As Marc Benioff transforms Salesforce from the world’s largest apps vendor to a high-growth data and AI company, he slammed predictions of the death of SaaS as “so much nonsense” and even cited the Bible to support his contention that AI is enhancing rather than killing SaaS.
Indeed, over the past nine months we’ve all witnessed a SaaS market disruption approaching Biblical proportions resulting from Microsoft CEO Satya Nadella opportunistically forecasting in December 2024 that the rise of AI would lead to the “collapse” of SaaS apps and relegate them to a third-tier supporting role.
I say “opportunistically” because Microsoft has a relatively small SaaS business but hopes and expects to have a very large AI and agentic AI business, and Nadella’s prognostication of an impending SaaS Collapse has certainly caused some big customers to hold off on big SaaS purchases.
But on Salesforce’s fiscal-Q2 earnings call last week, Benioff took great exception to the idea that SaaS is dying, and he invoked Matthew 3:12 from the New Testament to buttress his total disbelief in that radical forecast.
“But there’s so much nonsense, and you gotta separate the forest from the trees,” Benioff said when asked by an analyst to comment on the impact AI will have on SaaS.
“Or for those of us who are kind of Bible readers, maybe we separate the wheat from the chaff. And I’ll just tell you as we separate the wheat from the chaff, just know there is truth out there, and you have to go out there and really find it. And the truth is always with the customers — and also right here at customer zero,” Benioff said, referring to the extensive deployment of Salesforce’s Agentforce platform within the company’s ongoing operations.
“And I plan to lay it all out for you at Dreamforce as well on October 14.”
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The Data Cloud Phenomenon
While Benioff staunchly rejected the SaaS-is-dying theme, he simultaneously endorsed the emerging consensus that AI will forever change and enhance applications to drive better business outcomes for customers provided those customers have got their data estates in order.
“None of this is possible without Data Cloud,” Benioff said, calling it “the heart and soul of the success of these agents because it is providing the data and the metadata that you need and the context to get the accuracy.”
The combination of Tableau and MuleSoft and soon Informatica — the acquisition is scheduled to close next year — will enable customers to “clean and harmonize their data and provide it in a way that can be consumed by our Agentforce platform to provide unmatched levels of accuracy,” Benioff said.
And as a result, “I think the data business is probably the most strategic and most important business for Salesforce going forward.”
Okay wheat over here, chaff over there!
Benioff on the Apps + Agent interplay
I’ve been devoting a lot of time and analysis to this “SaaS is dying” canard because I think it’s generated nothing but confusion and uncertainty and delay and paralysis among many business leaders, all of which is harmful in these momentous times when doing nothing is the worst approach of all.
So as one of the prime creators of the SaaS business, and as the CEO of the largest apps business on the planet, and as a visionary who started evangelizing the business benefits of AI more than a decade ago, Benioff has some opinions that deserve to be heard. So here’s a fairly long excerpt from his earnings-call remarks that reveals why he believes AI will extend and enhance SaaS rather than obliterate it.
“We are seeing one of the great transformations in the history of software: the idea that we’re moving from that enterprise software is just for human beings to where it’s also having an agentic layer, and that together, it’s more powerful to serve customers, and that it can create enterprises that are much lower cost and much more efficient and much more capable and much more powerful.
“And it’s against this strange narrative that’s out there that somehow enterprise SaaS or apps or something are going away. Now, I guess nothing lasts forever, okay? But I just look at how I’m running my own business, and what’s happening with the businesses of our customers.
“I don’t understand what the replacement is. So I just look at this incredible next-generation transformational capability, and I’m gonna lay it all out at Dreamforce. And by the way, my keynote — I kinda threw away all my slides, and I said, ‘Let’s just have 12 CEOs of the largest companies on the planet show you exactly what they’re doing with this technology because it’s crystal clear what the value proposition is.
“But to hear some of this nonsense that’s out there in social media or in other places — people say the craziest things, but it’s not grounded in any customer truth. And I think this is what really gets down to the part and parcel of it all, which is we are in the greatest transformation of our industry, which I characterize as the agentic enterprise.”
Final Thought
Could Benioff be wrong, and could Nadella be right? Well, in this crazy business — let alone in this crazy universe — all things are possible. But I would say the preponderance of evidence and human instinct plus a dollop of common sense tilts the equation strongly in favor of Benioff being right.
Plus, SAP also thinks AI will improve and not eliminate apps, and Oracle thinks AI and agents are already improving apps and that the two will become inseparable, and Workday believes the same thing.
And as I attempt to separate the wheat from the chaff by listening to what customers want and need and are actually doing, I believe that Marc Benioff and his Biblical references are very much in the right.
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