March 12 (Reuters) – Oracle’s Mike Cecilia is the latest software executive to join the debate over whether artificial intelligence tools that are automating massive human tasks mean the demise of his industry. His decision was a resounding “no.”
“You’ve all heard … that new companies that code faster using AI will kill SaaS (software as a service),” he told analysts on a conference call on Tuesday. “I don’t agree with that. I think AI tools and their encryption capabilities will be a threat if we don’t take them, but we are, and quickly.”
Cecilia is responding to Wall Street’s concerns that new AI tools can now perform some of the tasks created for traditional software companies’ products, such as organizing customer information or guiding people through business processes.
Those concerns led to a nearly $1 trillion drop in software stocks last month when heavyweight AI startup Entropy introduced an AI plug-in for its CloudWorks Agent, a digital assistant that can automate such tasks. CEOs of software companies have since used their post-earnings conference calls to battle.
Cecilia also made a case that Oracle was ahead of its smaller rival Salesforce, saying that his company is actually using AI to create new products and automate entire business processes, not just adding AI features on top of existing tools.
Salesforce, for its part, has offered a different defense, with CEO Marc Benioff telling analysts last month that his company will survive any so-called SaaS-pocalypse, a term for shares last month that hurt software-as-a-service companies.
Benioff brings Salesforce customers positioned as Salesforce’s self-transforming enterprise platform that builds, deploys and manages AI agents using the company’s proprietary customer mountains and sales process data.
Even Jensen Huang, AI pioneer and CEO of chip maker Nvidia, last month dismissed fears that AI will replace software and related devices, calling the idea “illogical.”
Oracle on Tuesday predicted that the AI boom would power its earnings for the next few quarters, sending its shares up 10% on Wednesday. The company has deep enterprise data across finance, supply chain and human resources, which is hard for AI to replicate.
Oracle offers affordable, efficient cloud systems and a database that can run on any major cloud, said Rebecca Whitman, CEO of technology research firm Wellware. “This flexibility gives customers choice — and it’s a powerful position to grow the AI ecosystem,” she said.
About a dozen tech analysts and investors surveyed by Reuters said owners of years of specific financial, legal, design or technical information are likely to have the best defenses.
“Property data is the deepest moat yet,” said James St. Aubin, chief investment officer at Ocean Park Asset Management.
In the case of Salesforce, while the startup continues to dominate the company’s customer-relationship software sector, its software is deeply entrenched in corporate systems, with its real-time data platform that manages more than 50 trillion records. It’s also trying to establish itself as an AI-agent company through its AgentForce service — which is still a small business.
Some analysts said Salesforce is also hard to replace because businesses have spent years building day-to-day operations around the company’s products and the cost of transition is high.
But AI is starting to break down that barrier, making it easier to code and build applications with far less human effort and cost.
While businesses experiment with isolated AI tools, Salesforce has built a comprehensive system that helps it stand out, said Salesforce AI CEO Madhav Thatai, adding that the company is leveraging decades of enterprise experience.
Oracle did not return emails seeking comment.
But concerns about the demise of traditional software companies persist, and analysts say not all data is equal.
Employee data and payroll company Workday has plenty of data, but analysts said its core products run on HR and payroll data, which follow uniform, industry-standard formats. This means that an AI company can easily learn from or replicate tools built from such data.
Workday brought back its founder, Anil Bhosri, as CEO last month to lead the company “fast forward into the AI era.” But the company’s shares have fallen by more than a third this year, hitting a more than five-year low last month after forecasts of sluggish sales. Boseri said last month that Workday’s systems replace two decades of business processes that AI can’t replicate.
“AI, for all its incredible capabilities, is probabilistic by nature,” he told analysts on a post-earnings conference call. “It reasons, predicts, and makes recommendations based on patterns and possibilities. Maybe it will eventually become a state machine—a system that follows the same steps and gets the same result every time—but it doesn’t exist today.”
Asked for comment for this story, a Workday spokesman referred to Bosari’s comments in a call to Reuters.
Some analysts believe the enterprise software industry will prove more resilient than currently valued, arguing that higher productivity brought about by AI could spur hiring and growth.
“I wouldn’t write the death knell for some of these companies just yet because there’s an opportunity for them to reinvent themselves with AI,” said Ocean Park’s Obin.
(Reporting by Aditya Soni in Bangalore; Additional reporting by Stephen Niles in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis)
