Inside Big Software's fight for its life

On the eve of Salesforce's latest earnings report, CEO Marc Benioff invited Workday CEO Aneel Bhusri over for drinks.

Both men run companies squarely in the blast radius of a debate that has taken hold across Silicon Valley and Wall Street: Will artificial intelligence be the death knell for some of the most influential companies in Big Tech?

The question has already rattled the sector: Microsoft's stock has dropped more than 21% this year, Salesforce's 26%, Workday's 36%, and Asana's 51%. The IGV, a benchmark for software stocks, is down nearly 22% year to date. It's also shaking credit markets, as investors become more cautious about lending to tech companies.

It's a fight-for-your-life era in Big Software.

The key issue is whether AI-assisted coding will become so powerful that companies won't need these providers, or if instead software companies' new products, shifting pricing strategy, and longterm reliability can keep customers hooked. Salesforce and Microsoft, in particular, are painting a picture of a world in which businesses still need their platforms, but use them differently — by managing AI agents to do the work for them in the background across platforms.

One Microsoft salesperson summed up their central challenge for Business Insider by describing a recent client meeting: "I was sitting in a cigar-filled boardroom, and the CTO just looked at me and said, "Well, I can just build it. Why do I need you?"

AI is rapidly changing the business software-as-a-service sector, which Benioff himself helped popularize. Think, Salesforce for customer relationships, Workday for human resources, and Asana for project management.

The cheekily named SaaSpocalypse has put the sector in a tizzy in just the two months since Anthropic sparked a software stock sell-off by launching its Claude Cowork AI agent that automates complex business tasks. "Vibe coding" has also entered the popular lexicon to describe how people without programming backgrounds can ship an app in minutes using AI tools. If that seems far-fetched, there's no doubt that new AI tools are already helping experienced programmers build powerful custom software faster. If businesses can build their own on-demand programs to manage sales pipelines or HR processes, why keep paying for expensive vendor subscriptions like Microsoft or Salesforce?

Inside Microsoft, executives debate the magnitude of AI's threat.

"The rumors of the demise of enterprise software are greatly exaggerated," Jared Spataro, a Microsoft executive overseeing marketing for AI-powered workplace tools, told Business Insider. Internal sales guidance at Microsoft suggests a narrative that AI isn't killing software, but changing how it's used, a person familiar with it said. Instead of navigating across dozens of applications, AI will execute tasks and act as the interface with the software running in the background.

In Big Software's utopia, their services still dominate workplaces around the world, but workers don't have to switch from screen to screen to use them — instead, they order an AI agent around to do much of the work. That's why software companies are racing to embed AI agents in their products. Microsoft released software into its suite of business applications with agents that workers can treat like a digital coworker to complete tasks across tools like Outlook, Teams, and Word without having to manually switch between apps.

Salesforce is rolling out its own "Agentforce" tools for customers to build AI agents, and also has "Slackbot" in its popular workplace collaboration platform Slack. It's what Benioff spent the evening showing Bhusri when they had drinks in February, he said on the next day's earnings call. Office workers around the world can DM Slackbot to summarize conversations or fetch files, among other tasks.

One bellwether: Payment app Klarna's CEO, Sebastian Siemiatkowski, made waves with multiple comments over the last two years about his company forgoing 1,200 software services, including Salesforce, thanks to AI. However, he clarified that the company did not simply replace Salesforce with a large language model. Instead, it required more advanced work to build an internal data storage system.

"I don't think it is the end of Salesforce; might be the opposite," he wrote in a 2025 X post.

Bhusri, the Workday CEO, addressed investor fears during his recent earnings call by pointing out that Anthropic and OpenAI, the same companies poised to bring the AI reckoning, use Workday's software themselves. OpenAI CEO Sam Altman said AI is changing software, but it's not going away. "Is software dead?" he was asked on the tech podcast TBPN. "It's different. It's definitely not dead," he said.

Still, RBC analyst Rishi Jaluria said, the market is struggling to understand the nuances of this debate. "The overarching sentiment from the market is, 'I'll believe it when I see it.' We're betting on something that is a five to 10 year thing."

At the core of the debate is how software companies price their products. For decades, the industry has relied on "seat-based pricing," a per user per month license. As AI agents take over tasks once performed by employees, companies are expected to need fewer seats. Plus, it's gotten more expensive for software providers to run these power-hungry AI tools. For these reasons, AI has prompted a shift to charging customers based on how much they use the product and what results they get. Market intelligence firm IDC predicts pure seat-based pricing will be obsolete by 2028.

Despite these pressures, Microsoft doubled down on the traditional model — charging $99 per seat per month for its high-end, AI-fueled enterprise tier of Microsoft 365 called E7, a rollout that was first reported by Business Insider.

Microsoft is carefully evaluating pricing models, Spataro said, studying how customers use their products and how much it costs to serve them. While some tools, like Copilot Studio, already use consumption pricing, people familiar with internal strategy discussions said there's reluctance to throw too much change at customers who are still getting used to using AI.

"It's complicated and messy," a Microsoft salesperson said. "We will get there, but customers have to mature up to it."

Rajesh Jha, a retiring top Microsoft executive, recently said at a UBS conference that there's no evidence AI is eroding traditional software seats and that the company was even seeing increased seat growth. Jha predicted AI could increase demand for such licenses as companies adopt AI agents who may function like digital employees and effectively become new seats themselves.

"Our perspective is rather than jumping to brand new monetization models and exclaiming how excited we should be about them, we really have to take our customers by the hand and go on a journey with them as we all move through a period of transition," Spataro said.

In the meantime, Jaluria, the RBC analyst, said the market remains skeptical. "These companies are showing fine numbers, but most SaaS companies are not seeing growth accelerate. People are going to struggle to believe it. The market sentiment could flip very quickly."

Asana CEO Dan Rogers is betting that as companies add more AI tools and agents, they'll need project management platforms like his even more. "The coordination problem doesn't go away. It actually expands exponentially," Rogers told Business Insider.

Another major issue for business clients is security — loading a vibe-coded sales platform with customers' personal information, for example, is risky.

"Are you going to do the due diligence of connecting your marketing tools, and your accounting software, and your call center, and your HR systems into it?" a Salesforce employee said.

In other words: "If you want a house, are you going to build a house from scratch or move into one already built? Are you going to learn about plumbing and electrical and permits and construction? Are you going to invest in the right tools?" the employee said. "Why would you want to?"

PitchBook analyst Derek Hernandez said, "I do not think AI makes SaaS obsolete," he said. Instead, it changes Big Software's value proposition to emphasize security, reliability, and AI tools that can work across multiple programs to make life easier for business customers.

"I hear from most traditional software buyers that they are not very interested in a broad push to replace SaaS vendors with internally built systems. They primarily want AI to be embedded into existing software," he said. "Most large enterprises still want trusted vendors to handle the inherent complexity in software solutions."

In addition to customers who vibe code are competitors whose coding skills are now supercharged. A senior Salesforce employee told Business Insider that the company is at risk of losing small- and medium-sized business customers to competitors that use AI to build and offer lower prices.

Still, the main defense, as Bhusri, the Workday CEO, said during a February earnings call, is the risk and complexity involved for the businesses that use these softwares. Big Software processes payments, handles employees' Social Security numbers, keeps up with global regulations, he said, "No amount of vibe coding is going to" do that.

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