ServiceNow is boosting the artificial intelligence (AI) capabilities in its applications for enterprises with a deal to buy Canadian startup Element AI.
The deal is slated to close in the in early 2021. While financial terms of the acquisition weren't disclosed, TechCrunch reported the price tag was around $500 million.
Element AI was founded in 2016 by CEO Jean-Francois Gagné, Anne Martel, Nicolas Chapados, Jean-Sebastien Cournoyer, Dr. Yoshua Bengio, and Philippe Beaudoin. According to Crunchbase, Element AI has raised a total of $257 million to date.
"We plan to acquire the full company and retain most of Element AI’s technical talent, including AI scientists and practitioners," a ServiceNow spokesperson said in an email to FierceTelecom. "Our focus with this acquisition is to gain technical talent and AI capabilities. Element AI Founder and CEO JF Gagné will join ServiceNow as part of the deal. Element AI Co-founder, Dr. Yoshua Bengio, will transition to serve as a technical advisor for ServiceNow after the transaction closes."
Once the deal closes, ServiceNow will start re-platforming some of Element AI’s capabilities. ServiceNow plans to wind down most of Element AI’s customers after the deal is completed. Customers that are interested in working with ServiceNow can contact the company to discuss future plans, according to the ServiceNow spokesperson.
Element AI was ServiceNow’s fourth AI acquisition in 2020, following Loom Systems, Passage AI, and Sweagle.
"Element AI will help ServiceNow deliver workflows that learn more efficiently from smaller datasets, improve the quality of existing AI capabilities like content and language understanding, and expand new capabilities like image recognition and cognitive search," Gagne said in a blog. "Together we will enable customers to surface and summarize information, make predictions and recommendations, and automate repetitive tasks so employees and customers can focus on areas only humans excel at – creative thinking, customer interactions, and unpredictable work."
ServiceNow has seen strong demand for its AI-powered products such as IT Service Management Pro, Customer Service Management Pro, and HR Service Delivery Pro, according to Monday's press release.
With the acquisition of Montreal-based Element AI, ServiceNow said it would create an AI Innovation Hub in Canada to accelerate the development customer-focused AI applications. ServiceNow’s AI Innovation Hub in Canada follows similar investments by ServiceNow to create technology development centers in Chicago, Hyderabad, Kirkland, Wash., San Diego, and Silicon Valley.
RELATED: ServiceNow has bold ambitions across the telecommunications space
ServiceNow has its software in various verticals as it works to become the top digital workflow assurance company. ServiceNow's software enables workflows that span verticals such as field management, finance, HR, IT service management (ITSM), legal, marketing, telecommunications, and more.
ServiceNow CEO Bill McDermott, who was CEO of SAP until leaving that position in October of last year, has said that ServiceNow was destined to become a $10-billion company, which would be a step up from its current value of just under $4 billion.
ServiceNow, which was founded in 2003 as Glidesoft, uses a configuration database to tie the inventory systems together in order, for example, to see which customers are individually affected by an outage based on the alarms that are going off in a network.
Santa Clara, Calif.-based ServiceNow is being used by service providers such as BT, Vodafone, Telstra, Optus, Tata Communications, Orange Business Services and Proximus, among others. Vodafone was able to reduce its operating costs by 45% in the company's service operations by using ServiceNow.