Companies feel immense pressure to integrate AI to stay competitive, leading to massive spending. However, this rush means they lack the infrastructure to measure ROI, creating a paradox of anxious investment without clear proof of value.

While AI expands software's capabilities, vendors may not capture the value. Companies could use AI to build solutions in-house more cheaply. Furthermore, traditional "per-seat" pricing models are undermined when AI reduces the number of employees required, potentially shrinking revenue even as the software delivers more value.

For established software companies with sluggish growth, the path forward is clear: find a way to become relevant in the age of AI. While they may not become the next Harvey, attaching to AI spend can boost growth from 15% to 25%, the difference between a viable public company and a sale to a private equity firm.

Building software traditionally required minimal capital. However, advanced AI development introduces high compute costs, with users reporting spending hundreds on a single project. This trend could re-erect financial barriers to entry in software, making it a capital-intensive endeavor similar to hardware.

The initial enterprise AI wave of scattered, small-scale proofs-of-concept is over. Companies are now consolidating efforts around a few high-conviction use cases and deploying them at massive scale across tens of thousands of employees, moving from exploration to production.

The current AI hype masks a significant future risk: customers will churn if they don't see ROI beyond simple tasks like summarizing emails. For channel partners, ensuring deep user adoption of tools like Copilot is not just a value-add, but a critical defense against future revenue loss.

AI is making core software functionality nearly free, creating an existential crisis for traditional SaaS companies. The old model of 90%+ gross margins is disappearing. The future will be dominated by a few large AI players with lower margins, alongside a strategic shift towards monetizing high-value services.

Historically, labor costs dwarfed software spending. As AI automates tasks, software budgets will balloon, turning into a primary corporate expense. This forces CFOs to scrutinize software ROI with the same rigor they once applied only to their workforce.

The current era of broad enterprise AI experimentation will end. The CEO foresees 2026 as a "year of rationalization," where CFO pressure will force companies to consolidate AI tools and cut vendors that fail to demonstrate tangible productivity gains and clear return on investment.