Why AI Isn’t Killing SaaS Yet

This is one of the most dynamic markets we've seen, particularly for buying software where month over month you will see large incumbents be replaced by the newcomers. Anthropic just did that with OpenAI. Now the most popular model used by businesses according to ramp data. Parser did that with GitHub Copilot. My main take is that Sespocalypse as a pronouncement has come way too soon and is typically not informed by actual business behavior. You're saying that Sespocalypse is not in the data. I'd say quantitative, but neither aspect of SaaSpocalypse is supported by actual business spend. Neither aspect as in it's going to change the way we buy it. Currently, it has not in any meaningful way nor has it killed off at least the companies that are frequently mentioned. This episode originally aired on the MTS segment Monetary Matters. For the last two years, the dominant story in software has been that AI will wipe out SaaS companies, collapse seat based pricing, and centralize everything around a handful of frontier model providers. But when you look at actual business spending data, that story becomes much harder to defend. Many of the fastest infrastructure, workflow, and application layers forming around them. At the same time, businesses are increasingly using multiple models, becoming more cost conscious, and experimenting with AI in ways that don't neatly fit the prevailing narrative around automation and labor replacement. Jack Farley and Max Sweety speak with Ara Kharazian, lead economist at Ramp. We have the lead economist from Ramp Economics. Ara Khurazan, thank you so much for joining us today. Ara Thank you, guys. Written you've written a number of pieces, looking at this very topic. Are people changing their spending patterns? What are you guys seeing at Ramp? Yeah. I mean, I think that's, what's so important about this kind of work is that, you know, we live in this world, particularly in tech specifically, where everyone wants to make these big pronouncements about where the market's gonna go. Everyone seems like a pundit. No one's really armed with any data to inform them about what's actually happening in the market. So I have this unique job at Ramp where, you know, we see the spend data from 50,000 businesses, a $100,000,000,000 of annual spend. And so we did set out to research what is actually happening in the market. New AI companies are coming out with competitor products to a lot of prominent SaaS firms. Are we seeing any declines in the, in adoption for those traditional SaaS companies? Are we seeing any changes in how people are buying SaaS? And that's really where I divide SaaS apocalypse into two different categories. Right? There's one that's, hey. Are people shifting away from traditional SaaS over to, over to, you know, competitors provided by the model companies. And then number two, is the way people are buying software changing or people shifting to a new model where you buy, like, agentic, you know, …