Mike Scarpelli, CFO, ServiceNow, explored the financial take on IT, along with ServiceNow’s results and target market with theCube co-hosts Jeff Frick and Dave Vellante, live at the ServiceNow Knowledge conference.

Commenting on the ServiceNow Knowledge conference, Scarpelli said that the biggest point of feedback from investors was about the large number of customers who are glowing about the company. Investors now understand the potential of the market, he said.

Detailing ServiceNow TAM, Scarpelli said that the ITSM market has been evaluated at $4 billion, and a conservative estimation of the company’s TAM is at $20 billion. Dave Vellante pointed out that it was a very conservative estimation, the market could be double. Where customers are concerned, Scarpelli mentioned ServiceNow targets larger businesses and does not really address the SMB segment. “Within our customer base, we are about a third penetrated,” he added.

On being CFO of a public company

Asked about his experience of being the CFO of a public company, Scarpelli said that “things really haven’t changed that much.” Probably the biggest challenge of being the CFO of a public company today is that the the level of detail in auditing has changed a lot. The great part about being in such a company is that it can offer full transparency to customers, he stated.

“The number one thing of being public is that once you’ve set expectations for the market, you have to make sure you meet them,” Scarpelli explained. As a small company, when you’re in growth, if you set the right expectations for investors, it’s not hard to meet them. “We will invest all our free cash flow back into the business.”

“We want to walk before we run,” Scarpelli said, mentining a 1 billion dollars target for 2016 revenue, obtained through new customer acquisition. “Once we get a customer, we retain a customer,’ he said. “Once we get them, we further penetrate,” ServiceNow’s new business to existing customers amounting to 30 percent of business. The company’s renewal rate is of over 95 percent will the average revenue per customer is increasing, fact generated buying more, not by being charged more. Of the over 1600 customers, quarterly losses were of 6 yo 12 customers. The most frequent reasons to lose a customer were the company going out of business (mergers / acquisitions) or the fact that it had been a small company who couldn’t drive enough value from the ServiceNow platform.

Who’s the boss?

Asked who the CIO should report to, whether it should be the CFO, CEO or someone else, Scarpelli said “I am happy to give IT to report to someone else.” IT historically has reported into the CFO because people were looking at cost. “It does not matter who you’re reporting to,” he explained, the IT leader should be able to communicate and get feedback from all the executives in the company -VP of sales, support, engineering, etc.

Talking about the ServiceNow platform, Scarpelli said that his finance team and business analysts have been creating an app where they can put their entire documentation for stock control. It’s made by financial people, not by programmers. “Any business analyst can create apps on our platform, that is what makes it so much more approachable,” he added.

Asked what worries him regarding the future of the company, he said: “The two things that worry me the most are IT and facilities. We are growing so fast,” the company is also geographically dispersed, and managers are great at communicating how many people they need but not where they would be located, and that created a lot of challenges.