(Bloomberg) — ServiceNow Inc. said President CJ Desai is leaving the company after an investigation uncovered policy violations related to a government contract and the hiring of a former US Army official.
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Desai, one of the software maker’s most prominent executives who also serves as chief operating officer, will resign from all positions within the company effective immediately, ServiceNow said Wednesday in a statement. Raj Iyer, a former Army chief information officer who has been ServiceNow’s head of public sector since early 2023, also has departed the company.
The investigation began after a complaint “raised potential compliance issues 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 determined company policy was violated regarding the hiring of the former Chief Information Officer of the US Army,” ServiceNow said in Wednesday’s statement.
In December 2022, while Iyer was the Army’s chief information officer, the military branch awarded a contract to ServiceNow at a value as much as $432 million. The deal, which included consolidation of existing spending and new purchases, authorized 1.2 million licenses to ServiceNow’s applications for technology, operations and customer service management. The company works with all branches of the military and all 15 cabinet agencies, according to a May presentation.
“In the public sector, Raj Iyer led the biggest digital transformation effort in the history of the United States Army,” Chief Executive Officer Bill McDermott said during an investor event in May 2023. “He did his service to the country — he served the time in his agreement with the Army and he chose to come here because the transformation was on the ServiceNow platform.”
Desai and Iyer didn’t respond to requests for comment. Desai joined ServiceNow in December 2016 as chief product and engineering officer and was promoted to COO in January 2022. He was named president in January 2023. He has fully cooperated with the investigation and maintains that he didn’t intentionally violate company policy, ServiceNow said in a separate regulatory filing on Wednesday.
McDermott said in an interview that Desai’s resignation won’t have any impact on ServiceNow’s execution, results or government contracts. “Let me be crystal clear — this is an isolated incident,” he said, adding that the company would be tightening hiring procedures.
Chris Bedi, an executive who has been with the company for almost a decade, will serve as interim chief product officer. “While CJ has been a critical thought-leader driving the product innovation in the past years, we believe the company has a deep bench of talent,” Kirk Materne, an analyst at Evercore ISI, said after the announcement.
ServiceNow said it had informed the US Justice Department, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the company’s investigation. The company said it’s continuing to cooperate with the Justice Department, which is also investigating the incident.
(Updates with details from additional filing beginning in the seventh paragraph.)
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