Salesforce, Workday Cancelled 🚫🚨
Is AI replacing enterprise SaaS?
Just as we were writing about the future of labor…
Last week, Klarna announced that it was slashing its spending on software as a service (SaaS) tools. First on the chopping block was Salesforce, which Klarna said it shut down at the end of August. Next up is HR software Workday, which it will shut down in the coming weeks.
“We have a number of large internal initiatives that combine AI, standardization, and simplification to enable us to shut down several software-as-a-service providers," a Klarna spokesperson said.
Klarna’s CEO has also said that he expects to halve its workforce thanks to AI. Early returns are promising – Klarna’s recent earnings release indicated that, thanks to AI, it cut sales and marketing spend by 11% and customer service spend by 10%.
Ahead of the Curve – or a Nice IPO Story?
What is Klarna? It’s no small business. Founded in 2005, it provides payment tech for eCommerce. It grew up as one of the breakout success stories of the “buy now, pay later” wave of fintechs with over $2B in revenue and over $4B raised since its founding.
And, now Klarna is telling us that what its view of the future looks like: a lot more AI, and potentially 50% fewer humans.
To be fair, some remain skeptical that Klarna will be successful – or that Klarna is being truthful about why it’s cutting costs. Another, less flashy version of the story? Klarna is preparing for an IPO next year, so it’s trying to improve its profitability to make itself more attractive to public markets. Pretty standard fare for tech companies trying to rein in excessive spending, and drum up PR buzz, as they look to survive the scrutiny of public market investors.
Your AI Agent Will See You Now
However, there’s reason to believe there’s at least some truth behind Klarna’s story. This shift from SaaS tools to AI automation is emblematic of a broader evolution that we have been tracking in the technology market.
Salesforce and Workday are perfect examples of this shift – both of them are classic “workflow” tools. They provide a better user experience and help organize information that enable humans to do their jobs more effectively and more efficiently. Increasingly, we are seeing the newest wave of AI start to replace these “human in the lead” workflow tools with either full AI automation or AI-lead automation with a “human in the loop.”
At the frontier of this shift is the next evolution of GenAI, called Agentic AI. GenAI of the ChatGPT era (yes – technology moves fast!) tends to require prompting or predefined tasks to deliver results. The newer agentic AI models provide a layer of intelligence on top of that capability that enables it to make decisions, plan actions, and learn and improve on its own. In essence, it creates “agents” – hence the term agentic – that can learn how to execute and perform complex operations that humans normally would perform. Rather than optimizing the workflow, like SaaS tools have, AI agents simply…execute the workflow itself.
Now, this technology is not foolproof. There are still – and likely will be for the foreseeable future – exceptions and complex tasks that the AI will require support from humans to solve. But agentic AI represents a meaningful shift from humans enabled by AI to AI enabled by humans. The AI is in the driver’s seat, and with that shift comes a much greater ability to automate human tasks.
Agentic AI Examples
What are some examples? Look no further than our announcement earlier this week for the Innovators Summit. The final two companies we announced – Blue Sierra and Instalily – have both built Agentic AI solutions.
Blue Sierra is using AI agents to read and write data to distributor ERPs, and Instalily uses AI agents to help field and inside sales reps. If you want to learn more about what they do, check out the announcement here.
While the technology is still relatively early, Agentic AI is having a similar impact across the tech landscape, from areas like devops fraud detection to HR and financial planning.
Is SaaS being Replaced by AI?
Here’s a reaction from tech leaders in the valley.
“This news from Klarna should have ever enterprise SaaS company shaking in their boots.” - Gokul Rajaram