Updated 13:45 BST with initial comment from Dr Iyer.
ServiceNow says its “company policy was violated” after investigating an internal complaint “that raised potential compliance issues during the procurement process related to one of its government contracts.”
With an investigation now complete, ServiceNow’s President and COO CJ Desai has resigned and ServiceNow said “we're announcing the departure of the individual who's hiring was the subject of the original complaint.”
He was named earlier as former US Army CIO Dr Raj Iyer, who was hired in March 2023 as the newly created role of global head of public sector.
See also: The Big Interview: US Army CIO Dr Raj Iyer gets tough amid DX shakeup
ServiceNow CEO Bill McDermott said on a July 24 earnings call that “While we believe this was an isolated incident, we are further sharpening our hiring policies and procedures as a result of the situation.”
As Bloomberg reports, in December 2022, the Army awarded ServiceNow a contract worth up to $432 million in a deal that included both new licensees and consolidation of existing spending. It was not immediately clear if the complaint pertained specifically to this contract award.
ServiceNow said it had informed the US Justice Department, the Department of Defense Office of Inspector General (OIG) and the Army Suspension and Debarment Office of the company’s investigation.
The Justice Department is also investigating the incident.
Dr Iyer told The Stack: "The company is faulting their internal process and their President, not me. I resigned voluntarily so as to not be associated with this."
"Throughout my tenure as a committed public servant, my actions were guided by integrity and a steadfast commitment to the best interests of the U.S. Army and the American people. My leadership in the digital transformation of the Army was driven by a genuine dedication to service, with no intent of personal gain. Indeed, I left a lucrative career in the private sector to fulfill my duty to the nation. I am confident that my conduct has been beyond reproach. Every single day I worked hard to better position our Army to become digitally superior while at the same time driving down operating costs. I drove change in an institution nearly 250 years old, and I remain proud of what was accomplished.
"My resignation from ServiceNow was voluntary and aligns with my personal values, and I do not wish to have my integrity questioned as a result of a potentially compromised hiring process. I look forward to focusing on what is most important to me professionally: leading organizations and teams through their most important digital challenges and opportunities. I am optimistic that whatever I do next will continue to be guided by my passion and commitment to public service. For those who know me well, I know you will continue to place this trust in me."
Also on the earnings call, ServiceNow discussed its earnings, describing generative AI as "a generational secular tailwind."
These included the following numbers:
Subscription revenues of $2.54 billion, up 23% year-on-year
ServiceNow inked 88 deals greater than $1 million in net new annual contract value (ACV), up from 70 a year ago
Its "first federal customer actually crossed the $100 million-plus" ACV mark
“ServiceNow’s elite‑level execution is reflected in our continued outperformance across all topline growth and profitability metrics,” said ServiceNow CEO Bill McDermott in a canned statement.
“Our relevance as the AI platform for business transformation remains stronger than ever as CEOs are looking for new vectors of growth, simplification, and digitization. ServiceNow intends to reinvent every workflow, in every company, in every industry with GenAI at the core.”
