Service-now Finds Hard Economic Times Are Good for Business

2/10/09

A private software company that arose following the implosion of San Diego’s scandal-ridden Peregrine Systems says its business is booming despite the recession, because its innovative model for offering Software as a Service can help customers shave their IT costs.

Service-now.com was founded in 2003 to meet the same business needs served by Peregrine, which was once one of San Diego’s hottest technology companies. Service-now’s software, like Peregrine’s, helps big companies keep track of their assets, such as computers, software licenses and other IT resources. Privately held Service-now also offers a set of applications that helps IT organizations operate more efficiently by automating processes and helps system administrators manage their help desk operations.

But where Peregrine’s enterprise software had to be installed on a customer’s computer network, Service-now runs the software on its own network, and serves its customers’ needs by offering its Software as a Service. Chief Executive Fred Luddy says recurring revenue is now approaching $20 million per year, and he expects the company to start booking a profit by May or June. “This economy has played very well into our hands,” the Service-now CEO told me. “When things are going well the status quo is seldom questioned.”

By moving to the Web and doing away with management fees, Service-now is able to undercut competitors like BMC and Hewlett-Packard by 20 percent or more, Luddy says. In the current economic climate, those savings have opened doors for Service-now at big companies that might not have shown … Next Page »

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