US IT firm ServiceNow warns of AI-driven industry shakeout

ServiceNow’s COO Amit Zavery warned of potential industry consolidation if software companies fail to adapt to AI technologies during the India AI Summit.

He said some firms may struggle to transform for AI and stressed adopting the latest technology to stay competitive.

Companies not using AI, or ignoring AI security risks, could be left behind.

Zavery emphasized that AI without security is chaos, and controlling AI is critical.

ServiceNow aims to offer integrated AI support, including security solutions, to help businesses manage AI responsibly.

The warning comes amid concerns about AI’s impact on the software industry and market stability, as AI development and integration gain significant attention in India.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

ServiceNow warns about consolidation while driving it

ServiceNow has pursued consolidation through several 2025 acquisitions, including Armis, Cuein, and Veza 1.
One deal leads the list, its $7.75 billion purchase of cybersecurity firm Armis 1.
The plan ties Armis into the Configuration Management Database (CMDB) plus Armis data discovery tools 1.
An analyst said the added data makes ServiceNow’s discovery tools “an order of magnitude more powerful” 1.
This AI transformation helped produce what management called the company’s largest quarter in history for CRM net new annual contract value, yet it also stirred investor uncertainty plus a negative market reaction 2.

AI is forcing a software pricing reset

AI puts pressure on per-seat subscriptions since automation can cut human headcount, yet customers still pay by user count 3.
Many vendors are moving toward hybrid pricing that mixes subscriptions with consumption fees for AI agents, a setup ServiceNow calls its “Goldilocks model” 4.
Analysts expect hybrid approaches could reach up to 40% of all software revenue by 2026 5.
Valuation math is shifting as well, with AlixPartners (a consulting firm) saying AI-native companies using outcome-based metrics get 5–6x valuation premiums versus SaaS peers 5.