 Live from San Francisco, it's theCUBE. Covering IBM Think 2019, brought to you by IBM. Welcome back to theCUBE, I'm Lisa Martin with John Furrier and we are on a rainy San Francisco day, day three of theCUBE's coverage of IBM Think 2019. Here to talk shopping, one of my favorite topics. We have Katie Dunlop, VP of Global United, unified rather commerce and marketing for Blue Wolf, part of IBM. Katie, welcome to theCUBE. And from Salesforce, we have Ben Caesar, Senior Director of Global Industry Retail Solutions. Ben, it's great to have you on the program. How are you? Excellent. Good. Even though we are at the rejuvenated Moscone Center, which is fantastic and I think all of the hybrid multi-clouds have opened upon San Francisco. Right. It's a very soggy day. So Katie, IBM announced a partnership with Salesforce a couple of years ago. Just yesterday, John and I were chatting. We heard Ginny Romani, your CEO, talk about IBM as the number one implementer of Salesforce. Talk to us a little bit about the partnership before we get into some specific examples with that. So I know that part of that partnership, it's really to leverage the best of the technology from Salesforce as well as IBM in ways that we together, married together, create opportunities for the industry. And specifically here today, we're talking about retail. So on the retail side, Salesforce is obviously a great SaaS company. They keep on blowing the records on the numbers, performance-wise, SaaS business has proven it's a cloud business, but retail is a data business. Yes. So how does IBM look at that? What's the relationship with retail? What's the solution? And what are people looking at Salesforce for, for a retail? Yeah, I think it's really important to understand where our strengths are. And I think when you talk about Salesforce, you talk about marketing cloud and commerce cloud and service cloud, we call that the engagement layer. That's how we really interact with our consumers, with our shoppers, but at the same time to really have a great connection with consumers, you need to have great data. You need to have great insights. You need to understand what's happening with all the information that drives choices for retailers. And that's why the relationship with IBM is absolutely so strong. And it is a data-driven relationship. Together, I guess you can see the customers in the middle. So we have our engagement layer and our data layer. Together, we satisfy the customer. Lisa, what's the solution specifically? Because obviously you guys going to market together to explain the tactical relationship. You guys joint sales and integration. Sure, so what we have done, given the disruption that's happening right now in the retail space and with the customer at the center of that conversation, we've been looking at ways that the native functionality for Salesforce is Einstein as an intelligent layer and for IBM, it's Watson. So where do they complement one another? And so looking at retail with commerce and marketing and services, the center of that conversation and the engagement layer, how are we activating and working with the customer from a collection of data information standpoint and activating that data all the way through supply chain. So the experience is not just the front experience that you and I have when we go to a site. It's actually how and when is that delivered to me? If I have an issue, how am I going to return that? So we've looked at the entire customer journey and looked at ways that we can support and engage along the way. So for us, we're looking at, as you see retail and the way it's evolving, is that we're no longer just talking about that one experience where you're actually adding to your cart and you're buying. It goes all the way through servicing that customer, returning and making sure that that information that's specific to me and if I can choose how I'm going to have that inventory sent to me and those products sent to me, that's exactly what we're looking to do. So then the retailer, like a big clothing store is much more empowered than they've ever been. Probably really demanded by us consumers who want to be able to do any transaction anywhere, sort it on my phone, finish on the tablet, et cetera. So I can imagine, maybe Ben, is this like a Watson and Einstein working together to say take external data, maybe it's weather data, for example, and combine those external data sources with what a retailer has within their customer database and sales force to create very personalized experiences for us shoppers, us consumers? Right, and where retailers really can grow in terms of the future is really accessing all that data. I think if you look at some of the statistics, retailers have up to 29 different systems of records and that's why some of our experiences are very good, some of our experiences are not very good. So together if we can collapse that data in a uniform way that really drives personalization, contextual selling so you can actually see what you're buying, why you're buying it, why it's just for me, that's the next level. And I must say with all the changes in the industry, there's some things that will never change and that is consumers want the right product, the right price, the right place and at the right time all enveloped in a great customer experience. That will never change, but today we have data that can inform that strategy and when I was a senior merchant at Macy's years ago, I had no data, I had to do a lot of guessing and when mistakes are made, that's when retailers have a problem. So if retailers are using data to its benefit, it just makes sure that the customer experience is exceptional and that's what we try to do together. And I can build on that if we're thinking specifically how we're engaged from a technology perspective. If I'm a merchandiser and I decide I want to run a promotion for New York and I want to make sure before I run that promotion that I have the right inventory and that I not only am I creating the right message but I have the information that I need in order to make that successful. One of the things that we partner with Salesforce on is the engagement layer being Salesforce but in the back end we have access to something called Watson Embed Business Agent and that business agent actually goes out and talks to all the disparate systems. So it doesn't have to be solutions that are necessarily homegrown by IBM or Salesforce. Watson can actually integrate directly with them and sits on top. So as a merchandiser I can ask the question and receive information back from supply chain. Yes, there's enough product in New York for you to run this promotion. It can go out and check to see if there's any disruption that's expected and check in with weather. So that as, on the back end from an operations standpoint I'm empowered with the right data in order to run those promotions and be successful. It's interesting, one of the things that comes up, we've heard this expression from IBM. There's no AI without IA, information architecture. You talk about systems of record, all these silo databases, there's low latency. You need to be real time in retail. So this is a data problem, right? So this is where AI really could fit in. I see that happening. The question that I have as a consumer is what's in it for me, right? So Ben, tell us about the changes in retail because certainly online buying mobile is happening. So what are some of the new experiences that end users and consumers are seeing that are becoming new expectations? What's the big trend in retail? Well, there's two paths. There are your expectations as a consumer. Then there's the retailer path and how they can meet your expectations. So let's talk about you first. So what you always want is a great customer experience. That's what you want. And what defines that is, are they serving me the products I want when I want them? Are they delivering them on time? Do the products work? If I have a problem, how am I treated? How am I served? And these are all the things that we address with the Salesforce solutions. Now let's talk about the retailer. What's important to the retailer as an ex-retailer myself? It was important that I understood what is my right assortment? And that's hard because you have a broad audience of consumers, you have regional and local requirements. So you want to understand what's the right assortment? And working with IBM with their assortment optimizer, that helps us out in terms of how we promote through our engagement later. That's number one. How about managing markdowns? This year there were over $300 billion in markdowns for retailers. Half of those markdowns, $150 billion were unplanned markdowns and that goes right to your P&L. So we want to make sure that the things we do, satisfy the consumer, but not at the expense of the retailer. The retailer has to succeed. So by using IBM supply chain data and information, we can properly service you. It's interesting, we see the trend in retail, I mean financial services early on, high frequency trading, use of data, that kind of mindset's coming to retail where if you're not a data driven or data architecturally thinking about it, the profit will drop, unplanned markdowns and other things, inventory, a variety of things. This is a critical new way to really reimagine retail. Yeah, retail's become such a ubiquitous term. There's retail banking, there's retail in every part of our life. It's not just the store or online, but it's retail everywhere. Someone's selling their services to you. So I think the holy grail is really understanding you specifically. And it's not just about historical transactions which you bought, but behavioral data. What interests you? What are the trends? And data has become a much broader term. It's just not numbers. Data is, what are your trends? What are you saying on social media? What are you tweeting out? What are you reading? What videos are you viewing? All that together really gives a retailer information to better serve you. So data has really become exponential in its use and in its form. So I'm curious what you guys see this retail, very robust retail use case as driving in the future. We just heard yesterday, one of the announcements, Watson anywhere. I'm curious, leveraging retail as an example and the consumerization of almost any industry because we expect to have things so readily. And as you both point out, data is commerce. Where do you think this will go from here with Watson, Einstein and some of the other technologies? What's the next prime industry that really can benefit from what you're doing in retail? Well, I think that I'll start and you can add that in as well. But I think that it's going to bleed into everything. So health and life sciences, consumer goods, product goods, we've talked about retail being all different kinds of things right now. Well, CPG organizations are actually looking at ways to engage a customer directly. And so having access, utilizing Watson as a way of engaging and activating data to create insights that you've never thought of before. And so being able to stay a step ahead, anticipate the needs, stay on the bleeding edge of that interaction so that you're engaging customers in a whole new way is what we see. And it's going to be proliferated into all kinds of different industries. Yeah, every merchant, every buyer wants to be able to predict. I mean, wouldn't that be incredible to be able to see around the corner a bit? And while technologies don't give you the entire answer, it can sure get you along the way to make better decisions. And I think with Watson and Einstein, it does exactly that. It allows you to really predict what the customers want. And that's very powerful. I want to get you guys' perspective on some trends that we're seeing. We hear Ginni Rometti talk about chapter two of the cloud. You almost say there's a chapter two in retail if you look at the certainly progressives who are way out front doing all the new things. People doing the basics, getting an online presence, doing some basic things with mobile, kind of setting the table of foundations, but they stare at the data problem. They almost say, oh, so it's a big problem. Out of all these systems of record, how do I integrate it all in? So take us through a use case of how someone would attack that problem. Talk about an example of customer or a situation or a use case that says, okay, guys, help me. I'm staring at this data problem. I got the foundation set. I want to be efficient and innovative in retail. What do I do? Do I call IBM up? Do I call Salesforce? How does that work? Take us through an example. So I think the first example that comes to mind is I think about Sally Beauty and how they're trying to approach the market and looking at who they are and many retailers right now because there's such a desire to understand data, make sure that you're kept, everyone has enough data, but what is the right data to activate and use in that experience? So they came to us to kind of look at, are we in the right space? Because right now, everyone's trying to be everything to all people. So how do I pick the right place that I should be and am I in the right place with hair care and hair color? And the answer came back, yes, you are in the right space. You need to just dive deeper into that and make sure that that experience online. So they used a lot of information from their research on users to understand who their customers are, what they're expecting, and since they sell hair care product that is professional grade, how do I make sure that the customers are getting using it in the proper way? So they've actually created an entirely infused way of deciding what exactly hair color you need and for me as a consumer, am I actually buying the right grade level for me and am I using that appropriately? And that data all came from doing their research because they were about to expand out and add in all kinds of things like Altile where you're going into the makeup area but really helping them stay laser focused on what they need to do in order to be successful. So you guys come in and do like an audit and engage with them on a professional services level. Yes, we went end to end. And they're buying a SAS AI and then they plug in Salesforce? Yeah, so they actually already had Salesforce. So they had the commerce solution, marketing and service, they were fairly siloed. So we go back to that old conversation around data being held individually but not leveraging that as a unit in order to activate that experience for the consumer. What they have decided as a result of our work with them so we came in and did a digital strategy. We've been involved as an agency of record to support them in how that entire brand strategy should be from an omnichannel perspective in the store as well as that digital experience. And then they actually just decided to go with IBM OMS and use that as a way of activating from an omnichannel order orchestration standpoint. So all the way through that life cycle we've been engaging them and supporting them on Watson, obviously native to Salesforce's Einstein and they're leveraging that but they will be infusing Watson as part of their experience. So another benefit that Sally Beauty and I imagine other retailers and other companies and other industries will get is optimizing the use of Salesforce. It's a very ubiquitous tool but you mentioned, I think you mentioned Ben in the previous days of many, many, many systems of records. I imagine for Sally Beauty, also not just to be able to deliver that personalized customer experience, talk inventory, but it's also optimizing their internal workforce productivity. And I'm curious, for an organization of that size, what's the time to impact? They come in, you guys do the joint implementation, go to market, the consulting, identify the phases of the project. How quickly did Sally Beauty start to see a positive impact on their business? I think they, well there were some immediate benefits because they were already Salesforce clients and so our team, our IBM team was able to come in and infuse some best practices and their current existing site. So they've been able to leverage that and see that benefit through all the way through Black Friday and last holiday season. And now what they're seeing is they're on the verge of launching and relaunching their site in the next month and then implementing OMS as part of that. So they're still on the path and the journey to that success but they've already seen success based on the support that we've provided them. And what are some of the learnings you guys have seen with this? Obviously you've got existing accounts, they take advantage of this. What are some of the learnings around this new engagement layer and with the data intelligence around AI? What's the learnings have you guys seen? Yeah, I think the leading thing that I've learned is the power of personalization. It's incredibly powerful and a good example is one of my favorite grocers and that's Kroger. And if you really understand what Kroger has done, I'll talk about their business a bit and I'll talk about what they've been able to do. If you look at someone's chopper basket, there's an amazing amount of things you can learn about them. If they're trying to be fit, if they're on a diet, you can learn if their birthday's coming, you can learn if they just had a baby, you can learn so many different things. So with chopper basket analysis, you can understand exactly what coupons you send them. So when I get coupons, digital or in my home, they're all exactly what I buy. But to do that for 25, 30 million top customers is a very difficult thing to do. So the ability to analyze the data, segment it, and personalize it to you is extremely powerful. And I think that's something that retailers and CBG organizations are going to continue to try to do. We're not all the way there. We're probably 30% there, I would say. But personalization is going to drive customer for life. That's what it's going to do. And that's a massive learning process. And the other thing too, Ginny mentioned in her keynote is this concept of reasoning around the data. So it's knowing the interests and around the personas, et cetera. But it's also those surprises. Knowing kind of in advance maybe what someone might like given their situation almost. We were talking about this morning actually. We're talking about behavioral data. And data's taken a different term. Data is, again, what are you doing online and what are you talking about? What did you view? What video did you look at? For organizations that have access to that data, tells me so much more about your interests right now, today. It's not just about a product, but it's about a lifestyle. And if retailers can understand your lifestyle, that opens the door to so many products and services. So I think that's really what retailers are really into. My final question for you guys both, if you can answer be great, is what's the biggest thing that's going to happen in retail that people may not see coming? That's going to be empowering and changing people's lives. What do you guys see as a trend that's knocking on the door or soon to be here and changing lives and empowering people and making them better in life? Yeah, I'll jump in on one real quick. And I think it's already started, but it's really a phenomenon of commerce anywhere. Commerce used to be a very linear thing. You'd see an ad, someone would reach out to you and you would buy something. But commerce now is happening wherever you are. You could be tweeting something or on Instagram or you could be walking in an airport. You could be anywhere and you can actually execute a transaction. So I think the distance between media and commerce has totally collapsed. It's become real time. In traditional media, TV, printer, radio, they're still a big part of media, a big part. But there's distance. So I think it's the immediacy of media and a transaction that is really going to take retailers and CPG customers by surprise. It changes the direct to consumer equation. It changes it. It does. And I think I would just build on that to say that people have relationships with their brands. And the way that you can extend that in commerce anywhere is that people don't necessarily need to know they're in that commerce experience. They're actually having a relationship with that individual brand. They're seen for who they are as an individual, not a segment. I don't fall into a segment that I'm kind of like this, but I'm actually who I am and they're engaging. So the way that we can, I think we're going to see things go is people thinking more and more out of the box about how to make it more convenient for me and to not hide that it's a commerce experience, but to make that more of an engagement conversation that you're buying. People centric, not personate in a database. Exactly. Moving away from marketing, from segmentation and more to individual conversations. Yeah, I think you said it, Ben. It's the power of personalization. Katie, Ben, thanks so much for joining us, talking about what you guys, IBM and Salesforce are doing together and we're excited to see where that continues to go. Great. Thanks so much. Our pleasure, thank you. We want to thank you for watching theCUBE live from IBM Think 19. I'm Lisa Martin for John Foyer. Stick around, our next guest will be joining us shortly.