ERP Disruption!

ERPs are catnip for PEs.

Private equity loved those enterprise software businesses because they had low customer churn and long-duration recurring revenue. But once AI hit the scene, everything changed.

We’re now seeing these classically safe businesses being disrupted by two factors:

1. AI-native competitors are disintermediating ERPs at the user experience and logic layers of the stack, reducing them to compliant databases with lower margins.
2. Customers are replacing ERPs due to years of zero user experience improvements, bloated software additions, and higher prices. Customers are now attempting to build it themselves or hire a group with experience to rebuild it custom, in-house, for their specific needs.

As a result, you see customers becoming AI natives. Of course, this is the core of the AI Disruption Risk described in the SaaSpocalypse hypothesis. Unfortunately, the narrative is not quite that clean.

Because even if you can vibe code your way to a light implementation, it still takes people with the right strategy, product requirements, design sense, engineering capability, and quality control to get the software functional, accepted by, and retained by internal users.

So, you see a number of companies adopting the principles of forward-deployed enterprise software and services firms.

It took the world decades to figure out what we did a long long time ago in a galaxy far away. That people care about their needs, not your products or your margins. And with a deep understanding of AI and Emerging Tech, you can enable the best of both worlds:

• Product-like quality, margins, and capabilities
• Services-like customizations

Together, it creates a more durable competitive advantage for users. Of course, this raises a key question.

Do you have the right stuff in-house? Does your existing service provider? Or did they both just get the memo in the last 6 months and decide they’re suddenly world-class brain surgeons (read: software product people)?

Choose wisely: https://www.youtube.com/watch?v=sx_WG4-L1jE

—Sean