In recent weeks, the stock prices of various large software-as-a-service companies, including Salesforce, ServiceNow, and Oracle, have fallen.
Even if you’ve never used software tools from these companies, there’s a good chance your employer does. These tools manage critical data about customers, employees, suppliers, and products and support everything from payroll to purchasing to customer service.
New “agent” artificial intelligence (AI) tools for businesses now promise to reduce reliance on traditional software in daily operations. These include open source agent platforms such as Anthropic’s Cowork, OpenAI’s Frontier, and OpenClaw.
But how important are these Software-as-a-Service companies now? How quickly will they be replaced by AI? And are the jobs of the people using the software safe?
Digital plumbing in the business world
Software-as-a-Service systems run in the cloud, reducing the need for in-house hardware and IT staff. It also makes it easier to scale as your business grows.
Software-as-a-Service vendors can earn steady recurring revenue because companies “rent” their software and typically pay a fee per user (often referred to as a “seat”).
Austin Distell/Unsplash
And because these systems are so deeply integrated into how companies operate, switching providers can be costly and risky.
In some cases, companies may have to use them for more than 10 years.
digital coworker
Agent AI systems function like digital coworkers or “bots.” Software bots and agents are not new. Robotic process automation is used by many companies to handle routine, rule-based tasks.
Recent developments in agent AI combine this automation with generative AI technologies to achieve more complex goals.
This includes selecting tools, making decisions, completing multi-step tasks, etc. These agents can replace human labor in everything from processing expense reports to managing social media and customer interactions.
What AI can do now
But recent advances are even more ambitious. These tools are now reportedly producing usable software code. The spike in software development productivity is believed to be due to the use of AI agents like Anthropic’s “Claude Code.” Anthropic’s Cowork tool extends this from coding to other knowledge work tasks.
As a general rule, users describe business problems in plain language. Agent AI then provides coded solutions that work with existing organizational systems.
Once this becomes reliable, AI agents will begin to resemble junior software engineers and process designers. AI agents like Cowork extend this to other entry-level jobs.
These developments have taken the market by surprise recently (though many of the affected stocks have since recovered slightly). Only time will tell whether this decline is a temporary overreaction or an actual long-term change.
Don Feria/AP Content Services for Anthropic
What impact will it have on work and costs?
Since the arrival of OpenAI’s ChatGPT in November 2022, AI tools have raised deep questions about the future of work. Some predict that many white-collar roles, such as software engineers and lawyers, will be transformed or replaced.
Agent AI appears to be accelerating this trend. This allows many knowledge workers to build workflows and tools without knowing how to code.
Software-as-a-Service providers will also be forced to change their pricing models. The traditional model of charging per human user may become less relevant when much of the work is done by AI agents. Vendors may need to move to pricing based on actual usage or value created.
Hype, reality, and limitations
Several forces may moderate or limit the pace of change.
First, the promised potential of AI has not yet been fully realized. For some tasks, using AI can result in even worse performance. The biggest gains are still likely to be in routine tasks that can be easily automated, rather than tasks that require complex judgment.
Where AI replaces human labor rather than augmenting it is where labor practices will change the most. A nearly 20% decline in junior software engineering jobs over three years highlights the impact of AI automation. As AI agents improve at higher levels of reasoning, more senior roles will be threatened as well.
Second, to benefit from AI, companies must invest in redesigning their jobs, processes, and control systems. It has long been known that organizational change is slower and messier than technological change.
Third, you need to consider risk and regulation. High reliance on AI can lead to the loss of human knowledge and skills. Short-term efficiency gains can be offset by long-term losses in expertise and creativity.
Ironically, the loss of knowledge and expertise can make it harder for companies to ensure that their AI systems comply with corporate policies and government regulations. The checks and balances that help organizations operate safely and honestly will not disappear with the advent of AI. In many ways they become more complex.
Technology is evolving rapidly
What is clear is that major changes are already underway. Technology is rapidly evolving. Labor practices and business models are beginning to adjust. Laws and social norms will change more slowly.
Software companies won’t disappear overnight, and neither will the jobs of the people who use their software. But agent AI will change what you sell, how you charge, and what your end users see.
