Ep.232 – The “SaaSpocalypse” — and Why It’s a Gift to the Advisor

Josh Lupresto (00:00)
In one 48-hour stretch earlier this year, about $285 billion evaporated off the value of the world’s software companies. Not because of a recession, not because of interest rates, just because Wall Street suddenly got scared that AI agents were gonna make a whole category of software obsolete. So the press gave it a name. This is a great marketing name. It’s called the SAS Pocalypse.

So a few months later, Airtable, you may have heard of, some of you may have used that, a company used by 80% of the Fortune 100, that’s a big number, and still growing, still making money, sold for about a tenth of what it was once worth. Now, if you’re an advisor, you might hear that noise and you might go, ooh, I might get a little bit nervous. software’s blowing up, subscriptions are getting cut. Is this bad for us? here’s my take.

And it’s kind of the whole reason I wanted to do this episode. I’ve got a lot of thought process on this. It’s probably not going to be the first of this. the SAS Pocalypse, air quotes, is not a threat to you. I think it’s one of the best opportunities that you’ve had in years. Because when a customer’s entire software stack gets thrown up in the air, somebody has to help them catch all those pieces, right? and that somebody is you. So let’s get into it.

Welcome back to Next Level BizTech. I’m Josh Lepresto, SVP of Sales Engineering, and today’s episode is titled The SAS Pocalypse and Why It Is a Gift to You, the Advisor. So I want to talk about a business model story right now in tech because it’s playing out you know inside of every one of your customers’ environments, whether they’ve noticed yet or not. So let me explain.

what this SASPOCalypse actually is in a little more plain terms. So for the last 15 years, as long as I’ve been in this, business software was kind of sold one way per seat per month. 100 employees, 100 Salesforce licenses, 100 little monthly fees that added up to a big annual number, right? But it was predictable, it’s high margin, and I think it made those software companies incredibly valuable, right? It’s great.

This per seat model was really the foundation of the entire industry. And then you know, as of late, AI agents showed up and you know, in the the investment market started doing some crazy math out loud. So that version got quoted everywhere a little bit like this. Well, if 10 AI agents can do all of the work that, you know, take a hundred people, then it must be that the customer only needs 10 seats instead of a hundred, right? And that’s a 90% cut in the software vendor’s revenue for the same amount of work.

Getting done. That purely right there, just that statement, no logic, no reason, no anything, just that statement. That’s the fear that wiped out a couple hundred billion dollars in two days. Now, that you know, the worry, I guess, that that whole per seat model in is the thing that the software industry was built on might be coming apart. Now, here is the part.

That I really want you to hear because it’s this panicky headline. it’s just part of the story. When you really look closer, news flash, this is not software dying. This is not Airtable didn’t sell cheap because it was broken. It was growing over 20% a year and generating cash. What happened is just a repricing. And we see this a lot on Wall Street in all the different financial markets, right? There’s an occasional repricing.

So Wall Street didn’t decide that software is worthless. Software’s a great business. It decided that maybe it was valuing software the wrong way and it was sorting the winners from losers in real time, which I I don’t think is fair. So some software got cheaper, some software got more valuable, and a lot of it is being rebuilt around this thesis of we have to explore what AI means, versus around how it was always done around seats. And we saw this, you know, we we saw this early on

with

AI not with AI, but with cloud and infrastructure and consumption, right? So this idea of consumption got introduced. Now I I I don’t think this is this is an apocalypse. spoiler alert, right? it’s just a reshuffle. And a reshuffle is exactly the moment that a trusted guide, trusted advisor becomes priceless because your customer is standing in the middle of it with no idea.

Which of their 40 tools just became the liability and which became the superpower? And fear is a very freezing thing to do. And that is when the customers need help. Okay, let’s go, let’s go part two. Let’s think about what this really looks like inside of your customer’s business. So so let’s get a little concrete here. Cause this isn’t a stock market story to your customer. This is sitting in their actual budget right now.

So let’s picture a mid-size customer. They’ve got dozens of software subscriptions. They’ve got a CRM, they’ve got a maybe a help desk tool, they’ve got a project management tool, they’ve got marketing tools, they’ve got analytic tools. That’s a stack of licenses that’s just been quietly growing and auto-renewing for years. and honestly, nobody’s really looked hard at that whole thing in a long time. There wasn’t really a different way to look at it. Now, AI rolls through.

And every one of those tools falls into let’s say maybe like three groups. Okay. So group one is tools where AI now does a lot of the work of what we were paying for natively. So maybe they’ve got an expensive add-on for something you know, a modern AI feature now handles for free. That’s overspend that they don’t even know that they have. Group two is tools that just got dramatically more valuable because AI supercharged them.

The platform that plugs everything into it and now has an AI layer on top isn’t a cost anymore. It’s leverage. And they should probably be doing more with it, not less. And if you saw what what Brian Smith and I talked about at Partner Summit, a lot of it they should be doing a lot more with it, not less. Let’s think about group number three here: gaps. So

Things that they couldn’t do before at any reasonable price are suddenly possible, and a competitor down the street is about to figure that out from them. Gaps is really important. We’ve talked a lot about gaps, wedges, things like that on some of these previous episodes. So I want to keep thinking about that gaps. So here’s the problem. Your customer cannot really see these three groups. They’re too close to it. And I think they’re busy running their business.

Every single vendor is telling them that their tool is a group two superpower, right? and that the customer is drowning in a little bit of this self interested advice, I guess.

Now, this is the the the whole point here to kind of wrap this thought up. It’s exactly the gap that you exist to fill, right? You are the one person who can walk into their environment, tell the difference between the overspend, the leverage, and the gap, and do it without a horse in the race. That’s not a threat to your business. That is your business. And I think this SAS pocalypse, air quotes again, just made it ten times more valuable.

All right, let’s go let’s go part three. Why this grows our map, we think about like the Toleras solution map, instead of shrinking it. So I want to hit this head on because I know some of you are thinking, like, okay, Josh, if I go in and help a customer just cut software, am I not shrinking the pie? Cannibalizing maybe some things that we sold them? my answer to that is no. And I want to be really clear about that, because I think that’s the most important mindset.

mindset shift in this whole episode. When you help a customer clean up wasted software spend, you are not taking money off the table. You are freeing up budget and earning the trust to redeploy that into just some higher value solutions. And almost every one of those solutions is already on the Tolaris solution map. And if you haven’t heard this before, if you haven’t seen it before, you can get in the hub and you can get it or you just go

Go Google Telaregus solution map. You can download the PowerPoint and people use that all day, every day. I use that all day, every day. It is the core of everything that we are building here. It is kind of that, the foundation of the data model.

Now let me let me connect the dots here, because this the the that’s really what this map was built for, right? Let’s look at what’s on it. Okay. Under cloud and managed services, we’ve got software license management, software license optimization. You could do that. That’s literally the service of walking in and right-sizing the exact mess on some of this big software that we’re talking about that people are spending a ton of money on. We’ve also got

Cloud migration, application management, you know, think ERPs and CRMs, things like that. When a customer decides the tool is worth doubling down on or needs to modernize it, that’s us, that’s you. there’s a lot of options there. Okay, so keep going. The map has AI woven through every single pillar, right? LLM as a service. You’ve got that LLM gateway option there. And application optimization under cloud, conversational AI.

real-time agent assist, of course, under agent experience. And as we think about AI-driven detection, how do we fight AI cyber threats? We fight them with AI. So you’ve got those types of things right under cybersecurity. So when a customer realizes that AI just changed the game, we’re not sending them to a vendor’s website. We’ve got context center AI. We’ve got

Process automation, we’ve got CRM integrators, we’ve got the whole customer experience stack ready to go as that even as that changes day by day. All right. So so watch the actual sequence here. You go in, you help them make sense of this software chaos, right? you save them money on that dead weight that builds enormous trust and frees up budget, right? And then you take that, you redeploy

that budget.

into and and and that trust into managed services into security into cloud connectivity all this new ai heavy software it’s just demanding that you didn’t you didn’t you didn’t shrink the relationship you didn’t shrink that pie you deepened it and you opened three new doors think about that too think about that from another lens I was just with a really great supplier of ours

And one of the things that I loved that they stood up and said was, you know, let me tell you guys where to not think of us for. Let me tell you what we are not good at. Do not send us this stuff. I know it might look like we sort of do it. We do not. You can, but we don’t do it well. And that’s not where you should think of us for. I love all all I hear when I hear stuff like that from a supplier is I want to figure out the exact niche that they fit in. And I want to send them more business. I am thinking of them double.

when they tell me that because I respect those boundaries, right? And that’s the that’s the angle here when you’re you know you’re going on some of what I just said, what I mentioned above, is you’re helping them understand exactly where these things fit, exactly where they’re overspending and that frees up budget. And I don’t think that’s the approach that everybody takes. It’s not the approach your competition takes. So leverage it. Okay. let’s let’s think here here here’s a here’s a kicker I I think it makes it a little bit better

for us.

So all of this AI native software your customers are adopting, right? It’s hungry. it needs more bandwidth, more secure connectivity, better networking, tighter security, you know, more cloud infrastructure underneath it. I have never look, I I know we’ve all sold a lot of connectivity. I have never seen the quantity of connectivity, more so the size of the pipes that we are selling right now. I’ve never in the

13, 15 years I’ve been in this space. I’ve never seen the size of these pipes, right? i this was unreal to think that we’d be selling the size of connectivity that we are selling now. So think about all those things. Every one of those is core part to what we do. The SaaS Pocalypse, it’s not cannibalizing the map. It feeds it. More AI in the stack means more demand for connectivity, more security and infrastructure layers that are the heart of this channel.

So no, this is not about being the person who cuts. It’s about being the person who reallocates. You’re not the budget cutter. you’re this portfolio manager for your customer’s entire technology spend. And that is the most valuable seat in the building, especially from the spot that you have where you see it all.

All right. let’s go part four. because we love to end and we we we we always bring it home with questions, right? So these are the questions that build on what we talked about, that that kind of opens everything up. So let’s make this into something that you can use on you know, Monday morning as you as you pop in next week. here are the questions that I think turn this sass pocalypse. I’m gonna keep doing air quotes. Hopefully you’re not

getting tired of.

Seeing the air quotes if you’re watching this on video. here’s the things that turn this SAS pocalypse into a conversation and honestly a little bit of a pipeline. So jot these down, pause it. I hope to see this as the most revisited part of these episodes. So start with the inventory. Ask Do you have a clear picture of every software subscription that you’re paying for? What each one costs, and who is actually using it? Not a lot of people do.

the moment they hesitate, I think, is when you’ve found that opening because you can’t optimize what you can’t see, and license optimization is something that you can help them with. Then I’d say maybe find the overlap. Ask how many of your tools have their own AI features and is anyone checking whether you’re already paying for something that you have a couple different times? Are you or are you not? I think that’s overspending, you know, hitting i hitting and just

All these key areas and it’s right there in plain sight. I I think that’s a great door opener too for somebody that you’ve never talked to. I mean, th think about all of the tools that people are just buying left and right right now. and is there overspend that do these three different tools do the same thing? Finding it is delivering value before you’ve sold a thing.

Then I would say to our earlier point that we talked about, the leverage. Ask which of your core platforms just added AI? And are you actually using it? Are you are you paying for a superpower that you’re just leaving on the shelf? That’s, I think, your doorway into doing more, not less. There is so much optimization right now. I promise you, each one of you could go in, presumably, one of your customers is using a foundational

model.

Let’s optimize it. Let’s put an SOW around how to build it. and and they need that help. They need that implementation support. And and those little projects turn into big long-term projects. I’ve seen it time and time again. I think that’s it is the doorway, I guess, into doing more. It’s it’s not less, it’s deployment like I talked about, integration, adoption, all those good things. So after that I would say maybe find the gap, right? To the the third point of all these

These these buckets. Ask them if your software could suddenly do something for their customers or their team that it can’t do today, what would you want it to do? That’s where the new projects live. The AI, the customer experience, the automation, it’s all sitting right there again on the map. Now, notice notice what all four of those do. You’re not just selling a product, you’re not just cutting costs.

You’re helping them take control of a stack that is being repriced, whether they like it or not. And and when that gets complicated because it does, and untangling a, you know, 40 tool environment gets complicated fast, that’s exactly where, again, you don’t have to go it alone. Engineering is here to help. You’ve got supplier resources here to help.

All right. let’s go on to part five for this one. you know, to that point. You bring the trust, we’ve got the depth. So h here’s the truth. you’re not expected personally to audit 40 software contracts, map every integration, architect the migration, all that stuff, right? your job is to spot that opportunity, go as deep as you want, and decide where you want to pause. Ask those questions, right? Own that relationship. The deep work, the

license optimization again that we talked about that cloud migration, the AI deployment, the security, the connectivity, all of that, right? that’s where the SE team, that’s where my team is here to help you for in in in these different areas wherever you need to use them. So when the customer says, okay, you’ve let in with all those things that we’ve talked about in in this episode, the previous episode, help me actually sort this out and build what’s next. That’s your cue. Bring us in, leverage us. We’ll go as deep as it takes.

We’ll go across, you know, the the the solution map once they’ve said, Hey, I need I need help in this area. and we’ll help you just turn that messy stack into this clean, modern, AI ready environment, right? You are this trusted advisor that saw the opportunity in this chaos, right? we’ll help you be that engineering horsepower and we’ll just build it together. So you don’t just help. I I think if you if if you frame it up and you think like that, you don’t

just help.

The customer survive this sass pocalypse, you’re helping them come out on the other side with a better stack. And you come out with a bigger, stickier relationship. That’s what I always want for all of you. I want you to have the stickiest relationship possible in there. You may have started in selling them this one thing. And if you come out, you know, we’ve, as we’ve talked about on this podcast, so many different ways to cross-sell, upsell.

Introductory conversations, just you come out with the stickiest part of that relationship, I think. If you leverage some of these, and they’re always thinking of you. That’s what you want. You want them to be thinking of you. Sometimes the things that I give you might not drum out immediate opportunities, and that’s okay. Play the long game, plant the seed, continually plant the seed, and continually ask these difficult questions and get them thinking. All right.

Gotta gotta land this plane, I suppose. So let’s let’s bring it home. Let’s look ahead just a little bit. So maybe recap bring from the beginning. Two hundred and eighty-five billion dollars vanished in two days. And the headlines called it an apocalypse. But an apocalypse i i it’s it’s just a reshuffle that nobody is guiding, if you really think about it. So for your customers, it’s not the end of software.

I think it’s it’s the biggest rethink of their tech stack in ten, fifteen years. And every rethink is a decision. So if you read this the wrong way, it’s fear, and fear makes people freeze. So let’s guide them through that. And every decision I think is a chance for the right advisor to add value. So don’t read this SASPOCalypse’s software dying. Read it as the moment.

Your customers finally need someone to help them make sense of it all, to separate this garbage vaporware software from, you know, the the the opportunity to to reallocate this budget towards what actually moves their business. I think people get caught up in kind of that glamour of the next greatest thing that may not be really foundationally sound software. Of course, shameless plug, you’re not doing it alone.

Laris sales engineers, we love this stuff. you got a whole bench behind you, you got a solution map behind you, you got the hub behind you, you’ve got tools in there, you got supplier matrix pro, you’ve got so many different things and people and tools that want to help you wherever you are in this process. So look ahead, just watch.

Which software goes AI native and thrives versus which one kind of clings to the old model and and and and fades, right? Watch the pricing shift. It’s not a per seat thing, it’s a per outcome. And watch how much new connectivity and security all this AI software demands. It is it is truly insane. I think yeah every one of those shifts is a conversation you get to have. If you just pause for a second, it creates a conversation. So this week, pick

one customer, go ask them the first question. Do you actually have a clear picture of every software subscription that you’re paying for and who’s using it? And just listen for that creaky sound. Watch the door open. That’s the show for today. this has been what I’m gonna call debunking the SAS Pocalypse, why it’s a gift for you. I’m Josh Lepresto, S V P of Sales Engineering at Toleris, and this has been Next Little Biz Tech. See you on the next one.