ServiceNow announced that CJ Desai , its former COO, is leaving the company after an investigation found he facilitated a government contract and also hired a former U.S. Army officer.
Desai, one of the U.S. software company’s most prominent executives , will resign from all positions effective immediately, ServiceNow said in a statement Wednesday. Raj Iyer, the former Army chief information officer who was hired, has also left the company.
The investigation that led to the executives’ firings began after a complaint “raised compliance concerns during the procurement process related to one of its government contracts,” the software company disclosed in a May regulatory filing.
“As a result of the investigation, the company’s board of directors has determined that company policy was violated in connection with the hiring of the former Chief Information Officer of the U.S. Army.”
In December 2022, while Iyer was the Army’s chief information officer, the military branch awarded a contract to ServiceNow worth an estimated $432 million .
The deal, which included consolidation of existing spending and new acquisitions, authorized 1.2 million licenses for ServiceNow’s technology management, operations and customer service applications.
The musical chairs are taking place at a time when the company is presenting its quarterly financial statements to investors. When the stock market closes on Thursday, the 25th, analysts expect the company to post earnings of US$2.83 per share and revenue of US$2.6 billion.[/emphasis added]
Additionally, ServiceNow said subscription revenue increased 23% to $2.54 billion, beating estimates of $2.53 billion.
Impact on ServiceNow Leadership
In the public sector, Raj Iyer led the largest digital transformation effort in the history of the United States Army,” CEO Bill McDermott said during an investor event in May 2023. “He served his country — he served his term with the Army and chose to come here because transformation was on the ServiceNow platform.
ServiceNow said it has informed the U.S. Department of Justice, the Department of Defense Office of Inspector General and the Army Office of Suspension and Disqualification about the company’s investigation. The company said it continues to cooperate with the Justice Department , which is also investigating the incident.
