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Zendesk to acquire AI customer service bot startup Ultimate

Zendesk continues its acquisition spree with plans to buy partner Ultimate, making way for more straightforward integration of virtual agents.

Zendesk plans to acquire Ultimate, a Finnish generative AI startup that provides AI chatbot development tools as well as automation and analytics features to integrate bots with CRM, order management systems and other back-end business apps.

Its API can also be integrated with outside data sources crucial to automating CX, such as data from shippers.

Ultimate has been a close partner of Zendesk for several years, and most of its CRM integrations are with Zendesk, said Adrian McDermott, Zendesk CTO.

The technology Ultimate brings to Zendesk includes "reasoning APIs" that can make choices and plan activities to, for example, solve a customer's issue when properly embedded into workflows, McDermott said. The goal of the acquisition, ultimately, is to bring automation capabilities usually associated with monoliths such as Amazon to Zendesk's 100,000-plus customers.

With this acquisition, Zendesk customers get AI tools that focus on prediction, automation, scale and speed, said Liz Miller, an analyst at Constellation Research. Ultimate's data models that integrate with back-end systems should deliver precise predictions, responses and answers to customer questions. That said, the complicated part for individual organizations will be how they combine human and AI agents on the front lines to solve customer problems.

The real question for a Zendesk customer is how to manage and optimize this new blended human and AI workforce.
Liz MillerAnalyst, Constellation Research

"AI agents need to be managed, orchestrated, trained and upskilled just like human agents," Miller said. "The real question for a Zendesk customer is how to manage and optimize this new blended human and AI workforce -- where clear lines of responsibility, activity and handoff are mapped with clear expectations for the entire workforce."

Ultimate's tools also integrate with Salesforce CRM and other CX applications. The company's 140 employees will be joining Zendesk.

Terms of the deal, which could close as early as this month pending regulatory approval, were not disclosed.

Zendesk acquisition spree continues

A group of private equity firms led by Hellman & Friedman and Permira bought Zendesk for $10.2 billion on Nov. 22, 2022. Eight days later, OpenAI released ChatGPT. While the timing was coincidental, the private takeover of Zendesk positioned the company financially to quickly add generative AI to its platform through acquisition.

While Zendesk had acquired several automation and AI companies prior to being bought, the pace has quickened with three acquisitions in 14 months, including Klaus, for quality assurance technology; Tymeshift, AI-powered workforce management; and now, Ultimate.

It's a favorable climate for companies to make acquisitions, said Rebecca Wettemann, founder of Valoir, a tech research company.

"This is part of Hellman & Friedman's ongoing strategy ... [and] while it's not clear what [their] timeline is for exit, the key to success will be effectively integrating these pieces to make Zendesk more competitive in the CX and customer service space," Wettemann said. "I expect it's not the last acquisition we'll see from Zendesk, particularly as it becomes more difficult for more earlier-stage companies to access a next round of funding."

Zendesk had sold itself to private equity after a failed acquisition of Momentive, the maker of SurveyMonkey, and pressure from activist investor Jana Partners. McDermott said Zendesk's investors have provided "great guidance" and have enabled the company to aggressively round out its product strategy and invest in its future.

"Being a private company allows you to really execute the strategy with some freedom," McDermott said. "Public companies have a 90-day popularity contest in the court of public opinion because you have to release [quarterly] results. I think you can take a long view as a private company, which is one of the reasons why -- in an era of tremendous innovation around artificial intelligence -- we're able to buy tools to make humans more efficient."

Don Fluckinger is a senior news writer for TechTarget Editorial. He covers customer experience, digital experience management and end-user computing. Got a tip? Email him.

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