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Subscription Growth Leads ServiceNow to a Strong 2018 Year-End Close

ServiceNow announced financial results for its fiscal year ending December 31, 2018. While new customers account for some of the results, subscription revenue increases are the key factor behind its 36% year-over-year growth.

The integration of digital technology into all areas of a business fundamentally changes how an organization operates. ServiceNow seeks to become “a strategic partner to the world’s largest enterprise,” said John Donahoe, ServiceNow president and chief executive officer. “As we look to another strong year of growth in 2019, we remain committed to enabling companies’ digital transformation by making work, work better for people.”

Digitizing business services provides new challenges. Organizations need to manage workflows from different business functions and integrate data from varied sources across multiple applications. Meanwhile, software platforms that neglect the user experience are likely to struggle with process and tool adoption.

The quarterly and full-year results reflect how ServiceNow is dealing with those challenges. The results include:

  • New account growth across its product portfolio in every geography.
  • Consistent increase in annual contract value of existing accounts.
  • Increased contributions to annual contract value from emerging products beyond IT, including customer service, HR, and security operations, and intelligent apps.

The financial results are consistent with established ITSM tool market trends toward:

  • Artificial intelligence applications such as chatbots and intelligent agents.
  • Extending the ITSM platform to non-IT business functions.

Our Take

The 2018 ITSM tool market trends toward improving access to self-service and workflow automation across business functions continue to have an impact on the marketplace. The right question to ask before adopting new software, or when considering new technology, is whether it helps you solve business problems quickly, effectively, and permanently.

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