On November 30, 2020, ServiceNow, a large cloud-based IT services company, announced their plans to acquire Canadian artificial intelligence (AI) startup, Element AI, which helps companies across industries deploy AI solutions. According to TechCrunch, the purchase price was around $500 million, with a valuation between $600 and $700 million.
| ServiceNow is no stranger to acquisitions, with 18 acquisitions under their belt, according to Crunchbase data. This is the fourth acquisition that they have announced this year, alongside: |
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Why then did ServiceNow decide to scoop up another data-related startup? Without a crystal ball or inside knowledge, here are some thoughts.
Element AI is a mix of AI products (including tools to build AI-powered workflows, computer vision solutions, document intelligence) and AI services to help companies without a strong data science practice develop and deploy AI. Their founding talent is a force to be reckoned with and includes co-founder Yoshua Bengio, a top scholar in the field with an h-index of 174.
As such, ServiceNow is likely looking to take advantage of this strong talent, with Bengio coming on board as a technical advisor. In addition, according to ServiceNow’s press release, ”they will create an AI Innovation Hub in Canada to accelerate customer-focused AI innovation in the Now Platform.”
As with any acquisition, the question is always whether or not the acquirer will maintain the acquiree’s product suite or not. If not, it could either be an acquihire (in which the fundamental purpose of the hire is for the talent) or an attempt to roll in the technology to their broader product offering.
In this case, ServiceNow has said that their “focus with this acquisition is to gain technical talent and AI capabilities.” In regards to the latter, with no mention in their press release about Element AI’s products, it seems that the plan here will be to roll their technology into ServiceNow’s flagship product, Now Platform.
| Indeed, by looking at ServiceNow’s recent acquisition announcements from 2020, we can see how they can (and in some cases, such as with Passage AI) bolster and boost their platform with new and improved technology. |
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It’s all well and good to have great technology. However, technology is only as good if it is properly used and deployed. This is especially the case with successful deployments of AI, which requires special attention to data, a strong knowledge and focus on AI techniques such as machine learning, and more. With this acquisition, ServiceNow will get access to technology to improve their platform as well as the talent required to help customers effectively deploy AI.
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