March 20, 2017
IBM and Salesforce announced they will connect their artificial intelligence platforms to help companies target and serve customers.
IBM’s natural-language AI program Watson - which conquered the television quiz show “Jeopardy”- will be integrated with Salesforce’s Einstein, the Artificial Intelligence (AI) that helps mine its hugely popular customer relationship management software, to provide customer purchasing habits and shopping data for businesses that run Salesforce.
That means that an insurance company that uses Salesforce, for example, can also use Watson’s weather data to target customers before a snowstorm to help reduce potential damages.
By combining Watson’s data on local retail trends with specific customer data from Salesforce, companies will be able to send highly targeted campaigns to shoppers, according to the companies.
Salesforce customers will be able to start using Watson’s smarts to refine their customer targeting starting in the second half of this year.
Pricing for use of the new joint AI products was not disclosed.
As part of the agreement, IBM will start to use Salesforce’s cloud services to help organize its own customer support needs.
Other companies, like Facebook and Twitter, would probably love to provide that level of personalized engagement for businesses that target customers on their platforms, but this new partnership between Salesforce and IBM may prove hard to top.
The integration of Watson-Einstein will provide an insight on huge amount of data specifically related to the fields of health care, financial services and retail.
This will result in improved industry-specific predictions, recommendations and valuable insights that could be used for meaningful customer interactions by the companies.
Zacks Equity Research noted that IBM shares (up 28.8%) have underperformed the Zacks Computer - Integrated Systems industry (up 33.8%) over the last year.
Salesforce have also underperformed the Zacks Computer – Software industry over the last one year. While the industry gained 24.6%, the stock appreciated 19.8%.
Following the deal, we anticipate shares of both the companies to rebound as the partnership presents ample growth opportunities in the AI and Customer Relationship Management (CRM) fields.
What Does This Mean for Big Blue?
Zacks noted that IBM Watson has been fast gaining traction in recent years. Some other companies that have partnered with IBM for its AI technology include German carmaker BMW (for analyzing driving data), Cisco (for analyzing industrial Internet of Things (IoT) data), Medtronic (for analyzing data available from medical devices related to diabetes), General Motors (for providing customized content and advertisement to the users) and Twitter (for analyzing tweets and provide insights into user sentiment).
IBM Corporation Revenue
IBM continues to expand its Watson offerings. During the fourth quarter of 2016, the company introduced new offerings like the Watson Data Platform, Watson Discovery Service and trade surveillance for Financial Services. Further, the company added new cognitive capabilities for conversation to Watson.
With this collaboration, IBM has further strengthened its AI platform, which is a positive and will likely accelerate adoption rate going ahead.
What Does This Mean for salesforce?
Salesforce is a leading provider of on-demand CRM software.
However, with Mark Benioff at the helm, the company has made significant progress in the AI space as well.
Salesforce.com Inc Price
Artificial intelligence has its application in sales as it can improve interaction with customers. Hence, salesforce’s CRM platform will greatly benefit from this collaboration.
Moreover, IBM has agreed to use some of salesforce’s products internally as well, which will strengthen their relationship.
Zacks Equity Research Take
As per an IDC report, worldwide spending on cognitive systems and artificial intelligence is estimated to top $47 billion by 2020, up at a CAGR of 55.1%. Competition is strong in the AI space with the presence of major players such as Alphabet’s Google, Amazon, Apple and Intel.
Read the Article: What Intel’s $15.3 billion Acquisition of Mobileye Means in the Age of Driverless Vehicles
We believe that IBM’s technological prowess combined with strategic collaborations with the likes of Salesforce will go a long way in helping both the companies gain further traction in the markets.
Related Article: Salesforce Brings Artificial Intelligence to Everyone with Einstein