AI Agents Threaten Salesforce and ServiceNow's Business Model

Salesforce and ServiceNow are facing pressure on their lucrative business model due to AI agents reducing the need for human software users, according to Todd Ahlsten, Chief Investment Officer at Parnassus Investments.

Ahlsten argues that AI is changing the equation between customer headcount and software revenue. Traditionally, companies hired more workers, those workers needed more software accounts, and vendors collected more recurring revenue. However, AI agents allow companies to increase output without hiring additional employees who need new software licenses.

The consulting firm Bain & Company analyzed over 30 SaaS vendors introducing generative AI and found that about 65% had adopted hybrid pricing, layering AI usage or feature-based charges on top of traditional seat pricing. This supports Ahlsten's argument that software companies may have to rely less on customer headcount growth to drive revenue.

Both Salesforce and ServiceNow are already adapting by adding usage-based AI pricing alongside traditional per-user licenses. Salesforce CEO Marc Benioff has said the company kept its engineering workforce at about 15,000 for roughly two years while AI helped those engineers get more done. ServiceNow CEO Bill McDermott told the Wall Street Journal that roughly half of net new business revenue now comes from non-seat-based models.