Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Well, I'm thrilled to
Speaker 1: welcome Bill McDermott, Chairman CEO of Service Now. Hot of
Speaker 1: the heels of your earnings, which, let's just say it,
Speaker 1: beat expectations across the board. You're raising your forecast. We've
Speaker 1: got analysts raising price targets left, right and center, and
Speaker 1: in particular they seem to love the current remaining performance obligations.
Speaker 1: Why is there such resilience? What's driving this?
Speaker 2: Bill? It's all about AI.
Speaker 3: And thank you first of all for acknowledging the performance.
Speaker 3: I know all the teammates of Service Now will be
Speaker 3: honored by very nice remarks. AI has become the new UI,
Speaker 3: and we have that platform that is the leading enterprise
Speaker 3: platform in the world, which provides a single pane of
Speaker 3: glass that connects any agent, any model, any cloud, and
Speaker 3: any data source.
Speaker 2: To the platform.
Speaker 3: So the companies that we serve can run a lot better.
Speaker 2: And it's an AI world and we're here to win.
Speaker 1: It told us about the kind of customers. Are they
Speaker 1: global in nature? What kind of industry groups are particularly
Speaker 1: looking for your help?
Speaker 2: Right now?
Speaker 3: Yeah, these are the most significant brands in the world.
Speaker 3: Brands like Nvidia who is live on our AI platform, Starbucks,
Speaker 3: Exxon Mobile Standard chartered into it, the state of California,
Speaker 3: Banco do Nordeste do Brasil, very interesting one, al Raji Group,
Speaker 3: Burla Group, Tokyo Gas, a mercant company.
Speaker 2: So it's truly a global situation.
Speaker 3: And what's really happened and I've tried to be very
Speaker 3: clear on this. We don't live in a cloud SaaS neighborhood.
Speaker 3: We actually invented our own space in this market. That
Speaker 3: highly differentiates Service Now because AI work is cross functional,
Speaker 3: it goes across functions, and today everyone's selling agents for departments.
Speaker 2: But the problem is eighty.
Speaker 3: Five percent of the digital transformation projects out there don't
Speaker 3: deliver a positive ROI today because of integration problems. So
Speaker 3: if you just throw agents in a department, you're going
Speaker 3: to have a bigger mess. And that's why service Now
Speaker 3: takes all your investments, integrates it into one beautiful platform
Speaker 3: and gives you an experience for your people, your customers,
Speaker 3: and your network that drives performance.
Speaker 2: And that's what it's all about.
Speaker 1: But Bill, who are you kicking out? Who are you replacing?
Speaker 1: And is it existential to those that you are replacing.
Speaker 3: Yeah, it's a really important question because Agenic AI is
Speaker 3: an extinction level event for traditional CRM systems of record,
Speaker 3: and the reason for that is ninety percent of the
Speaker 3: market we'll move to a system of action with a
Speaker 3: front end or autonomous engine by twenty twenty nine, and
Speaker 3: we are that provide We handle the order management process
Speaker 3: with a world class configure, price and quote, all powered
Speaker 3: by AI.
Speaker 2: We fulfill and we service the.
Speaker 3: Customer all on one AI platform, and that's the only
Speaker 3: one in the world like it, and that's what the
Speaker 3: world wants.
Speaker 1: To meet that demand, you need the infrastructure. We understand
Speaker 1: that you've just secured a new cloud deal about four
Speaker 1: billion dollars. Can you tell us who you've gone with?
Speaker 1: We understand maybe it's a Google Cloud deal.
Speaker 2: Yeah.
Speaker 3: We have great relationships with all of the hyperscalers and
Speaker 3: they're all fantastic companies and they're all going to do
Speaker 3: amazingly well, and our customers rely on them, and some
Speaker 3: do better in certain geographies than others. Some have certain
Speaker 3: services perhaps that are stronger than others, but they're all
Speaker 3: some of the greatest companies ever, and so we integrate
Speaker 3: with all of them and we'll move workloads for our
Speaker 3: customers to all of them, and the customer if they
Speaker 3: want to run service now in those cloud formations, they
Speaker 3: may do so.
Speaker 2: If they want us to connect to.
Speaker 3: Their data sources, of course we do that, or any
Speaker 3: other data source and any other cloud. And so we're
Speaker 3: the open architecture that makes it all come together and work,
Speaker 3: and Caroline, that's exactly what the world needs.
Speaker 1: Okay, I'm interested in what the world needs. Also is
Speaker 1: sort of clarity on reskilling, because I'm just looking at
Speaker 1: what you're projecting one hundred million dollars in projecting cost
Speaker 1: savings for this year alone. Is that about replacing people
Speaker 1: with the AI the productivity. If you're hiring less, what
Speaker 1: does that mean when you start to scale that out
Speaker 1: across the world.
Speaker 3: Well, what we're doing is we're slowing down the hiring
Speaker 3: in jobs that are quite frankly soul crushing jobs.
Speaker 2: I mean, just think about like it support.
Speaker 3: You know, ninety seven percent of standard software automatically generated
Speaker 3: by AI now, and the pressure on supporting function and
Speaker 3: people has been cut in half. Customer support, eighty percent
Speaker 3: of the customer inquiries in cases now are fully managed
Speaker 3: by agentic AI. And think about security and risk management
Speaker 3: in real time. All the patch work and the change
Speaker 3: management is done by agents now. And the same is
Speaker 3: true go to market. You know, think about people that
Speaker 3: talk to customers. There's no prep work anymore. Their AI
Speaker 3: teammate is doing that for them at service now, So
Speaker 3: the speed of the company has accelerated dramatically. The supporting
Speaker 3: cast of the soul crushing work is now being done
Speaker 3: by agents. They work hard twenty four by seven. You
Speaker 3: don't have to pay them, and they don't need any lunch,
Speaker 3: and they don't have any healthcare benefits, so they're very
Speaker 3: affordable and that really complements our workforce. So we're still hiring,
Speaker 3: but we're hiring less in those supporting functions. And I
Speaker 3: suppose that's going to happen to all well run companies.
Speaker 3: And I say that because we now need to think
Speaker 3: about how you've run a corporation on service Now, how
Speaker 3: you change the w where you run your business processes.
Speaker 2: It could be ordered a cash, procure to pay.
Speaker 3: Hire to retire, designed to product. These are all processes
Speaker 3: that go across functions and we need to have those
Speaker 3: twentieth century ORG charts obliterated.
Speaker 2: We now need to work in teams.
Speaker 3: Teams need to work across processes, and the agents need
Speaker 3: to be the best friend to humans. And if we
Speaker 3: do this right, the GDP of the world will go up.
Speaker 3: Companies will outperform not just on the op X, cost
Speaker 3: takeout and productivity, but they will be building new horizons,
Speaker 3: new business models, and new dreams on the service now platform.
Speaker 3: And we're excited.
Speaker 1: Someone else is excited right now about AI, and it's
Speaker 1: the administration. We've got the new AI Action pan.
Speaker 2: What did you make of it?
Speaker 1: What do you think about perhaps the light to touch
Speaker 1: in terms of regulation.
Speaker 3: I think it's outstanding. We need less regulation and more innovation.
Speaker 3: And I think the President and the administration are doing
Speaker 3: a very good job on AI. They dedicated a whole
Speaker 3: symposium to it yesterday and I fully support it. You know,
Speaker 3: government has to run more efficiently, more transparently, with greater accountability,
Speaker 3: and that's what the service now platform has been doing
Speaker 3: in the public sector, especially in the US for many
Speaker 3: years now. And now that we'll bring an AI to
Speaker 3: the forefront, we're just going to accelerate the pace in
Speaker 3: getting behind the President's agenda and do even better work.
Speaker 3: And I think this is going to happen in governments
Speaker 3: around the world. You know, I travel to countries all
Speaker 3: the time, and when I meet them, they all want
Speaker 3: to understand what the US government is doing. They're very
Speaker 3: interested in this AI movement, the efficiency movement, the effectiveness
Speaker 3: of technology. So I think it's a pace setting move
Speaker 3: and I'm fully behind it.
Speaker 1: Within that, of course, you mentioned how you're winning contracts
Speaker 1: with the government of the State of California. How has
Speaker 1: federal spending been within service now? How you looking at
Speaker 1: that as an opportunity to scale because many had worried
Speaker 1: that they were shutting down perhaps some of the services
Speaker 1: to you.
Speaker 3: And yeah, of course, I mean if a department shuts down,
Speaker 3: obviously that's not great. But at the same time, we
Speaker 3: got six net new logos within the government in the
Speaker 3: current quarter. And you also have state and local governments too,
Speaker 3: So yes, we're winning in federal but we also have
Speaker 3: like the North Carolina Department of Transportation for example, the
Speaker 3: State of California. They're doing many, many things with this
Speaker 3: AI platform for business transformation because they have to give
Speaker 3: the citizens better service, they have to lower their cost base,
Speaker 3: they have to do a lot more with less head count,
Speaker 3: and Frankly, the unreported truth of the matter is there's
Speaker 3: millions of technically related jobs in the global economy that
Speaker 3: are unfilled today, and AI needs to fill those jobs. Similarly,
Speaker 3: we need to train, certify, and get the workforce ready
Speaker 3: for this AI revolution because it will not stop, it
Speaker 3: will intensify greatly, and we can't leave people behind. So
Speaker 3: we've developed service Now University where we're training three million
Speaker 3: people this year. We have rise Up where we rise
Speaker 3: up with governments and communities around the world, especially those
Speaker 3: that don't have access to some.
Speaker 2: Of these services.
Speaker 3: And we're not even charging for this because we have
Speaker 3: a big heart, a big culture, and we want to
Speaker 3: be the defining enterprise software company the twenty first century,
Speaker 3: and this is how we intend to do it. We
Speaker 3: will continue the pace of innovation, we will win an
Speaker 3: AI and our company will set the standard for all
Speaker 3: other enterprise participants bill.
Speaker 1: With tackling talent. But is there any other bottleneck or
Speaker 1: anything else that perhaps limits the growth in the business
Speaker 1: that clearly is pretty stellar right now? Is it macro environment?
Speaker 1: Is it certainty? Is it interest rates?
Speaker 3: Imagination is the limit? So we have to have dream
Speaker 3: big people. And similarly, we need everybody in the workforce
Speaker 3: fully engaged, not just in our company, but in every company.
Speaker 3: You can't leave people behind because right now, if I
Speaker 3: look at the biggest challenge with AI, AI is magic.
Speaker 3: It's fantastic, but a small percentage of the workforce today
Speaker 3: understands it, knows how to use it, and as being
Speaker 3: encouraged to prosper with it. And so a lot of
Speaker 3: times the headlines read AI as a negative and as
Speaker 3: a concern, And I look at AI as the best
Speaker 3: friend to humans and the best teammate a human ever had,
Speaker 3: because it'll give you access to knowledge and information that
Speaker 3: you would have never had without AI, and so having
Speaker 3: that can make everybody better. And we have to lift
Speaker 3: these companies up, and we have to have every department
Speaker 3: in these companies work together, collaborate together with AI, work
Speaker 3: with AI to transform. So the human element is the
Speaker 3: biggest limitation all the other things, alike the weather. You know,
Speaker 3: some days the weather's great, some days it's not so sunny,
Speaker 3: And you've got to operate in all environments.
Speaker 2: And we're ready for that. Old Weather Company