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Technology Executive Council

$7 trillion to be invested in making work more digital by 2023: ServiceNow CEO

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Key Points
  • ServiceNow CEO Bill McDermott says the coronavirus crisis has pulled companies into the world of virtual work rapidly, and they will now "lean into" a permanent transformation.
  • His company forecasts $7.4 trillion to be invested by 2023 in digital transformation.

In this article

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ServiceNow CEO McDermott on earnings, 2020 guidance, Covid-19 business impact

As employees around the country settle into a work-from-home routine, ServiceNow CEO Bill McDermott estimated there will be $7.4 trillion invested in the digital transformation of business operations over the next three years.

"People are going to get much more comfortable working in a virtual world," McDermott said. "This social distancing is not gonna go away anytime soon, and companies that aren't already digitally transformed and able to pull this off — they have a burning platform now. They have to lean into this."

Before the pandemic, only 7% of workers had access to a "flexible workspace" benefit, or telework, according to Pew Research Center. Now 42% of workers who previously did not work from home are doing so, according to CNBC's All-America Economic Survey.

Drew DeSilver, a senior writer for Pew Research Center, said the situation is "a large and unexpected experiment" of whether companies will make the switch to telework.

On CNBC on Thursday, McDermott made the case that a company's return on investment in adapting to virtual operation will be at least five times the amount it invests in any given year, and most companies see a payback in less than six months. ServiceNow's stock rose after the company's quarterly earnings beat projections.

Along with its Q1 earnings, the company also released updated guidance for both Q2 and full-year 2020, taking into account the impact of coronavirus. ServiceNow is up 48% year-over-year in deals of $1 million or more, it said. The cloud computing company itself has around 11,000 employees working from home.

McDermott said that the CEOs he has spoken with are not focused on growing revenue right now, but protecting it, as well as "keeping operations going and driving productivity."

In March the software company released four apps offering emergency response assistance to help companies navigate the pandemic. The apps, which are free for existing customers, focus on operations, exposure management, emergency outreach and self reporting.

"They all want a fast time-to-value scenario, and that's what we do," he said. "We're talking hours, days, a couple of weeks, not years."

Weekly jobless claims reached 3.84 million last week, which brought the total over the last six weeks to more than 30 million. Furthermore, a quarter of American workers have lost their job or had their wages cut due to the pandemic.