March 12 (Reuters) – Oracle’s Mike Sicilia is the latest chief executive of a software company to wade into the debate over whether artificial intelligence tools that largely automate human tasks will spell the end of his industry. His verdict was a resounding ‘no’.
“You’ve all heard…that new companies rapidly developing AI software are going to spell the end of SaaS,” he told analysts on a conference call on Tuesday. ‘I completely disagree with that. I believe AI tools and their programming capabilities would be a threat if we weren’t adopting them, but we are, and very quickly.’
Sicilia was responding to Wall Street’s concerns that new AI tools can now perform some of the tasks that traditional software companies’ products were created to do, like organizing customer information or guiding people through business processes.
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These concerns led to a nearly $1 trillion plunge in software stocks last month after giant AI startup Anthropic released AI plugins for its agent Claude Cowork, a digital assistant capable of automating such tasks. Since then, software company CEOs have used post-earnings conference calls to react.
Sicilia also argued that Oracle was ahead of its smaller competitor, Salesforce, stating that his company was using AI to actually build new products and automate entire business processes, not just add AI capabilities to existing tools.
Salesforce, for its part, has put forward a different defense, with chief executive Marc Benioff telling analysts last month that his company will survive any so-called ‘SaaS apocalypse,’ a term used to refer to the sharp stock drop that hit software-as-a-service companies last month.
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Benioff brought in Salesforce clients who positioned the company as an organization that has transformed into an enterprise platform capable of creating, deploying and managing these AI agents using the company’s vast amount of proprietary data about customers and sales processes.
Even Jensen Huang, AI pioneer and chief executive of chipmaker Nvidia, last month dismissed fears that AI would replace software and related tools, calling the idea ‘illogical’.
UNIQUE DATA IS THE BEST DEFENSE
On Tuesday, Oracle predicted that the AI boom will boost its revenue for several quarters, sending its shares up 10% on Wednesday. The company has a vast corporate database in the areas of finance, supply chain and human resources, something difficult for AI to replicate.
Oracle offers cheaper, more efficient cloud systems and a database that can run on any major cloud, said Rebecca Wettemann, chief executive of technology research firm Valoir. “This flexibility gives customers options, and that’s a powerful position to be in as the AI ecosystem evolves,” she said.
Nearly a dozen technology analysts and investors interviewed by Reuters said those with years of proprietary data on finance, legal affairs, design or technology likely have the best defense.
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‘Proprietary data is by far the strongest competitive advantage,’ said James St. Aubin, chief investment officer at Ocean Park Asset Management.
In the case of Salesforce, although startups are gradually weakening the company’s dominance in the customer relationship software sector, its software remains deeply integrated into enterprise systems, with its real-time data platform managing more than 50 trillion records. The company is also trying to reinvent itself as an AI agent company through its Agentforce service – which is still a small business.
Some analysts have said that Salesforce is also difficult to replace because companies have spent years building their daily operations around the company’s products, and the cost of change is high.
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But AI is starting to erode that barrier,making it easier to generate code and build applications with far less human effort and cost.
While companies experiment with siled AI tools, Salesforce has built a comprehensive system that helps it stand out, said Madhav Thattai, executive vice president of Salesforce AI, adding that the company benefits from decades of corporate experience.
Oracle did not respond to emails seeking comment.
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But concerns about the decline of traditional software companies persist, and analysts said not all data is created equal.
Employee data and payroll company Workday has a lot of data, but analysts say its core products work with HR and payroll data, which tends to follow uniform, industry-standard formats. This means that an AI company can more easily learn or replicate tools built on this type of data.
Last month, Workday brought back its founder, Aneel Bhusri, as chief executive to lead the company “in the rapidly evolving era of AI.” But the company’s shares have fallen by more than a third this year, hitting a more than five-year low last month following a weak sales forecast. Bhusri said last month that Workday’s systems incorporate two decades of business processes that AI cannot replicate.
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“AI, for all its incredible capabilities, is probabilistic in nature,” he told analysts on the conference call after the results were released. ‘It reasons, predicts and recommends based on patterns and probabilities. Maybe one day it will become a state machine — a system that follows the same steps and gets the same result every time — but that’s not the case today.’
Asked about the matter, a Workday spokesperson referred Reuters to comments Bhusri made during the conference call.
Some analysts believe the enterprise software sector will prove more resilient than current valuations indicate, arguing that the increase in productivity enabled by AI could boost hiring and growth.
“I wouldn’t write the obituary for some of these companies just yet, because there is an opportunity for them to reinvent themselves with AI,” said Ocean Park’s Aubin.
