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IBM, Salesforce Strike Global Partnership on Cloud, AI

March 6, 2017, 9:22 PM UTC

Are two clouds better than one?

How about two nerdily-named artificial intelligence platforms?

According to IBM and Salesforce, the answer to both of those questions is yes.

The two Fortune 500 companies on Monday afternoon revealed a sweeping global strategic partnership that aligns one iconic company’s multiyear turnaround effort with another’s staggering growth ambitions. According to the terms of the deal, IBM and Salesforce will integrate artificial intelligence platforms (Watson and Einstein, respectively) and some of their software and services (e.g. a Salesforce component to ingest The Weather Company’s meteorological data). IBM will also deploy Salesforce Service Cloud internally in a sign of goodwill.

Why not go it alone? Fortune spoke on the phone with IBM CEO Ginni Rometty and Salesforce CEO Marc Benioff to get a better understanding of the motives behind the deal. What follows is a transcript of that conversation, edited and condensed.

Fortune: Hi, guys. So what’s this all about?

Benioff: It’s great to connect with you again. Artificial intelligence is really accelerating our customers’ success and they’re finding tremendous value in this new technology. The spring release of Salesforce Einstein has opened our eyes to what’s possible. We now have thousands of customers who have deployed this next-generation artificial intelligence capability. I’ll tell you, specifically with our Sales Cloud customers, it creates this incredible level of productivity. Sales executives are way more productive than ever before—the ability to do everything from lead scoring to opportunity insights really opened my eyes that this is possible. So the more value in artificial intelligence we can provide our customers, the more successful they’ll be, which is why we’re doing this relationship with IBM.

We’re able to give our customers the incredible capabilities of not only Einstein but Watson. When you look at the industries we cater to—retail, financial services, healthcare—the data and insights that Watson can provide our customers is really incredible. And we’re also thrilled that IBM has agreed to use Salesforce products internally as well. This is really taking our relationship to a whole new level.

Rometty: Andrew, thank you for taking the time. This announcement is both strategic and significant. I do think it’s really going to take AI further into the enterprise. I think about 2017 as the year when we’re going to see AI hit the world at scale. It’s the beginning of an era that’s going to run a decade or decades in front of us. Marc’s got thousands of clients; by the end of this year we’ll have a billion people touched by Watson. We both share that vision. An important part of it is the idea that every professional can be aided by this kind of technology. It takes all the noise and turns it into something on which they can take action. It isn’t just a sales process; we’re going to link other processes across a company. We’re talking about being able to augment what everyone does—augment human intelligence. Together, this will give us the most complete understanding of a customer anywhere.

For our joint customers, to me, this is a really big deal. Take an insurance company—Marc’s got plenty of them as clients. You link to insights around weather, hook that into a particular region, tell people to move their cars inside because of hail. You might even change a policy. These two things together do really allow clients to be differentiated.

This is the beginning of a journey together.

I thought this was the brainiest deal I’ve ever heard of, with Watson and Einstein together.

Rometty: It’s good comedy.

Like any two large tech companies, you compete in areas and collaborate in others—frenemies. Why did you engage in this partnership? Any executive asks themselves: build, buy, or partner. Why partner this time?

Benioff: I’ll give you my honest answer here, which is that I’ve always been a huge fan of IBM—Ginni knows that. When I look at pioneering values in business—companies that have done it right and really stuck to their principles over generations—I really look to IBM as a company that has deeply inspired me personally as I built Salesforce over the last 18 years. We’re going to be 18 years old on March 8th. When I look at what we’ve gone through in the last two decades, I really think that it’s our values that have guided us and how those values have been inspired by many of the things at IBM.

Number two is, Ginni made a strategic decision to acquire Bluewolf, which is a company that we had worked very hard to nurture and incubate over a very long period of time. It really demonstrated to me that the opportunity to form a strategic relationship with IBM was possible. We both have this incredible vision for artificial intelligence but we’re coming at it from very different areas. [Salesforce is] coming at it from a declarative standpoint, expressed through our platform, for our customer relationship management system. IBM’s approach, which is pioneering, especially when it comes to key verticals like retail or finance or healthcare—these are complements. These are the best of both worlds for artificial intelligence. These are the two best players coming together. We have almost no overlap in our businesses. We have really a desire to make our customers more successful.

Rometty: Beautifully said. And I’ll only add a couple of points. Not only sharing values as companies but in terms of how we look at our customers. We share over 5,000 joint clients. But more importantly, think about this era of AI. There are different approaches you can take. What Marc’s done with Einstein—think of it as CRM as a process. What we’ve done with Watson—think of it as an industry in depth. We do have very little overlap. Why we talk about Watson as a platform is to be integrated with things like what Marc’s doing.

Let me ask you about AI. It’s been in development for decades, but the current wave is nascent. How do you each see AI as part of the success of your companies? It’s a capability—no one goes to the store to buy AI. Hopefully it solves their problems. But AI can be anything.

Rometty: I view AI as fundamental to IBM. Watson on the IBM cloud—that’s a fundamental and enduring platform. We’ve built platforms for ourselves before: mainframe, middleware, managed services. This is now the era of AI. It will be a silver thread through all of what IBM does.

Is it fair to say that you guys aren’t trying to compete on AI? I don’t mean between you—I mean within the greater industry.

Rometty: We’re absolutely complementary. Clients will make some architectural decisions here. Everyone’s gonna pick some platforms to use. They will pick them around AI. By the way, there are stages: the most basic is machine learning, then AI, then cognitive [computing]. What we’re doing with Marc goes all the way into cognitive. Just to be clear.

Benioff: I could not agree more. We brought our customers into the cloud, then into the social world, then into the mobile world. Now we’re bringing them into the AI world.

This is really beyond my wildest dreams in terms of what’s possible today. And by the way—that we’re able to replace Microsoft’s products [at IBM] is a bonus for us. (laughs)