Zendesk's recent $45 million acquisition of BIME will streamline the cloud services it offers to customers and is, in some ways, more meaningful than the record EMC-Dell deal.
Last week saw the single largest acquisition in technology history with Dell’s purchase of network storage company EMC for $67 billion. While Silicon Valley and the Street were busy absorbing the shock of such a big deal, it missed one, which, while considerably smaller at $45 million, presents a different view for the future of technology.
Zendesk, a customer service software company, quietly announced the acquisition of We Are Cloud, the parent company of BIME Analytics, a startup that claims to “conquer the complexity of data.” This deal may not be as large or as sexy as the Dell-EMC merger, but it speaks more to what businesses need from technology going forward.
Building huge and expensive data centers, which is at the heart of the Dell-EMC merger, is old news. Sure, it is still a lucrative venture, and will probably be profitable for years, but companies can now store data far more cheaply and easily than ever thanks to the rapid development of cloud services, like Amazon Web Services.
Just from a capital budgeting point of view, it makes more sense for a company to store data in the cloud rather than spend millions upfront to build a proprietary data storage server.
The real value isn’t in storing the data; it is about interpreting the data so that it can be put to work. The Zendesk acquisition better reflects the path of where Big Data is going and how it is going to get there.
Fortune sat down for an exclusive interview with Zendesk co-founder and CEO Mikkel Svane to get the reasoning behind the BIME acquisition and what it says about the future of technology software in business. The following interview has been edited and condensed for publication.
Fortune: Businesses are expected to increase their spend on software by 17% over the next few years, jumping to a mind-boggling $4.5 billion by 2017, according to a recent report by Barclays. This is due in large part to increased adoption of cloud software services. Why the big rush into the cloud?
Mikkel Svane: Businesses are dealing with an exponential growth in data being created about their customers. It’s no longer enough to capture data from only customer support interactions; businesses need to make sense of all of their customer data.
Being able to combine that with all of the other data out there about customers allows businesses to be data-driven with customer service. It means that a retailer can compare their service inquiries to their sales, or that a gaming company can see how customer inquiries are impacted by the launch of a new title.
How does the acquisition of BIME Analytics speak to what customers want from technology today?
As we integrate the software and begin rolling out the new data analytic offerings, customers will be able to get even more context about their customers no matter where the data lives.
Beyond the typical data analysis, we will also be working with BIME analytics to think about the future of customer service. Just earlier this month we launched Satisfaction Prediction, a new feature that uses machine learning to spot poor customer-service interactions before they happen. We are hoping that by acquiring BIME Analytics, we will open more doors to take customer service to the next level.
Why acquire a company rather than build the capabilities yourself? What value is BIME bringing to Zendesk?
It’s a major undertaking to build a data analytics platform that can combine data from multiple sources and then make it really easy to build queries and beautiful visualizations. BIME Analytics, in our opinion, has done it better than anyone else. Bringing that expertise and technology into our existing customer data platform helps us move more quickly on what we think is a huge opportunity in applying analytics to customer service and relationships.
We’ve offered advanced reporting features for years that allow businesses to track their customer service performance, ranging from customer satisfaction and volume of inquiries to the speed of response.
BIME will allow us to sprinkle more real-time data visualizations, dashboards, and tools across our product portfolio.
BIME has a powerful and beautifully simple model for combining multiple data sources without having to build a centralized data warehouse, and to standardize on one large vendor’s systems.
It will also allow for organizations using Zendesk to combine support data with all of the other data about customers that a business tracks, as well as with an organization’s other business metrics.
It will help businesses better understand how business and product decisions impact their customer relationships and uncover patterns that they were missing when all of the data lived in separate places.
How did you find BIME and why is this company a good fit for Zendesk?
We have a lot of ambitions for how we want to use data, so we were really deliberate in looking for a company that fit our philosophy on how business software should work, and that made data analytics really simple for business users. We simply called the BIME Analytics team because we thought its product matched ours. As we met, we were impressed with the team and technology.
Do you find your customers care about the technology powering your analytics engine, or do they just want it to work? Do you see BIME being a selling point?
Ultimately, what our customers care about the most is that it just works for them, and that we’re able to guide everyday business users to the kind of data dashboards and visualizations that make the most sense for them. There’s a lot of work to do, but our goal is to make data analytics very simple and pervasive across our entire portfolio of products.
How does this acquisition position you to get an advantage over your competitors?
For too long, the traditional approach to data analytics in enterprise software required business to store all of their data in a single data warehouse, and to standardize on one large vendor’s systems. The big enterprise vendors have followed that approach, and we don’t believe in it. We’re opening the world of data analytics to anyone involved in customer service and engagement without having to change their technology architecture or spend tons of money on major integration projects.
I keep hearing about customer-centric IT… that is, technology created with the end-user in mind. How do you see Zendesk exemplifying that? Is BIME helping accelerate that vision?
This was one of the biggest reasons we were attracted to BIME Analytics. Like us, the team follows a customer-centric approach to technology. Pricing is transparent and available on its website; anyone can immediately start a trial and see how the software works before committing to it, and design and simplicity are as important as the technology behind the scenes. We think of this as democratizing business software–focusing it on the real users, and making the software approachable to any kind of business without requiring big IT projects.
IBM’s CEO Ginni Rometty recently met with Fortune’s Chief Editor Alan Murray onstage at our Most Powerful Women Conference and said that it’s no longer about being a digital business, but a cognitive business. Do you agree? How does BIME position Zendesk to empower your customers to be a cognitive business?
Definitely. I believe that data is the new currency in business and customer relationships. Organizations that not only have critical data, but also know how to bring it all together and make sense of it are going to better understand their customers and, ultimately, win and keep more of them for a lifetime.