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Service Now Names New Boss to Keep Firm on Fast Track

SERVICENOW

CEO: Frank Slootman.

Revenue: $100 million in fiscal 2011; $50 million in fiscal 2010.

No. of local employees: 150.

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Investors: Fred Luddy, unnamed friends, JMI Equity.

Headquarters: Carmel Valley.

Year founded: 2004.

Company description: Provides software that helps big organizations deploy, manage, update and repair their information technology systems.

Software provider ServiceNow has doubled its business annually for the past five years, according to founder Fred Luddy.

Now its problem is holding on to that winning streak.

To that end, ServiceNow has brought in a new chief executive officer and is simplifying its offerings to end users. It also hopes to grow by exploiting the hot concepts of cloud computing and social networking.

ServiceNow caters to large companies — ones that run sprawling information technology operations with IT staffs of 200 to 10,000 people. Customers include American Express Co., Google and UBS.

Also known as ServiceNow.com, ServiceNow turned in 379 percent growth in revenue between 2007 and 2009, earning it the No. 3 spot on the San Diego Business Journal’s latest Fastest-Growing Private Companies list. Investors include JMI Equity, which provided $7.5 million in two rounds of venture capital in 2005 and 2006.

Among those taking notice has been Gartner Inc., a Connecticut-based technology consulting firm, which in November called ServiceNow a “challenger” in the IT service desk space.

Frank Slootman, ServiceNow’s new CEO, is still getting used to the job. The company brought in the Dutch native April 26. Slootman was previously CEO of Data Domain, an enterprise storage company, which he took public in 2007. EMC Corp. of Massachusetts acquired Data Domain in 2009. Slootman left after 18 months at EMC, but still holds an advisory role with the corporation. Slootman is also a venture partner in Northern California-based Greylock Partners.

He follows Luddy, ServiceNow’s initial employee and original code writer, who has taken on the title of chief product officer.

Finding a ‘Real CEO’

Before a crowd of slightly less than 1,000, at ServiceNow’s user conference last week, Luddy recalled peddling his software from business to businesses along Pacific Coast Highway. His first customer was Phoenix Footwear Group Inc. of Carlsbad.

Today’s users include Citigroup Inc.

Phoenix had 2009 sales of $19.9 million. Citigroup had 2010 revenue of $65.6 billion. “These two couldn’t be more different,” Luddy told his audience at the Paradise Point Resort & Spa.

“It led me to believe this company needed a real CEO.”

The board considered 60 people for the CEO’s job. Luddy said he interviewed more than 30. The person who eventually got the job stood out, Luddy said, when he looked back on his experience growing Data Domain and said, “Fred, I want to do this again. I want to do this again at scale.”

Up in a Cloud

ServiceNow sets its business apart by offering its software in the cloud, or in servers that are outside its clients’ walls. The San Diego company maintains seven data centers — three in North America, three in Europe and one in Australia — said Matt French, the company’s director of marketing.

Cloud computing is still an emerging phenomenon, Luddy told his audience May 17. He spoke of a “very large” client who told him that they have seven data centers worldwide, and a goal of zero data centers in 36 months.

Then there is what Luddy called “The Facebook Imperative” — that is, a user must be able to interact simply with technology. ServiceNow is introducing a help desk application called Live, which lets people converse about the state of a network — much as if they were on the social networking sites of Facebook, LinkedIn Corp. or Twitter.

French gave a scenario where an employee might send out a message saying, “Anybody having issues with email?” An overseas colleague might respond that everything’s OK in his spot, while a colleague in the same state might say the problem has cropped up there, too.

ServiceNow’s local customers include Gen-Probe Inc., Qualcomm Inc. and UC San Diego.

Actively Hiring

The company, which employs 350 people, is actively hiring. A need for more space led ServiceNow to move its headquarters from Solana Beach to Carmel Valley recently.

For its fifth user conference, ServiceNow stayed in San Diego and rented a private island — which San Diegans will recognize as the Paradise Point resort in the middle of Mission Bay. More than 1,000 people registered for the event, which also filled rooms at the nearby Bahia Resort Hotel and The Dana Hotel on Mission Bay.

Looking back, Luddy said a lot of things have gone right with ServiceNow, including a recession that led companies to want to cut their IT expenses.

Said Luddy, “We struck a chord in the marketplace.”

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