SQDM share an article published by portal TheStreet, sharing strategic progress on CRM systems and Artificial Intelligence.
Salesforce held a small group meeting of less than 60 people at its headquarters in San Francisco last week where it announced that Einstein AI is now available to all its customers across sales, service, marketing, commerce and more, even going so far as to title the presentation, “The Year of Einstein.” Salesforce also announced a strategic partnership with IBM to combine the power of Einstein and IBM’s Watson to provide more insightful analytics for businesses.
Salesforce clearly has big ambitions for Einstein AI. As the company says on its website, “Einstein is like having your own data scientist to guide you through your day.”
Einstein is a product of about $600 million in acquisitions and three years of internal development. The artificial intelligence project was announced in September and was displayed at the company’s annual Dreamforce event in October. Last week it became clear that Einstein’s capabilities have seriously improved since October, according to a note from Pacific Crest that was sent to investors on Wednesday.
During last week’s press and customer event, CTO Richard Socher demonstrated how Coca Cola is using an AI-powered inventory app to improve stocking efficiency. The app uses object detection for instant inventory updates. After the demo, Coca-Cola CIO Barry Simpson said, “We have 24 million customers and 16 million coolers powered by AI. Being able to find better ways to optimize inventory and improve experience for customers is really important for us.”
A second demonstration came from CPO Alex Dayon who demoed how the Amazon Web Services sales team uses Einstein to improve its lead-to-cash time. Amazon Web Services CMO Ariel Kelman said, “The Salesforce platform has been incredibly important for us. We needed something that moved very quickly. Salesforce has grown with us.”
After the event, Pacific Crest released a positive report based on the two demonstrations saying, “Salesforce is enabling meaningful operational improvements at these global companies, which is a testament to how Salesforce leverages data and artificial intelligence (AI) in unique ways.” In addition, Davidson called the two demos “compelling,” but noted that its updated features come at an additional cost to the client.
Pacific Crest claimed that as an important differentiating factor for the company, Einstein could help Salesforce keep its momentum going in deals with large clients. In addition, its partnership with IBM’s Watson could give joint customers “unparalleled insight into both industries and end users.”
Pacific Crest ended its report by saying that Salesforce was a favorite cloud stock to own for 2017 and recommended that investors add to their positions on weakness.
The firm released an updated note Wednesday raising Salesforce’s price target to $106 from $95, claiming it had even more confidence in the company’s AI strategy after having spoken with industry contacts, competitors and management. “Success in AI could support price increases, share gains and customer retention over time,” the firm said.
This process of solving specific problems for customers that can then be replicated is an important reason for the firm’s increased confidence in Einstein: “It is a highly automated process where Salesforce can populate multiple statistical models that it can then test on a customer’s data, determine which fits the best for that specific business line or process, then apply the right models so that the right AI algorithm can begin learning. The company was thoughtful about creating an internal and external process that could be easily replicated. This should facilitate a relatively fast ramp within its new and existing customer installed base.”
Pacific Crest said that it believes Salesforce has an advantage in the industry with its early start in the industry. The firm has more confidence that “Salesforce can lever early AI wins at 50 pilot customers into a competitive advantage that can be easily replicated via a highly automated data-capture and modeling process.”
The firm said its sees $129 million in incremental revenue for Salesforce. “The CRM industry could top $36 billion this year, and we estimate that every 25 basis points of new share could add an incremental $90 million in revenue. Additionally, every 50 basis point reduction in attrition could add another $39 million,” the firm explained.
Based on conversations Salesforce has had over the past two weeks, AI is more of a capability within software rather than its own product category — and that’s a good thing. “End users ultimately buy solutions that address real-world pain points, not a new product category,” the firm claimed. “To that end, we are encouraged by early momentum that Salesforce has generated so far in solving very specific pain points for customers.”
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