Salesforce, Microsoft’s new products, pricing for a new era of software

The night before Salesforce’s latest earnings report, CEO Marc Benioff invited Workday CEO Anil Bhusri for drinks.

Both men run their companies squarely within reach of a debate that has taken hold across Silicon Valley and Wall Street: “Will artificial intelligence spell the end for some of Big Tech’s most powerful companies?”

This issue has already caused a stir in the industry. Microsoft stock is down more than 21% this year, Salesforce is down 26%, Workday is down 36% and Asana is down 51%. Software stock benchmark IGV has fallen nearly 22% since the beginning of the year. Credit markets have also been shaken as investors become wary of lending to tech companies.

We live in an era where big software is fighting for its life.

The key question is whether AI-assisted coding will become so powerful that companies no longer need these providers, or whether software companies’ new products, changes in pricing strategies, and long-term reliability can instead continue to attract customers. Salesforce and Microsoft, in particular, are painting a picture of a world where businesses still need their platforms but use them differently by managing AI agents that perform work in the background across platforms.

Describing a recent customer meeting, a Microsoft sales representative summarized the key challenges for Business Insider: “I was sitting in a boardroom filled with cigars, and the CTO looked at me and said, ‘Well, I’ll just build it.’ Why do we need you?” ”

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AI is rapidly transforming the software-as-a-service space for business that Benioff himself helped popularize. Think Salesforce for customer relations, Workday for HR, and Asana for project management.

In just two months, the cheekily named SaaSpocalypse has been thrown into turmoil since Anthropic launched Claude Cowork, an AI agent that automates complex business tasks, causing software stocks to tumble. “Vibe coding” has also entered the popular lexicon to describe how people with no programming background can use AI tools to release apps in minutes. As far-fetched as it may seem, there’s no doubt that new AI tools are already helping experienced programmers build powerful custom software faster. If companies can build their own on-demand programs to manage their sales pipeline and HR processes, why keep paying for expensive vendor subscriptions like Microsoft or Salesforce?

Inside Microsoft, executives are debating the magnitude of the threat posed by AI.

“Rumors about the demise of enterprise software are greatly exaggerated,” Jared Spataro, a Microsoft executive who oversees marketing of AI-powered workplace tools, told Business Insider. Microsoft’s internal sales guidance suggests a narrative in which AI is not disrupting software, but changing the way it is used, people familiar with AI said. Rather than moving between dozens of applications, AI performs tasks and interfaces with software running in the background.

In a big software utopia, its services will still dominate workplaces around the world, but employees won’t have to switch from screen to screen to use them, instead commanding AI agents to perform much of the work. That’s why software companies are rushing to embed AI agents into their products. Microsoft has released software into its suite of business applications with agents that can treat employees like digital colleagues, allowing them to complete tasks without having to manually switch apps between tools like Outlook, Teams, and Word.

Salesforce has rolled out its own Agentforce tool for customers to build AI agents, and has also introduced Slackbot to the popular workplace collaboration platform Slack. This was what Benioff had shown Bousri the night after a night of drinking in February, he said at an earnings call the next day. Office workers around the world can send DMs to Slackbot to summarize conversations, retrieve files, and more.

One visionary: Sebastian Siemiatkowski, CEO of payments app Klarna, has made waves over the past two years with multiple comments about his company abandoning 1,200 software services, including Salesforce, because of AI. However, the company made it clear that it’s not just replacing Salesforce with a larger language model. Instead, building an internal data storage system required more sophisticated work.

“I don’t think this is the end of Salesforce. Maybe it’s the other way around,” he wrote in a 2025X post.

Workday CEO Bhusri addressed investor concerns on a recent earnings call by pointing out that Anthropic and OpenAI, the same companies that are implementing AI calculations, use Workday’s software in their own companies. OpenAI CEO Sam Altman said AI is changing software, but it’s not going away. “Is software dead?” he was asked on the technology podcast TBPN. “No. It’s never dead,” he said.

Still, RBC analyst Rishi Jallia said the market is having a hard time understanding the nuances of the argument. “The overall sentiment in the market is ‘I’ll believe it when I see it.’ We’re betting on it taking five to 10 years.”

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The debate centers on how software companies price their products. For decades, the industry has relied on “seat-based pricing,” a per-user, per-month license. Companies are expected to need fewer seats as AI agents take over tasks previously performed by employees. Additionally, the cost for software providers to run these power-hungry AI tools is becoming more expensive. For these reasons, AI has prompted a shift to charging customers based on product usage and results obtained. Market intelligence firm IDC predicts that pure seat-based pricing will be phased out by 2028.

Despite these pressures, Microsoft doubled down on its previous model and priced the high-end AI-powered enterprise tier of Microsoft 365, called E7, at $99 per seat per month. This is a development first reported by Business Insider.

Spataro said Microsoft is carefully evaluating its pricing model, studying how customers use its products and how much it costs to provide its services. Some tools, such as Copilot Studio, have already adopted consumption pricing, but people familiar with internal strategy discussions said they are reluctant to make too big a change for customers who are still used to using AI.

“It’s complicated and cumbersome,” said a Microsoft sales representative. “We’ll get there, but customers need to mature there.”

Outgoing Microsoft top executive Rajesh Jha recently said at a UBS conference that there is no evidence that AI is encroaching on traditional software seats, and that the company is even seeing an increase in the number of seats. Jha predicted that AI could increase the demand for such licenses as companies introduce AI agents that can act like digital employees and effectively become new seats.

“Our perspective is that instead of jumping on board with a completely new monetization model and shouting about how excited we should be about it, we have to take our customers by the hand and journey with them as we all go through a period of transition,” Spataro said.

Meanwhile, RBC analyst Jallia said the market remains skeptical. “These companies are showing great numbers, but most SaaS companies aren’t seeing growth accelerate. People will have a hard time believing that. Market sentiment could reverse quickly.”

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Asana CEO Dan Rogers is betting that as companies add AI tools and agents, they’ll need more project management platforms like his. “The coordination problem doesn’t go away; it actually grows exponentially,” Rogers told Business Insider.

Another big issue for business clients is security. For example, loading customer personal information into a vibe-coded sales platform is risky.

“Are we going to do the due diligence to connect our marketing tools, our accounting software, our call centers, our HR systems?” said a Salesforce employee.

In other words, “If you want a home, are you going to build one from scratch or move into one that’s already built? Are you going to learn about plumbing and electrical and permitting and construction? Are you going to invest in the right tools?” the employee said. “Why do you want to do that?”

“I don’t think AI will make SaaS obsolete,” said PitchBook analyst Derek Hernandez. Instead, change Big Software’s value proposition to emphasize security, reliability, and AI tools that work across multiple programs to make life easier for enterprise customers.

“We’re hearing from most traditional software buyers that they’re not really interested in a broader push to replace SaaS vendors with internally built systems. They primarily want AI to be built into their existing software,” he said. “Most large enterprises still want a trusted vendor to handle the complexity inherent in a software solution.”

In addition to customers interested in code, you also have competitors whose coding skills have significantly improved. A senior Salesforce employee told Business Insider that the company risks losing small business customers to competitors that use AI to build and offer lower prices.

Still, as Workday CEO Bhusri said on an earnings call in February, the main defense is the risk and complexity associated with companies using these software. Big software processes payments, processes employee social security numbers, and meets global regulations, but “no amount of atmosphere coding can do that,” he said.

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