Salesforce Highlights AI & Investment on its World Tour 2023

PAC attended the latest Salesforce World Tour in London last week, with north of 14,000 attendees hearing from the company’s UK leadership team and a raft of clients, including Aston Martin, Heathrow Airport and John Lewis.

Salesforce has had a bumpy ride in 2023, with activist investors turning on the pressure as the company battled against mounting economic headwinds. So, what are the focus areas for the company in the second half of the year and how is the mood among the vendor’s partner ecosystem? Here’s our key takeaways from the event…

Investing in Europe for further growth

Salesforce’s European business has been out-growing its North American division in recent quarters, and it is planning to invest to drive further momentum. The vendor unveiled plans to invest $4bn in its UK business alone over the next five years, dwarfing a previous cycle that saw it pump $2.5bn into the region over a three-year period.

Zahra Bahrololoumi, CEO, Salesforce UKI, said the investment will be channelled into “innovation, customer success and growth,” and helping UK customers harness the company’s increasingly AI-centric approach (more on that later). The aim will be to drive a similar level of impact as some of the bets it placed in recent years. For example, the recruitment of senior figures from its target industries have helped it to build real credibility when selling projects with a strong domain-specific focus.

While the UK was the focus for last week’s event, PAC expects similar announcements for other key European markets. Several Salesforce ecosystem partners believe that there is a lot of headroom for growth in France, where the Salesforce platform has started to build momentum in sectors including public services and manufacturing.

A difficult year, but a year of growth nonetheless

It is not easy to find a software vendor that isn’t finding 2023 to be tougher than previous years, as macro-economic and geo-political headwinds hit customer budgets. Salesforce is no exception, but the gloom-and-doom surrounding the company’s job cuts and share price dip have overshadowed the company’s still-healthy development.

https://www.sitsi.com/despite-clouds-salesforce-s-outlook-looks-bright

The consensus among the Salesforce partners that PAC spoke with last week was that while European spending on Salesforce-related solutions and services is not likely to increase at the same rate as it did last year, it will still grow in 2023. The vendor’s European revenue rose by 17% in its most recent fiscal quarter (at constant currency) and several of its partners are on course to beat this level over the course of the calendar year.

The common thread connecting those partners that are performing the best are that they are working with a solid base of customers where the Salesforce platform has a truly strategic place in the business, and it is being used to support business-critical initiatives. While budget for some greenfield roll-outs remains tight and the synergies with the Slack acquisition have yet to be fully realized, we heard about several major Salesforce expansion projects that are playing out in sectors including energy, manufacturing, telecoms and retail.

Grumbles over Salesforce’s services push

When Salesforce made its initial push in Europe a decade or so ago, part of its strategy was to acquire some direct systems integration capability to help its clients get to grip with its platform. It bought French partner Kerensen Consulting back in 2015, but it has since been leaning heavily on its rapidly growing ecosystem of integrator and consulting partners, who were given a center stage role at recent World Tours.

But PAC heard from several ecosystem partners at last week’s event who claimed that Salesforce’s own professional services team are playing an increasingly prominent role on client engagements, with sales teams incentivized to push services as well as subscriptions. The vendor’s professional services sales were up by 9% in its most recent quarter, accounting for 7% of total sales.

It is nothing new for a software vendor to look to claw back attached services revenue when license growth becomes a challenge. PAC expects this situation to ease off in the coming quarters, but Salesforce needs to keep its partners onside. Clients and prospects are looking for the deep industry knowledge and business change support that partners can provide and Salesforce cannot stand up (at scale) off its own bat. Most of Salesforce’s larger partners have other vendor partnership practices, and they may choose to reallocate their alliances investment elsewhere if they think that Salesforce is taking a more direct approach.

Clients warm up with Generative AI

Perhaps inevitably, the central theme of this year’s World Tour was artificial intelligence.

Bahrololoumi said in her keynote that the speed of adoption of generative AI was unprecedented, and Salesforce has been quick to bake elements of it into its portfolio.

The big announcements so far this year were the launch of Einstein GPT, which it branded the first generative AI for CRM, as well as AI Cloud, which aims to provide customers with a toolkit to get started with their generative AI initiatives, bringing together AI, data, analytics and automation. Generative AI is now baked into Salesforce’s wider offering, including Sales GPT, Service GPT, Marketing GPT, Commerce GPT, Tableau GPT, and Platform GPT, enabling users to speed up productivity, offer hyper-personalized services, and enhance customer success and growth.

Customers are already harnessing more established flavours of AI in the Salesforce platform. For example, retail group Marks & Spencer is using Salesforce’s AI technology to personalise billions of customer interactions across multiple channels, including its website, stores, contact centres and core CRM system. Santander is using Salesforce’s GPT capabilities in its international trade portal, Santander Navigator, to better support businesses seeking to expand into international markets. But while there is a huge amount of interest in what generative AI can bring to the party, most clients are taking a cautious approach to ensure that they are using data within the appropriate guardrails.

Salesforce ensures appropriate and trustworthy usage of data and generative AI through its recently launched Einstein GPT Trust Layer, which through various steps prevent private details falling into the public domain, mitigating risks. Its process includes large language models such as Bring Your Own Model, Shared Trust, and Salesforce Hosted while Einstein GPT Trust Layer comprises secure data retrieval, dynamics grounding, data masking, toxicity detection, auditing, and zero retention. Essentially, these key services prevent data leakage, unauthorized access, generation of misleading information and harmful or inappropriate content, mask personally identifiable information, while also logging and monitoring generative AI usage.

Some use cases emphasized by Salesforce include drafting outreach emails in seconds within Sales GPT based on the target’s historical and preference data ensuring a personalized approach. Another example is solving complex customer queries faster within Slack GPT while Einstein GPT can create a template of the solution and identify similar problems that would benefit from the solution. But to improve the user experience, Salesforce launched Prompt Studio, offering stock templates ready for any prompt type, e.g., email, field population, sidebar, and more. Templates can be customized to the customer or issue at hand, while generating a tailored response in seconds, saving valuable time.

Overall, Salesforce needs to continue to invest on two fronts to get its growth back on an upward trajectory. Enhancing the core product set through AI and expanding and reinforcing its European account teams will help it stay on the front foot in the region. However, it must be careful of undermining the hugely important role that its ecosystem continues to play in taking it deeper into its clients’ core business activities.