I found myself disagreeing with almost all of the comments on the “AI Is Killing B2B SaaS” thread [1], based on my perspective as a senior PM (~20 years in SaaS) at a massive system of record (SoR) company in California. We’re still cooked. Throwaway for obvious reasons.

BigCo SoRs, differences aside, have historically been a good, low-drama way to make a living in tech. RSUs, ~40-hour weeks, generally smart colleagues, and real problems to solve for F100 customers. Our products work, but are not loved. Enterprise sales runs the show.

I have no concerns about a scrappy AI startup or indie dev replacing us. The real threat is other SoR vendors, the cloud providers, and of course the AI labs themselves. All of them are coming for our SaaS margins, and as an industry we are woefully unprepared.

Every major SoR has its core competency (HR, ERP, CRM, etc.), but also a long tail of lesser-known portfolio products that increasingly overlap with other SoRs and serve as growth vectors. The competition here is only going to accelerate. As a huge enterprise, you’re not going to rip out a component your SoR for a cool startup or a vibe-coded internal tool... but you would seriously consider doing so if the alternative comes from another SoR vendor you use and is cheaper.

The public cloud providers are explicitly positioning themselves as the place where your business data, AI agents/LLMs, and critical applications live. This is on a direct collision course with SoRs’ own AI platform ambitions that they are banking on for growth.

The AI labs themselves have the same ambition. Note where systems of record sit in OpenAI’s Frontier press release marketecture: a dotted, nearly invisible line at the bottom [2].

SoRs aren’t dead, and they’re not being disrupted by vibe coders. But the path forward is brutal.

Which brings me to the hardest point that applies to me as well. SoR teams are not known for fast execution, cutting edge AI adoption, product taste, or engineering excellence. These are exactly the strengths of our new competitors. We also struggle to attract this kind of talent. People who fit that profile go to FAANG or the labs. We could try to compete with RSUs, but those are down ~50% over the past few months, and the industry is under increasing pressure from investors around stock-based comp and M&A in general.

The goal here is an honest take from someone on the inside. There’s a difficult road ahead. I think SoRs will always continue to exist in some form but I don’t think the recent market corrections are overblown.

[1] https://news.ycombinator.com/item?id=46888441 [2] https://openai.com/index/introducing-openai-frontier/

user:	michaelpalmeter
created:	September 24, 2017
karma:	1