According to the Smart Finance APP, Salesforce, the cloud software giant focusing on customer relationship management (CRM) software, announced a major turning point in its AI strategy planning at its annual Dreamforce conference this week. The company now states that its AI tools can efficiently handle multiple complex tasks without human supervision, and it is changing the pricing model for its software product portfolio in the context of AI technology integration. This model is likely to become the new mainstream pricing model for SaaS software companies in the AI era.

This tech company is known globally for pioneering the era of software as a service (SaaS), which involves accessing computer software applications through a subscription model. With the launch of ChatGPT, the AI era that human society has long awaited is gradually approaching, and Salesforce is expected to open up a new revenue model for the SaaS industry.

In recent years, as generative AI has disrupted the entire software industry, Salesforce management is rethinking the business model of its emerging technology. The software industry giant will charge $2 for each conversation with its new AI "agent", which are AI chatbots based on generative AI technology. These chatbots are used for quickly and efficiently accessing complex technical modules, handling customer service, scheduling sales meetings, and other enterprise tasks without human supervision.

If the widespread adoption of AI leads to an increase in unemployment in the future, and the scale of traditional software subscription services purchased by the company's business customers may also decrease, the company's new AI agent technology and pricing strategy will maximize the protection of Salesforce's profits.

Salesforce even leans towards the potential of using new technology for "employee substitution". Mark Benioff, the CEO of the company, stated in his keynote speech at the annual Dreamforce conference on Tuesday that their new AI agent will allow the company to quickly increase the supply of labor needed to handle business during busy periods, without hiring additional full-time employees or "gig workers".

Although AI has been the focus of global investors since early 2023, application software providers such as Salesforce, Workday Inc., and ServiceNow Inc. have shown little improvement in their revenue and profit growth driven by AI technology. In terms of revenue scale and profit growth, the income and stock valuation benefits brought about by AI have mostly flowed towards AI infrastructure hardware giants like Nvidia, or cloud computing infrastructure providers like Oracle and Microsoft.

In the global scope, since 2023, many software vendors have launched generative AI assistants that can summarize or draft written content, with Microsoft's Copilot being the most famous. This AI assistant is fully embedded in Microsoft's flagship software, such as the Office suite. However, customers do not seem to be ready to pay extra for these additional AI functionalities.

"I think investors have not seen the results they expected from Microsoft's Copilot," said Brian Millham, Chief Operating Officer of Salesforce, in an interview in late August. "I think the market speculation has been somewhat ahead of the results brought about solely by Copilot."

Regarding Salesforce's latest AI product, the company stated in a statement that its new generation of AI products will operate without human supervision, "in stark contrast to outdated AI assistants or AI chatbots that rely on human commands and struggle with complex or multi-step tasks." "For example, renowned publisher John Wiley & Sons stated that by using the "AI agent" provided by Salesforce, the publisher was able to increase the number of customer service claims or other services resolved by the publisher without human intervention."

This represents a significant change for Salesforce, which until recently had been focused on building AI tools based on human assistance. "We have a principle called 'human in the loop' - because we do not yet have enough understanding to introduce fully autonomous technology," said Patrick Stokes, a senior executive at the company, in September 2023.

At the Dreamforce conference held this week in San Francisco, the company will further elaborate on its new AI strategy. It is expected that 45,000 attendees will participate in this important technology conference. Its venture capital division also announced a new fund of approximately $0.5 billion for AI startups.

Benoit stated on Tuesday local time that Salesforce's new AI products will have high accuracy and security, as Salesforce has securely and accurately captured a large amount of customer data. This is in stark contrast to what he calls "those inefficient and annoying AI assistants."

Salesforce's new AI strategy acknowledges that AI will replace some jobs.

In addition, software providers like Salesforce have addressed another concern of investors, that the increase in unemployment caused by AI could harm the profitability of the software-as-a-service business model.

Undoubtedly, one of the main selling points of Salesforce and other industry leaders in the software industry is the enhancement of labor efficiency through AI tools, and the new additional charges can almost avoid the negative impact of layoffs on enterprises. For example, a company that uses AI tools for customer service will require fewer human resources to serve the same number of customers. However, the rapid slowdown in the expansion of the workforce may significantly affect the revenue growth rate of SaaS software companies, as these companies usually charge based on the number of authorized employees using the software. Therefore, Wall Street analysts have debated this potential risk with software company management during recent earnings conference calls.

Salesforce's new AI strategy acknowledges that AI will replace some of the jobs that were originally done by humans. Therefore, by pricing its new AI features based on specific results rather than the number of employees using it in enterprise-level customers, Salesforce is making efforts to protect itself from the negative impact of customer layoffs.

Salesforce Chief Operating Officer Milham gave a concrete example, using a call center with up to 5,000 employees as a demonstration, stating that it may need to reduce its workforce by 30% within five years. He added that other companies may simply choose to reduce their employee count in the future.

"We like to think of it this way: let's relearn skills and have people enhance their skills to do more complex work," Milham said. "But there are certainly some companies looking through the lens - 'Hey, I think AI can do most of today's human work.'"

Since 2023, Salesforce has been continuously investing in the field of AI, and Wall Street is optimistic about its future stock price trend.

In addition to the latest AI layout strategy and software transformation plan announced by Salesforce at the recent annual Dreamforce conference, since 2023, Salesforce has continued to invest heavily in generative AI, the latest technology, striving to integrate almost all of its cloud software businesses with generative AI.

In order to keep up with technology giants such as Microsoft, Amazon, and Google in the AI era, Salesforce and other leaders in the enterprise software field, such as Snowflake, are intensifying their efforts to develop AI. They are striving to attract more users to use their software by embedding versatile generative AI tools, similar to ChatGPT, into their exclusive software products, thereby boosting their revenue. However, for these software companies, unlike software giant Microsoft, which directly holds a leading player in the industry, OpenAI, and Google's huge advantage in the AI field, the massive investment in AI by companies like Salesforce in the short term, such as spending a large amount to purchase NVIDIA AI GPUs, may not necessarily be reflected in performance.

Salesforce has already embedded AI technology into its cloud computing solutions to provide smarter and more personalized customer relationship management (CRM) and business applications. For example, Salesforce has launched an AI software platform called "Einstein", which adds AI capabilities to enterprise CRM and business applications. Einstein leverages technologies such as machine learning and natural language processing to help businesses predict customer behavior, provide personalized recommendations, and automate tasks.

Among them, the Einstein Bot, a generative AI chatbot similar to ChatGPT, allows customers to access technical support and various resources of the AI cloud platform through a simple chat interface. By integrating natural language understanding and generative AI capabilities, the Einstein Bot supports more complex conversations, easy access to AI platform features, automated handling of complex tasks for customers, and comprehensive integration across platforms. Similar to GPT-3/4, it can generate more natural conversations and provide higher-level customer support.

According to the latest forecast from renowned research firm IDC's Global AI and Generative AI Spending Guide, the organization predicts that global AI-related spending (with a focus on AI-supported applications, AI chips, AI infrastructure, and related IT and business services) will at least double from the current level by 2028, reaching around $632 billion. IDC predicts that AI, especially generative AI (GenAI) rapidly integrating into various terminal devices and products, will achieve a compound annual growth rate (CAGR) of 29.0% in AI spending during the forecast period of 2024-2028.

IDC pointed out that software or applications will be the largest category of AI technology expenditure, accounting for more than half of the entire AI market in most forecasts. IDC predicts that the five-year compound annual growth rate of AI software will reach 33.9% during the period from 2024 to 2028. IDC forecasts that spending on AI-related hardware, including servers, storage devices, and infrastructure-as-a-service, will become the second largest category of technology expenditure.

Baird, a well-known investment firm on Wall Street, recognizes Salesforce's focus on Data Cloud solutions and AI deployment, and maintains an "outperform" rating on the stock, with a target price of $315 within 12 months. Bank of America, a major Wall Street bank, maintains a "buy" rating on Salesforce, with a target price of $325. Another investment institution, Needham, has a target price of $345. As of Tuesday's closing price in the US stock market, Salesforce's stock price closed at $255.19.