Dennis Woodside, CEO, Freshworks
| Photo Credit:
Bijoy Ghosh
As enterprises increasingly deploy AI across customer support operations, to work alongside human agents, the pricing model for Software as a Service(SaaS) companies like Freshworks is already seeing change and aiding monetization. Dennis Woodside, CEO, Freshworks suggests that the traditional model where customers are billed based on the number of software seats is evolving into other AI consumption-based metrics.
It has been a disruptive environment globally both due to geopolitics and AI uncertainty. How do you assess the demand environment right now?Our customers are going through a lot of change right now especially with wars and other geopolitical issues. These things are totally outside their control, but AI is increasingly something that they are looking to become experts in. Everybody is in a different phase of adoption but most customers are now starting to talk about AI. The overall demand environment remains positive. We entered the year with our best pipeline ever and almost 70 per cent of our new customers in the Employee Experience (EX) from the last quarter are buying AI from us at the onset.How has AI changed the pricing model for SaaS companies?It has always been a mixed model but with more AI coming in we expect the mix to shift more towards consumption or outcome-based functionality. For example, our AI agent product is based on the number of sessions used. We have products that are based on the number of assets that are managed and others based on the number of incidents that have been managed. This transition will continue as AI adoption increases and focus shifts to outcomes. How are you using AI internally within Freshworks? Are you measuring token consumption and seeing productivity gains?AI has reshaped our software development process, with the development cycles now being about 30 per cent faster. Product requirements that once took weeks are now being generated from simple prompts and converted into code much faster. This is increasing the productivity of our teams and we are using the resulting gains for new projects. Moreover, AI is helping us blur the line between product managers and engineers bringing significant overlap in capabilities. While we track and measure token consumption, we do not evaluate our employees on the same.What progress have you made in your upmarket strategy? How are you tailoring offerings for these larger clients?It has worked really well. Enterprise customers are now driving a disproportionate share of Freshworks’ growth. Last quarter we won two of our biggest deals and we are increasingly winning customers from larger rivals including ServiceNow and BMC. We are targeting what we call ‘agile enterprises’ - companies that need enterprise-grade software but may lack the resources of very large corporations.
