Keith Dawson's Analyst Perspectives

The next phase of buying for contact centers and adjoining service/customer experience (CX) teams is going to be heavily influenced by how vendors develop tightly integrated ecosystems and define use cases and benefits across enterprise personas. There are more people involved in the work of delivering customer service, and a broader technology landscape from which buyers can choose their software applications. Platforms now function well beyond the communications needs of the contact center, taking in customer data, enterprise analytics, and the operations surrounding service delivery (e.g., case tracking and field service). With the breadth of options, buyers are trying to make choices that they can stand behind for the long term, but that don't lock them into a closed vendor system. Zendesk is well situated to take advantage of the changing needs of service teams. It was founded in 2007 and has since grown organically and through acquisition. The company went through some changes in the 2020s, notably a merger that didn't come to fruition and a staff reduction in 2023, a year after it was taken private in 2022. It is now headed by Tom Eggemeier, a seasoned CX executive with long experience at Genesys (which is owned by the same private equity firm as Zendesk). Amidst the changes, the company has consistently acquired niche vendors to provide key components for Zendesk's software portfolio. It has transitioned its software from being itself a niche application for tracking customer support requests into a full suite that supports a variety of applications serving needs across CX departments. The market is increasingly looking at vendor platforms as an indicator of future direction. Zendesk Sunshine is its base platform. It is an open Customer Relationship Management (CRM) tool, native to Amazon Web Services (AWS), that connects customer data from all sources to provide context. Sunshine checks all the relevant boxes: integrations, flexibility, customization, scalability. A platform is defined by three characteristics. First, it must provide a set of technical capabilities that facilitate the creation and maintenance of applications and the full integration of software from third-party developers. Second, it must encourage those third parties to work with it as an ecosystem — having an applications marketplace, for example. Third, the platform vendor must actively promote the use of the applications that can reside on the platform and facilitate the creation of application development skills by internal developers. Based on that definition, Zendesk actually has two platforms: Sunshine (the CRM layer) and Sunshine Conversations, a set of communications applications for capturing customer messages in Zendesk. Developers can build messaging into their own apps and services to ensure that customers can engage with companies over websites, social channels and private in-app messaging. It can also unify conversations across every digital channel to ensure context across CX stakeholders. Sunshine Conversations was built from a 2019 acquisition. Atop those platforms sit several application sets. Zendesk for Service is the primary offering for contact centers. It contains messaging, artificial intelligence (AI) and automation, an agent workspace, trouble ticketing and some self-service features. Zendesk Sell is a suite of sales engagement tools, including customized email sequences, targeted prospect lists, trigger-based actions for automating workflows and the ability to track things like deal progression, recurring revenue, volume and forecasts. Sell and Service can exchange data and work in tandem. A recent application addition is Conversational Commerce, a set of tools that connects brands with shoppers by managing ongoing messaging throughout different phases of the customer's journey. Unlike many contact center products in the market, this Zendesk offering focuses squarely on helping turn service interactions into revenue opportunities. Agents can act on customers' abandoned carts, for example. They have better information from across the enterprise to help them nudge customers complete purchases, like in-stock data, customer purchase history and merchandise preferences. It is integrated directly into Shopify's e-commerce platform and WhatsApp messaging. Conversational Commerce is part of Zendesk's efforts to move upmarket towards serving larger enterprise customers. In the last year, Zendesk has made two other moves that signal a serious shift in how it views the market. It acquired Tymeshift, a workforce management solution that automatically schedules agents to meet AI-forecasted needs based on historical and real-time data. It provides a comprehensive overview of team performance and capacity, allowing managers to optimize staffing and manage costs. Via public APIs, Tymeshift integrates workforce management analytics with CRM, HR, and finance systems. In 2024, Zendesk acquired Klaus, an AI-powered quality management system that analyzes both human and digital agent performance. Klaus’ AI scores 100% of customer support interactions, pinpoints conversations with positive or negative sentiment and identifies outliers, churn risk, escalations and follow-ups across all conversations — even those done by digital agents or outsourced teams. Klaus spots knowledge gaps and coaching opportunities that can be used to improve agent performance and productivity. Klaus and Tymeshift combine to function as a nearly complete workforce engagement or agent management toolkit. And that presents an interesting option for contact center buyers: Zendesk can function as a Contact Center as a Service (CCaaS) alternative, with everything operationally needed beyond the core voice routing, which can be had through an Amazon integration or one of many bring-your-own-telephony options. This is an example of the transition in the industry to focus more on enterprise CX than on interaction routing. In the future (based on extrapolating today's trends), the center's role will be to execute the strategies of the enterprise, not just to respond reflexively to the customer. As people gravitate towards thinking about their centers as part of a larger CX whole, they're going to be looking at an expanding landscape of vendors — some from the CRM world, some from Martech and some from data management — and seeing a plethora of options for replicating old-style contact center functionality while adding the most enterprise-related value. Zendesk is now well-poised for this transition. Tymeshift and Klaus represent an opportunity to articulate the benefits of an alternative contact center framework. AI will be an accelerator in the shift to enterprise CX. Zendesk's AI offering provides pre-built and pre-trained bots for messaging and email — the primary AI entry point for many contact centers. Zendesk offers two levels of AI functionality: Zendesk AI, a layer that combines Zendesk’s data and insights with the company’s proprietary models and external large language models. This level is included with standalone product and suite plans, with specific features varying by plan level. The second level is Zendesk Advanced AI, an expansion of features available as an add-on for the higher-tier plans. The basic level includes the features that are evolving into modern table stakes: pre-trained bots for messaging and email; agent assistance via AI insights and suggestions; and intelligent triage that uses intent detection, language detection, and sentiment analysis to classify incoming requests and build workflows based on them. At the advanced level, Zendesk adds AI-powered intents for bots and greater intelligence in the Agent Workspace, along with some added administrative features. Zendesk has a plan to develop proof points for its AI applications, specifically by showing quantitative value in places where people care deeply about the outcomes. At a recent event, the Zendesk team was able to discuss the costs and benefits of its AI applications with a high degree of granularity. That should open the door to serious consideration by less technical line-of-business (LOB) buyers. Zendesk also appears aware of the need to help those LOB buyers have productive conversations internally with IT teams and others about deployment, disruptiveness to processes, and seeing value. Those conversations are becoming more important: Ventana Research predicts that by 2026, two-thirds of enterprises will have projects underway to unsilo the sources of customer information, spurring discussions between IT and CX professionals on data management strategies. For contact center and CX buyers, the emergence of suites of applications built on open platforms like Sunshine represents an opportunity to future-proof their operations. It can also help shift the emphasis in service teams from cost control to revenue generation. With tools for Service and Sales, Zendesk has already extended the utility of the platform to enterprise CX teams. Now, with augmented contact center capabilities in agent management, it may be time for buyers to rethink how they organize service into a larger enterprise technology stack. Regards, Keith Dawson

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