Why software firms are calling time on the SaaSpocalypse

{"text":[[{"start":4.15,"text":"What does it take to draw a line under the SaaSpocalypse? Shares in software-as-a-service firms, already half their peaks, continue to drift downwards. That’s despite a clutch of decent quarterly results and, in the case of US-listed ServiceNow, a bullish medium-term forecast. Even a company founder’s recent claim that a rogue AI agent mass-deleted his data and backups failed to dent the narrative that AI will eat software’s lunch."}],[{"start":30.5,"text":"Sure, the prevailing tale is compelling. Off-the-peg AI agents can do much of what enterprise software does when it comes to payroll and other back-office processes. Businesses can even DIY-code their own agents. But the death-of-software story is too simple. SaaS firms bring security and interoperability. They have adapted before, most recently migrating on-premises systems to the cloud."}],[{"start":56.6,"text":"The best way for companies to ensure they retain their place in corporate IT budgets is to be the repositories of data their customers depend on, and to layer that with AI agents, all working in sync. A retail example: using inventory and customer data, agents can target specific items at consumers and map which is the nearest warehouse from which to dispatch it."}],[{"start":79.7,"text":"Like other industries, software vendors reap productivity gains, too. Germany’s SAP is targeting AI-related efficiencies by the end of 2028, which are equivalent to 4 per cent of that year’s projected revenue, based on consensus estimates."}],[{"start":null,"text":"

"}],[{"start":95.3,"text":"Both factors change the calculus for charging clients, too. Per-seat subscriptions will be supplemented with a range of tariffs that charge by consumption — say, per task, use of compute, or charging for agents as if they were cut-price humans. AI is both product and tool, there. Consider Stripe’s acquisition of Metronome, which allows the payments provider to handle more complex usage-based pricing models."}],[{"start":119.5,"text":"The nub for the industry is that as it grapples with these changes, investors too are moving the goalposts. While some companies may be seen as losers, those that prevail could become supercharged. Software won fans, not least in private equity, for its sticky recurring income and fat profit margins. One feature of that was the “rule of 40” under which investors sought out, and rewarded, companies whose percentage revenue growth and profit margins added up to 40."}],[{"start":147.45,"text":"Some investors have pronounced the decade-old rule dead; others have simply lifted it to 60. Banking in part on AI bundles, ServiceNow reckons it will hit this higher target — using free cash flow as its profitability measure — by 2030. Last year, it scored 55. SAP is calling the industry confab it hosts next week: “The beginning of better”. That no longer sounds premature."}],[{"start":180.89999999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778378463_2479.mp3"}