ServiceNow offers 70% discount to federal government in AI push

(Bloomberg/Brody Ford and Gregory Korte) — ServiceNow Inc. is offering federal agencies discounts of as much as 70% on its software, a move aimed at spurring adoption as the Trump administration presses for faster government implementation of artificial intelligence tools.

Agencies buying a higher-tier bundle of ServiceNow’s information technology products will see discounts as high as 70% though September 2028, the US General Services Administration said Wednesday in a statement.

The deal follows a spate of similar announcements touting big discounts on software and cloud products used by federal workers, as the GSA has sought to centralize negotiations with technology vendors to leverage the federal government’s purchasing power.

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Those contracts include productivity software from Microsoft Corp., the Slack messaging service from Salesforce Inc., design software from Adobe Inc., and cloud services from Alphabet Inc.’s Google and Amazon.com Inc. More recently, GSA has signed deals with companies like OpenAI, Anthropic and Google to use their AI tools for $1 or less for the first year.

GSA estimates that implementation of ServiceNow’s tools could increase efficiency by as much as 30%, as President Donald Trump has sought deep personnel cuts to federal agencies. ServiceNow makes software to manage personnel and IT operations, and has been implementing AI through its platform.

IT service management is “one of the more obvious places” to use AI to find efficiencies, Josh Gruenbaum, commissioner of GSA’s Federal Acquisition Service, said in an interview. For example, workers can waste hours when they get locked out of a computer or need a new card, he said.

The federal government is already a significant customer for ServiceNow — about 75% of agencies use its IT management tool, a company spokesperson said. The discounts announced Wednesday can be claimed by existing customers on renewal, the spokesperson said.

Investors have been anxious about what the federal government’s changing buying behavior means for ServiceNow. In July, the company cautioned that tightened federal budgets may impact its financial results.

The discounts mean lots of net new business for ServiceNow, and it will help drive adoption of AI-enabled higher tiers of the company’s product, Chief Executive Officer Bill McDermott said in an interview. As for what happens to the price of the products after the discount period ends, McDermott said “there’s always room for renewing a contract and coming up with win-win agreements.”

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