ServiceNow: 5 Things You Need To Know About Changes At The Top

In a surprise announcement Tuesday, ServiceNow announced that its CEO John Donahoe was leaving to lead Nike, and former SAP CEO Bill McDermott would take over.

The Executive Shuffle

ServiceNow CEO John Donahoe, who in May sat down with CRN to talk about the future of the company, the new partner program, as well as the brass ring of reaching $10 billion in annual revenue, announced that he is quitting the hugely successful ITSM platform to run Nike.

Taking over for him will be former SAP CEO Bill McDermott, who lead that company until about two weeks ago. Unlike Donahoe, McDermott has spent decades working in the IT industry, joining SAP in 2002.

The company is expected to announce earnings on Oct. 23, the day after this news hit. Preliminary third quarter numbers shows total revenue growth of 32 percent year over year, which translates to $885.8 million for the quarter. However ServiceNow’s share price has plunged from $302.31 on July 11 to $228.34 at Tuesday’s close, a loss of 24 percent of its value, for what has been the hottest name in ITSM.

What did Donahoe say about this move?

“ServiceNow is a special company and leading the team has been an honor,” Donahoe said in a statement. “I’m very proud of what we have accomplished together and our deep commitment to delivering for our customers. I am very confident in ServiceNow’s future and am confident that the team will stay focused on strong execution.”

Donahoe (pictured right) also addressed the news that he will join Nike – where he has been a board member -- in a separate statement.

“It is an honor to become President and CEO of this amazing, innovative company, and to join the more than 76,000 talented and passionate employees dedicated to serving athletes,” said Donahoe. “Over the last five years, I’ve been proud to be connected to Nike through my role on the Board and now look forward to being a full-time member of the team, working even more closely with Mark, building on Nike’s success and seizing the opportunities ahead.”

What did McDermott say about his new role?

“ServiceNow is one of the most exciting innovation and growth companies in the world. The company has a transformational platform, immensely talented colleagues and limitless potential. Fred Luddy has given us an enduring foundation on which to build the company’s bright future. I consider it a personal honor to succeed John and help carry ServiceNow’s proud legacy forward to the next chapter. I’m fired up and can’t wait to get started!”

Here's what McDermott said two weeks ago when he quit SAP: "Every CEO dreams of being able to transition a company to its next generation from a position of significant strength. When you look at where we were and where we are, I simply could not be prouder of what this company has achieved over the past decade. I am thankful for the opportunity to lead one of the world’s finest companies."

What is McDermott’s past?

McDermott joined SAP in 2002 as head of its North American division. He went on to lead the company's worldwide customer operations and joined SAP's executive board in 2008. Then, in 2010, he became the company's CEO, leading the company through revenue growth, increased profits and improved employee engagement for nearly a decade, according to SAP.

"SAP would not be what it is today without Bill McDermott," Hasso Plattner, chairman of the supervisory board of SAP SE, said in a statement. "Bill made invaluable contributions to this company and he was a main driver of SAP’s transition to the cloud, which will fuel our growth for many years to come. We thank him for everything he has done for SAP."

What does a ServiceNow partner think of the moves?

Chris Pyle, president and CEO of Champion Solutions Group, a Boca Raton, Fla.-based ServiceNow partner, said he doesn’t see this slowing down his business with ServiceNow.

“No. Not at all. They have a lot of momentum,” he said. “They recently brought on a new channel chief. Unless they get rid of him, I don’t see any problem.”

What did the news do to ServiceNow stock?

ServiceNow’s share price fell more than 5 percent since the after-the-bell announcement Tuesday to $216.11.

The company is expected to announce its financial results Wednesday and have Donahoe and McDermott answer questions during the earnings call