AI & the Business of Enterprise Sales, Software, & Services
Despite some backlash, AI is moving forward. We are building new capabilities on top of existing advances, moving toward the ability to implement services as software, and disrupting a $10 trillion market. How is that changing things? A lot of it is counter-intuitive.
The business of enterprise software is going to change, and it's going to change dramatically. There are very few areas, if any, that won't be drastically affected. OK, the underlying primitives, databases and storage for example, won't change. But it's what we do with those primitives that's important, i.e. running applications. Perhaps more importantly services are the vast majority of the entire IT industry. We take inputs, run them through programs/LLMs, and get outputs that are fed into infinite continuous feeds, and we provide services to build these things and string them together.
Even if you think Generative AI is useless or just plain weird right now, and maybe it is, the fact is that we are going to figure it out how to make it better. We are going to figure out how to build agents and get them to work together to get things done at the speed of computers. Computers aren't that smart, but they're fast. AI doesn't have to be perfectly smart, it just has to be good enough, smart enough, and then it will be fast because of CPUs and GPUs. We're going to see massive speed improvements, things that used to take weeks will now take hours. We'll be able to do things that we couldn't do in applications, and we'll be able to do them in short periods of time.
Service As Software
2004: Software as a Service, 2024: Service as a Software - https://x.com/bhalligan/status/1781323169313222852
We're transitioning to service as software.
The cloud transition was software-as-a-service. Software companies became cloud service providers. This was a $350B opportunity. Thanks to agentic reasoning, the AI transition is service-as-a-software. Software companies turn labor into software. That means the addressable market is not the software market, but the services market measured in the trillions of dollars. - https://www.sequoiacap.com/article/generative-ais-act-o1/
Examples:
- Harvey: AI lawyer
- Glean: AI work assistant
- Factory: AI software engineer
- Abridge: AI medical scribe
- XBOW: AI pentester
- Sierra: AI customer support agent
(Above are also from the Sequoia article.)
Sierra is a good example. B2C companies put Sierra on their website to talk with customers. The job-to-be-done is to resolve a customer issue. Sierra gets paid per resolution. There is no such thing as “a seat”. You have a job to be done. Sierra does it. They get paid accordingly. - https://www.sequoiacap.com/article/generative-ais-act-o1/
Through examples like Sierra, we can see that the software world, thanks to AI, is moving towards turning services into software, a huge, huge market. But it's not going to be easy to sell these services as software.
There is a big shift underway in the software industry. Fast, cheap, and powerful multi-modal models have massively expanded the scope of what's possible with software. A new breed of AI-powered companies are jumping into the fray to put these capabilities to work. These companies look quite different from the previous generation of SaaS. They sell work, not workflow. They sell outcomes, not tools. It's a whole new type of company, and we need a new name for it. - https://worldgov.org/sds.html
Enterprise Sales
We continue to believe that a mature, healthy enterprise field sales motion developed over time is critical to long-term growth for most companies. - https://www.iconiqcapital.com/growth/insights/the-state-of-go-to-market-in-2024
I think a lot of the changes are going to be non-intuitive. For example, on the one hand, you might think that the act of selling enterprise software is going to change, maybe thinking that maybe AI can do it better, ask better questions faster, or maybe an AI can make the initial phone call, then get into the zoom call and show the demo of the SaaS solution. But instead, it will probably go the other way, where we end up back doing more of the "old school" model of enterprise software sales.
Hands-on Keyboard Led Growth
AI is about solving problems in a less deterministic way–instead of writing code directly, we connect a series of natural language and other instructions, other layers of capability built on top of generic LLMs, from agent to agent. If the platform can effectively do almost anything, properly wired, meaning all we have to do is connect a set of agents to the inputs and outputs, the question becomes, what problems does the customer have? Once we have that knowledge, we show them in a matter of hours how we can solve multiple real-world problems over the course of a few days. Certainly doing this takes skill and domain specific knowledge, but the tools are coalescing as I write this.
In these immersive, hands-on-keyboard sessions, participants can expect to go from zero to use case in just one to five days. The results speak for themselves. Our partners have been able to solve problems that they have been struggling with for years in a matter of days. They are able to build their own intuition and skillset to be able to independently identify and execute on AIP use cases in subsequent weeks. AIP Bootcamps are also fun for all involved, as winning tends to be. - https://www.fool.com/earnings/call-transcripts/2023/11/02/palantir-technologies-pltr-q3-2023-earnings-call-t/
More:
In the last quarter, we reoriented our go-to-market approach around AIP boot camps, which has allowed us to deliver real workflows on actual customer data in five days or less versus our traditional pilots, which generally take one to three months. We're seeing different stakeholders at the table, including tangible engagement from IT, a quicker time to value for customers, a wider range of organizations partnering with us and the ability to have multi-organization boot camps. - https://www.fool.com/earnings/call-transcripts/2023/11/02/palantir-technologies-pltr-q3-2023-earnings-call-t/
More still:
As I've said before, with AI and LLMs, you can't think your way through it. You have to get your hands dirty and work in anger to get use cases into production. In AIP, we have built a platform to deliver proof, not just proofs of concept, to our customers, and bootcamps are the way to flex that strength. At AIPCon 3, we will have many customers on stage showing you their great work. - https://www.fool.com/earnings/call-transcripts/2023/11/02/palantir-technologies-pltr-q3-2023-earnings-call-t/
I have also seen that you have to use AI and LLMs to see their value–you have to wrestle with them and the code around them to get a sense of what is possible and what problems can be solved. With AI, it is not enough to do the basic demo, the TODO app. You have to go further.
Looking Ahead
“Full fathom five thy father lies, Of his bones are coral made, Those are pearls that were his eyes, Nothing of him that doth fade, But doth suffer a sea change Into something rich and strange” - The Tempest, William Shakespeare
We're heading into a sea change, not an unprecedented one, because at least in recent history we've had the big "I" Internet, mobile, cloud computing, and now AI, but these current changes are rewriting the underlying code of how we "do" technology. We are on the cusp of moving from what we so proudly developed, "software as a service," not only a technical change but a business and sales process change, to now "service as software," with the latest advances in AI, GenAI, LLMs, etc, as the underlying capability. What's more, the way we create and sell these services will also change, and somewhat counter-intuitively, the direction will not be Product Led Growth (PLG), but rather what many would consider "old school" sales methodologies, which of course never went away, just had less focus for a while, and are instead galloping towards the ability to solve actual organizational problems in a few days of "hardcore" techno-bootcamps. All of this is leading to a $10 trillion sea change.
Further Reading
Link - https://www.sequoiacap.com/article/generative-ais-act-o1/
Link - https://x.com/bhalligan/status/1781323169313222852
Link - https://www.whatshotit.vc/p/whats-in-enterprise-itvc-406
Link - https://www.iconiqcapital.com/growth/insights/the-state-of-go-to-market-in-2024
Link - https://blog.palantir.com/deploying-full-spectrum-ai-in-days-how-aip-bootcamps-work-21829ec8d560
