing. If you think about the compute power that is taking place in the world economy today, it is inspiring. If you think about the lab companies and the massive intelligence they are creating, it is inspiring, but it is also very costly, and it will be very costly to continue the pace of keeping that knowledge revolution going. What is so exciting about being ServiceNow is we could take advantage of all that compute, of all that intelligence, and then we put all of that to work in our AI platform for the enterprise without the cost associated with diving deeply into compute or deeply into the lab model, where they have to spend billions and billions to create this knowledge. We just get to benefit from all of it.
While others have made marketing moves announcing those exciting partnerships, and they are exciting, we have already been doing that for months and months now with complete integration into all the lab models. The cool part about ServiceNow is we will hire the right model for the right job, and we will enable the customer to manage the economics of their token usage by using the right platform for the right use case. Now you are into the token economics game. We understand that game very well, and we are partnering with all of these wonderful companies, and I think they are all tremendously exciting. The best is if you are a ServiceNow customer, you get to take advantage of all of it. You have total choice. We did not need a marketing event to actually pull that off.
We did it at a deep engineering level, and we did it months and months ago.
Let me ask you now about your early example on the airline cutting costs because they were able to cut out their call center. One of the questions we get from investors is, look, when you start adding up all of this CapEx and all of the frontier model spend, you cannot just save cost. You also have to expand the pie. There has to be-
Totally
some GDP derivative implication. There has to be more revenue that also comes out of the pool. I would love to hear your thoughts. For ServiceNow customers, I know you talk a lot about the labor argument, the cost argument, and Knowledge. What about the revenue expansion argument?
Oh, it is absolute. The revenue opportunity is massive. If you think about companies literally taking advantage of 20 L1 jobs now that are fully agentified at ServiceNow, and you just think about CRM growing on a doubling basis on a year-over-year level, these are huge kinds of numbers. That is because customers now are trying to connect all the things that a customer can do in any channel. They want to meet the customer where they are at. They want to fulfill whatever the customer requirement is and the configuration that they want, and they ultimately want to serve the customer on a net present value to create the loyalty effect for life. We can actually do that.
We are also arbitraging labor in the growth of company or the aspiration of company, where now with AI, instead of having triple the workforce to have a services model to deliver a decent margin, they can do it with five times less people, but still actually grow revenues that go into markets they were not even participating in before because of AI. I think that the GDP effect of AI done well is enormous, and I do think this rising tide will lift all boats. I see our own business model. People made a big deal out of, "Oh, seat-based AI, is it going away?" Everyone is finding out that not only did it not go away, but it is actually increased.
But on top of that, if you take that seat, we predict that that has a 4.5x increase in terms of the revenue of the original seat on the date the contract was signed throughout the fulfillment of the contract, because the AI effect and the use cases across the enterprise in the flow of work to reinvent business processes are so powerful and so growth-inducing and so margin accretive that companies are going to run to this model. As they do so, they will increase their growth, they will increase their margins, and obviously, they will do all this in a highly secure manner. That is what it is all about, executional excellence.
We're a big believer that when software companies drive value for customers, they're then able to capture a piece of that value via monetization. Tell us a little bit about how you pick the price point for some of these new AI products. You've already talked about how more than 50% of net new revenue is now coming not from seat-based contracts.
Sure.
Tell us a little bit about how when you have these conversations with customers about value, how do you decide how much of that value to then take in price?
Well, let's just look at ServiceNow, because this, as a matter of public record, we tell the story publicly. Our value accretion with our level one agents is $1 billion. It's about 2.5 million hours of work that have been taken off of the backs of people that were doing jobs that were somewhat soul-crushing, and now those excellent people can be retooled and re-skilled and do things that are far more productive in service to the customer, whether they're writing code, they're focusing on pre-sale, they're participating in the selling process or the post-sale go-live process, or the adoption and the token utilization process. Now we got people doing more important work. 90% of the cases, as I said, are being resolved by AI.
If you take a company like Robinhood as an example, which everyone has heard of, they're now using our ITSM product, and it's all autonomous. 70% of the cases that they used to manage with humans are now being managed by agents, and they're getting a huge ROI on that. If you take a company like Rossmann, they have 5,200 drugstores across Germany. They used to resolve customer cases in five to nine minutes. Now it's being done in five seconds. The implication is the customer's happier. They have more time to shop, more money to spend, and more loyalty to that brand. If you take these companies, 3M, taking a portal approach to managing the whole customer relationship, instead of having 26 legacy point solutions consolidate everything on one portal approach to running the business in a smarter way.
You could also say this for Starbucks, with thousands of locations across the U.S. as one example, 4,000 at least now converting to ServiceNow Customer Service Management. I could talk about Zoom, and I could talk about so many different instances where there's large corporations now fundamentally rethinking how they run their company. That varies by industry, but they're all exceptionally exciting. I had one company who was in the insurance industry and basically gave me a full day on a Friday afternoon to rethink the business processes of 17,000 agents and how you can put them to work in a holistic manner that's fully integrated into the core company with the sole intent of really meeting that customer where they are and keeping them for life, and also making the agent's life so much easier, all by leveraging workflow automation and AI.
This is such an exciting time. The other thing that's really underreported is data. There's lots of sources of data. We were the only company that fully integrated into all three hyperscalers and into those data sources, not to mention the great lab companies. Now all the data companies with the right connectors, we can make a zero-copy of any data source in any enterprise, from the systems of record to the various data stores to the hyperscalers, without ever moving a piece of the data. Zero-copy and continuous operations at AI speed. All of these things come together in a super innovative AI package from the AI Control Tower from ServiceNow.
Let's stay on AI Control Tower, because I think sometimes investors hear a system of action, and they think that it's as easy as plugging in APIs.
Yeah.
You talked about the full integration that you have with hyperscalers, with frontier models, et cetera. What is the difference between fully integrated when ServiceNow says it versus perhaps when your competition talks about API connectivity?
If you think about an agentic front door, everybody has to come into an agentic front door. The good thing is about ServiceNow, if you want to come through a headless front door, that's up to you. But we provide you the agentic front door. Now you can come into your corporation into one clean pane of glass instead of swivel chairing in and out of 17 different application experiences a day burning up a third of your productivity. So that's a choice. Make the choice, we give you choice. But if you come into the agentic front door, either as an employee or a customer, you have an unbelievable, simple experience. You simply have an autonomous experience where you're asking the system a question.
The system will go source any data relevant to the question that you asked and give you the necessary answers so you can go about your business just like you would using one of these great thinking machines on the weekend. The best part now is you're also activating not just the people, but the AI agents. The cool thing about ServiceNow is it doesn't have to be a ServiceNow agent. We will work with all of the agents of all of the corporations that companies utilize in the enterprise. So now the AI of the AIs kicks in, and that could also be a robot. You got to treat them the same way as you treat a human or you treat an agent. We also, as I said, integrate with all the labs. So we now have that in the control tower completely worked out.
But now you have to integrate with data. I've already given you the action layer. Now I'm going to get into the workflow data fabric layer where we can connect into any data source, which could have been a Snowflake or a Databricks or a hyperscaler, or completely your own rendition of what a data store is. Of course, the systems of record that you spent the last six decades investing in, we got you. Then where Armis really comes in was on the operating technology side. So think about all the assets of a corporation. One of the reasons our public sector business is doing so fabulously, and it's a much bigger setup this year than it was last year, is because we know all the operating technology in any environment.
So we already know, and we can go in to any agency and basically show them how little visibility they have into their assets, and that's probably not a good thing. We can immediately remediate that with our operating technology from Armis. So any of the assets, IT, IoT, OT, all on one common platform. If you think about major banks, they care a lot about critical infrastructure, networks, devices, the people that roam in and out of the buildings and all that, and it's now being managed by Armis. So we got you on the identity side. We've got you on the agentic front door as you come into the enterprise, which is huge. We've got you on all the fabric contained in the data of your corporation and of course, the operating technology. All of this is done in a highly secure way.
I repeat, we are the only company in the world that has integrated risk management, security operations, identity management, and operating technology on one common platform. Gabriela asked me a question earlier about ITSM. That was always the fabric and the moat where you have the configuration management database and you have the context engine for all the people, places, and things. That fabric has been built over 20+ years, 100 billion workflows, eight trillion transactions. So now you are talking about enterprise scale, and that is why we made the bold move into extending more broadly into security, because that is what our customers wanted from us.
Let me ask you a little bit about the R&D organization.
Sure.
There is a view that ServiceNow has been established incumbent for a long time.
Therefore, to take new technologies and make them backwards compatible, you run into an issue of technical debt. At the same time you are acquiring these companies, they have to be beautifully integrated. That is not easy. How did you and maybe Moveworks is a great case study here.
How did you look at your organization as a whole and say, "We've got to be able to move really quickly here"?
Yeah.
And use the technical debt, and I do not even know if that is the right word, but not let that hold you back and transform the tech stack such that you can actually move quickly.
Well, it is really interesting. I have been here seven years now. I do not know where that went, but it was quick, I can promise you that. One of the first moves we made in the company was a company called Element AI, who had a Turing Award-winning founder, and they were in Montreal, Canada. We did that, like in the first 120 days when I became CEO of ServiceNow. We immediately had a vision for where AI was going to go, and we were building models with Jensen and NVIDIA right from the start. It is just one of the real beautiful partnerships, a really sustainable one, and one that we are super proud of. We have really great engineering. Anything, whether it was Moveworks or it was Veza or was Armis, we are immediately focused on integration.
The calling card of ServiceNow and how we got big fast was really recognizing that the enterprise is a thorny, complex place. The number one reason why digital transformation failed to deliver a positive ROI for 85% of the companies in the global economy was because integration held it all back, which is why everybody was operating in silos doing point solutions. We knew that for the platform to transform companies, it had to integrate beautifully into all these other systems. In the flow of work, you could fundamentally change how companies ran without actually ripping and replacing the infrastructure that they spent billions on and years implementing and years customizing. That was our solve for that. When we took on Moveworks, and it was really interesting, we acquired Moveworks in April of 2025.
The deal didn't close until December, and we wanted the AI Control Tower. We are a company that's destined by our strategy and our vision, and we had the AI Control Tower vision. Veza was a very important part of that, and so was Armis, and so was Moveworks. You all dealt with the 72-hour period where we closed Moveworks, and then Veza and Armis were announced, and you're like, "Whoop, what's happening? I thought they were an organic growth company." We are, but we had to have the AI Control Tower to give you the organic growth and print cash for many years to come. Now everyone's like, "Genius Move, Veza, Armis, all these companies are unbelievable." All the customers love it. All the people that work for us love it. The investors now love it.
I think what's happening is they're seeing the power of integration on an enterprise-scale platform that serves multiple industries, that satisfies multiple personas in every corporation we serve, and we actually deliver extraordinary ROI. Our business cases are dynamite, and I think that's the real critical difference, that we can do it, that we integrate well, and that we do what we say we're going to do, and we give you a great return on your invested capital. That's what customers want, but they also want it in a secure way.
We're at a moment in time where enterprises have a lot of choice.
There are a number of new entrants in this space. There's a lot of confusion. You may even have different factions within a customer on the right way to do things.
Right.
ServiceNow comes in with a pitch like AI Control Tower, you have the case studies like FedEx, for example, of what true transformation on ServiceNow looks like. How do you get more customers to commit? How do you get them over the hurdle of, "Hey, we want to experiment for a while. Everything's changing so quickly. Let's just see how things go"? What does that conversation on conversion look like? How can you enable more of your salespeople to cross the chasm, so to speak?
Yeah. First of all, you're right. There's just a lot of confusion out there. There's a lot of FUD out there. It's silly season with vibe coding and the point solutions and the claims that are not based in fact. We, like everyone else that has a scalable, substantive company, has to be ready to handle that. What you find is the higher you go in corporations, the easier the people are to talk to because they just want to win. If you have a winning formula and you have a C-suite relationship, we definitely have that across the world and a Rolodex that I think would pretty much compare with anybody's, that's really the basis of understanding. You have to really deal with executives that are trying to transform their company.
Ultimately what we did is we not only invested engineering, but we also invested in forward-deployed engineers, where we actually go to the customer site. We actually implement with the customer and deploy the software and get them live at a record clip. Especially now in CRM, we're particularly interested in that discovery to adoption to ultimately tokenization process to create the value chain for the customer. So you got to be in it to win it.
I think that's the perfect place to leave it, in it to win it. Hey, please join me in thanking Bill McDermott.
Thank you very much. Appreciate you. Thank you, Gabriela.