SaaS 2.0 Is Here

Key Takeaways

So when you think about tech companies selling AI to businesses, how does this pitch look today and how does that pitch look different than selling software 5 to seven years ago? >> I think maybe one way to frame it out is is you know as we talked about last time you know SAS is still here but it's the SAS 2.0 and that's that that's what is enhanced by you know AI or gentification. Um the biggest change that I think the customers are demanding and at the end of the day they're the ones you know fronting the bill right they're writing the check is it's all about what are the outcomes and how do I get value from that which I uh am am signing up for and that's a very different concept if we're being honest if you look back to the world of ERP over the last 25 years certainly the world of CRM over the last 10 or 15 uh the integration of AI is going to be one where people are expecting and have been told and promised candidly are going to get a lot more value, a lot more, you know, a lot more experience, uh, a lot more, you know, frankly, uh, uh, perhaps it's scalability out of all these things. Uh, and the only way to really prove that that's happening is is to to move to something that's a lot more outcomes based, which is, you know, candidly, like you said, where companies have already gone. If you look back at history here, even in the last few years, you have examples of it. Autodesk just went through this. uh you have certainly Adobe from a number of years ago to you know readjust the way that they go about selling the creative suite. So there's examples of companies who've gone there. Um and it's I think just the the next generation of you know sales team as well as maybe it's you know sales leadership and and and even accountability framework. That's really what the uh direction of travel tells me uh is going to have to happen in the market for other companies to be successful to follow those same journeys. Now you talked about outcomes here and this sort of leads to the question around how we measure ROI for these AI investments. How do you see your clients evaluating that question today? And how does that compare and contrast to the way they evaluated ROI on the software that they spent on 5 to seven years ago? Sort of when the the SAS movement was really starting to take off maybe uh a decade ago. >> Yeah. I mean it even it's it's still in the vernacular right if you look at you know the way that we think about system integrators uh it's all about the go live uh it's the did you put the system in and did it like turn on were people able to access and do the things that they were supposed to do that generational or transformational dynamic you know tended to be still elusive I mean it wasn't that you couldn't find some efficiencies but broadly speaking it was all about getting to a fixed date or maybe it was a slip date but still a fixed date that might have been a little later um that that made you happy because you got the ERP in or you you're able to you know migrate let's say from on-rem to cloud this new this new you know thought process if you will from a from a actual outcomes you know view of the world um I think it's it's two bits one of them is how much money was spent over the last couple years on AI um especially from a PC point of view we were measuring value on a well how many PC's or how many pilots are you running and and honestly I mean that's a fun metric but at the end of the day that's not giving you really any sense of outcome that's not, you know, conjuring up new customers. It's not making your process more efficient. It's not allowing you to scale perhaps, you know, in engineering or scale in in the front office the way you might want to. And so that's why this outcome concept, I think it's actually coming for all of SAS, including, you know, ERP world, but it's really coming into into the fray as it relates to AI. Um, and and it's going to, you know, probably also begin to show us like who the winners and losers are, right? I mean you will have the the datarich uh companies who have the ability to monetize much more rapidly and also be able to extrapolate on that concept of value uh much more easily and you have those that are more superficial perhaps um that will struggle with this uh you know this this refactoring uh for for lack of a better word um this move to 2.0. I actually spent last night with about 110 sellers uh of AI products from one of the large uh companies here in the valley. I can tell you that a lot of them are actually excitable about the concept of being able to prove the value proposition, but they're also, you know, struggling up against the reality of, hey, I'm still accountable for a number. And that number is how many licenses did you sell? And that's going to be the the big friction point probably throughout 26 and and we'll see how things go as it relates to, you know, that migration, but it's going to be a challenging one uh for people to to move between. But I want to go back to this idea of the go live being the success the the success metric maybe in in the I don't want to call the older era of SAS but the preAI era of SAS. I mean why was that accepted as as the metric for for success back then? Why weren't they asking sort of the the the fundamental questions they are right now about how many dollars are we saving? What is the ROI? >> Yeah, I think it's two things. Um if you if you consider this fact right if you look at CEO interviews um and and even commentary on earnings calls go back just a few years no one with unless there was a major you know incident or problem if you will from an from an implementation of software point of view ever talked about anything that was going on in the back office or the front office or you know the supply chain as it relates to technological implementations. Now you have it, you know, and people are running the counts on these calls, right? You have CEOs and CFOs talking about AI, right? The the again the new SAS 20 times, 30 times, 50 times on a call. At the same time, you know, when they're surveyed and we did this uh just just a few months ago, uh these same executives are saying, "Hey, we're not seeing the outcomes from it." So, I think it's a direct accountability all the way up to the top of the house. is actually changing the dynamic whereas once before it was perhaps a bonus or a stock award for a CIO um it's now becoming you know a board level issue uh that is being talked about on a day-to-day basis uh and and really you know again back to that accountability point for you know the executives themselves if it's on their front burner they are going to talk about it they're also going to help you know hold more people accountable uh to the same >> so if it's if it's now a CEO level issue and a board level issue does that make the investments go faster? Does that add more layers of uh decision- making that have to happen? What's the net impact of that on these AI investments? >> Yeah, it's a great question. I think it's going to it's going to put a lot more pressure uh downward back into the organization on, you know, how do I allocate resources, both time and money. Um, and it's also going to put a lot, and this is where like the sophistication of of management and boards is going to come into play. We talked about this quite a bit recently uh with with a number of uh boards that we meet with and that is you know do boards have the ability to hold management accountable you know on on their goals and on the outputs that they're looking for. Uh presently it's it varies by industry I guess, you know, nicely put that. Um but the reality is uh it's it's harder to say exactly how that one's going to play out. I think you're just going to see a lot more pressure, you know, downward as it relates to the how much money is being spent on it without being able to demonstrate ROI. One thing that we've seen is a lot of companies asking saying, "Hey, what's the best way for me to actually capture and report ROI, right? The CFOs want to bring it, procurement organizations want to bring it. Certainly, you know, the CEOs want to see it." And I think at some level, the boards are going to be asking for it as well. So you have this upward you know uh dynamic coming through and and pushing hard to uh you know to allow for the reporting to happen so that that accountability can happen too and it is all about you know what gets counted gets done. Uh I think that applies absolutely in the case of of of you know again this new age s with with AI embedded in it. >> Great. Well Dallas I want to thank you for coming on. That is Dallas Dolan from PWC here on TIVv.