Good morning. Sell! Buy! Wait, what’s going on with software as a service, that generation of tech players that grew to behemoth status by letting subscribers access software from the cloud? Companies like Salesforce, Oracle, Asana, DocuSign and Intuit have taken a drubbing in recent weeks; Workday co-founder Aneel Bhusri is coming back as CEO to deal with the challenge.
What precipitated the latest selloff—dubbed ‘SaaSpocalypse’ by Jeffries analyst Jeffrey Favuzza—was the one-two punch of Anthropic and then Open AI launching agentic AI systems for enterprises that appear to perform some key functions currently provided by SaaS players, undermining their business models. Will Anthropic’s Claude Cowork and OpenAI’s Frontier doom the SaaS giants? It depends. Check out my colleague Jeremy Kahn’s take on that.
What’s clear is that a few factors will differentiate the winners and losers in this new era.
Data: Mission-critical software that’s integrated with sensitive, regulated or high-value proprietary data is hard to dislodge. I’ve yet to meet a leader who’s eager to outsource their payroll or enterprise security to a large language model. What we pay our people is more sensitive than what we pay for products. That makes me wonder if HR companies like Workday, for example, are in a stronger position than some investors might think.
