Artificial intelligence is moving beyond generating code and writing emails. It is actively threatening the revenue models of massive enterprise software companies. According to a recent report from The Information, the CIO of data management firm Cohesity is demonstrating exactly how AI tools can eat into the revenues of industry giants like ServiceNow and Splunk.
This shift represents a fundamental change in how enterprise IT operates. For years, companies have paid a premium for software that manages IT tickets or ingests massive amounts of log data. Now, generative AI is proving capable of handling these tasks natively, and at a fraction of the cost.
How AI Disrupts the Legacy Model
The threat to traditional SaaS vendors comes down to pricing structures and automation.
- ServiceNow and Per-Seat Pricing: ServiceNow largely relies on a per-user licensing model. When internal IT teams deploy AI agents to automatically resolve common help desk tickets, they need fewer human agents. Fewer humans mean fewer ServiceNow licenses are required to keep the business running.
- Splunk and Data-Volume Pricing: Splunk charges based on the volume of data a company ingests and analyzes. AI tools can now act as intelligent filters, pre-analyzing logs and summarizing security events before they ever reach a centralized dashboard. If you ingest less raw data into Splunk, your monthly bill drops significantly.
What stands out here is the speed of adoption. CIOs are no longer just experimenting with AI; they are actively using it to optimize their largest budget line items. When a prominent tech executive publicly outlines this playbook, other enterprise leaders take notice.
The Broader Market Dynamics
This development highlights a growing tension in the broader tech industry. Software incumbents are rushing to embed AI into their own platforms, often charging premium subscription fees to justify their massive research and development investments. However, their enterprise customers are simultaneously building internal AI tools designed specifically to bypass those expensive platforms.
This puts tremendous pressure on legacy vendors to rethink how they sell software. We are witnessing AI act as a deflationary force. If an internal AI wrapper powered by a foundational model can do most of what a legacy SaaS platform does, companies will aggressively negotiate their renewal contracts. Vendors may soon be forced to abandon per-seat and data-volume pricing in favor of outcome-based models, where customers pay for resolved issues rather than basic software access.
What IT Leaders Should Do Now
For businesses and AI practitioners, this trend offers a clear roadmap for immediate cost savings.
- Audit software overlap: Identify which expensive SaaS tools are primarily used for basic routing, summarization, or simple data retrieval. These are prime targets for AI replacement.
- Build intelligent middleware: Deploy AI agents to handle Tier 1 support requests before they trigger a costly ticket in your primary IT management platform.
- Filter data at the source: Use lightweight AI models to parse and compress log data before routing it to expensive analytics platforms.
The era of unquestioned enterprise software spending is ending. As AI models become cheaper and more capable, the traditional SaaS pricing model will have to adapt or face steady revenue erosion. Readers can find more details on Cohesity’s specific enterprise IT strategies in the original report at The Information.