[aobdev]

Thought exercise for those in disagreement: why would every company use AI to build their own payroll/ERP/CRM, when just a handful of companies could use AI to build those offerings better?

This is largely how things work now; AI may lower the cost and increase margins, but the economics of build vs buy seem the same.

[adrianwaj]

To avoid CRAZY SaaS charges. I left a comment further down about how the challenge is first getting a reliable stack running underneath whatever ends up being fast-coded. The trend will be more decentralization - I think that'll be AI 2.0. Increasing centralization is AI 1.0.

[mixdup]

But if that was a goal, or a marketable feature, SaaS and cloud would have competitors out there selling software with perpetual licenses to be run on premises

Yes, the vendors want subscriptions and cloud and not owning anything, but customers also don't want to hire people to operate the infrastructure required to run this stuff themselves. That's the whole point of SaaS, and why some companies just run entirely on that model and basically have no in-house IT staff

That AI means you can write and run your own payroll system doesn't mean all of a sudden a world of people with zero technical skills can start doing it on their own

[adrianwaj]

...unless they have an agent "IT Guy" who can either do it for them or show them what to do. Perhaps UIs will change and be designed half for a human operator, and half for the IT Guy to copilot with them.

The person with zero technical skills could start learning primitive technology: youtube.com/@primitivetechnology9550 - living off the land really is the job for the unemployed. We've done it before! As long as there is a safe place to actually do it and a planet that can support it. Those'll be the problems.

[dyauspitr]

Every company that I’ve worked at has had to do significant additional development work on their instance of salesforce to make it work for them. Like 6-12 months of work with 1-3 people. I don’t know if this is common but in that case maybe going custom might be the way to go. You get something lean, without all the cruft, specifically built for your usecase and nothing more.

[Fire-Dragon-DoL]

Well the answer is because the cost of that software is lower than somebody building the other software. What happens is that all these SaaS drop in value because it is now realistic to build them internally

[aobdev]

Why does AI make it cheaper to build internal but not cheaper for SaaS competitors to pop up? Everyone has access to the same tools.

[Fire-Dragon-DoL]

Oh sure! My conclusion is that they will drop in value, not disappear.

Basically I expect way smaller companies popping up competing with the big ones and their offering will be priced way lower because their payroll is way smaller.

While there is no competitor, internal tools will pop up now.

[aobdev]

I believe that. Companies will build cheap tools today while competitors are spinning up to undercut ADP, Salesforce, and SAP. But what happens tomorrow? There are plenty of examples in IT today where the reasonable option is to outsource in 90% of cases: don’t roll your own auth, don’t host your own email server, don’t build your own data center. I don’t see how AI can change that, when the people who build specialized software also have access to AI.

Another great example is open source. I think PostgreSQL being free and usable by everyone is a more economic outcome than every Fortune 500 company building their own database engine. Payroll, ERP, and CRM fall into the same category of being commodity software in a lot of cases.

[gnz11]

My experience is that the folks in charge of spending and making decisions are looking at AI as another means of outsourcing. Payroll, ERPs and CRMs went from commodity software to subscription services and anything that is subscription based is getting scrutinized much more heavily now.

[copperx]

It does make it cheaper, obviously. But the barrier to entry is almost zero, like panhandling. That's why it can't substitute a job.

[pmmucsd]

Slack is a good example. When the cost of Slack is an unreasonable amount of your operating costs then it makes sense to clone and maintain. The product is simple, you can basically recreate the main functionality in a sitting. Why would you pay hundreds of thousands of dollars for it?

[aobdev]

That’s a fine example, but my question then is why does Slack exist? Surely Fortune 500 companies are smart enough to realize that building a slack clone is cheaper, yet they don’t do that.

So now consider AI, perhaps the cost of building has decreased from 100k to 10k. What stops a Slack competitor from also building the product for 10k and reselling it at 10% of the cost of Slack? My point is that I don’t see how AI has changed the value prop.

[krisoft]

> my question then is why does Slack exist?

I do not actually believe that you can trivially vibe code a viable slack replacement. But even if one day we could it wouldn’t mean that Slack as a company would just disappear overnight.

They would hang around serving companies who haven’t got the memo yet, or who are locked in a contract, or where the internal political situation is against such a move. The innertia of a bunch of humans behaving like a bunch of humans would provide a sort of “coyote time” effect where the fundamentals could fall out from under Slack yet the company would keep “floating” for a while.

It is funny how much of your question sounds like the old joke where an economist can’t believe their eyes that a $20 bill is laying on the pavement, because surely if it were so someone would have already picked it up. In a steady state the logic might hold up, but we are not in a steady state.

And that is separate from why do I think it is not realistic to just replace slack with vibe coded alternative: just in my company some people use the web interface, some the ios app and some the android app. To be a viable replacement you would need all 3 platforms supported with all features. That sounds in itself a nightmare. Then figuring out what features my company members really use is an other nightmare. There are some who craft custom emojis all the time, some who integrate all kind of weird apps. We various CI and data pipeline processes integrated with slack reporting. And then comes huddle. Video and voice chat and screen sharing. You can even draw on someone else’s screen with it! IT has their needs to archive things (maybe?) or snoop on certain things. Then comes of course interfacing with single-sign-on. I wouldn’t even volunteer to enumerate all the different features people just at my company depend on, let alone offer to replace it.

[pylua]

Is it the sla and maintenance cost ? As silly as it seems it is important for slack to work reliably, especially in case of court orders and legal retention.

Also Is there not a self hosted open source solution that companies can host ? That’s easier than ai?

[svnt]

There is value in taking a product to market and hardening it, and no one wants to invest in something that requires headcount for cost-savings. They want upside. But if it doesn't require headcount and/or unlocks functions they have to negotiate for, and the AI can keep it online and troubleshoot, that is a different story.

Slack exists in part because ten years ago it was a lot harder for big orgs to make good/modern software.

[dehrmann]

Mattermost is FOSS. Why aren't companies running their own servers to avoid Slack? Prior to OneDrive and web integration, LibreOffice was 95% as good as MS Office, better than VibeOffice will likely be, and it still failed to gain much traction.

[rpdillon]

This is the key point. We've already run the experiment where the code is free and all you need to do is host it yourself and people still didn't opt to do that work. I don't see how AI changes the situation.

[b00ty4breakfast]

I have to imagine that companies pay so much money for Slack because it's actually not that simple.

At the very least, the return is not worth the time and effort.

[nkrisc]

If Slack is so simple why haven’t companies created their own internal versions 10 years ago?

[klodolph]

Every company I worked at in the past 10 years has created an internal version of Slack. Four companies.

[aobdev]

I don’t doubt it but that doesn’t negate the fact that Slack as a company exists and makes money by selling software. My question is this: AI makes it cheaper to build software, but ADP, SAP, and Salesforce also have access to AI and could make cheaper versions of their products. How does AI change the build vs buy trade off in a way that eliminates economies of scale? My opinion and that of the article is that it doesn’t.

[klodolph]

> How does AI change the build vs buy trade off in a way that eliminates economies of scale?

I think a more likely scenario here is that something good and free escapes containment at some point and Slack’s core product just kind of deflates. Not something better than Slack, but something good enough that people don’t care about Slack any more.

I don’t see it as a question of whether you build it or buy it, but a question of the time horizon for selling messaging software as a business strategy. Most business strategies have a finite time horizon. How long can you continue to sell messaging software before there are too many competing solutions available and you stop making money from it?

[rpdillon]

We've already ran this experiment with Zulip and Mattermost. Slack still won.

[nkrisc]

I guess to provide a counterpoint to my own comment, even I worked for a company that created their own internal social network similar to Facebook (this was 15 years ago).

Of course it sucked and no one used it except executives and VPs. Everyone else did just enough to meet the minimum quarterly engagement metrics right before performance reviews.

[jayd16]

Why don't they sell them?

[klodolph]

A list of outcomes:

1. They did, and still sell it. You can buy it.

2. They did, and then exited the market. Employees gradually migrated off the internal platform.

3. They weren’t in the business of selling software, and didn’t sell their internal messaging platform (which is idiosyncratic and closely integrated with other internal system).

[jayd16]

Slack is an hilarious example.

I can't wait for orgs to try to vibe roll their own dozen clients, security models, and then try to talk to handle external integrations of some kind.

[andersmurphy]

I mean once campfire is full featured free and easy to self host. Completely open source slack replacement.

I imagine it's also infinitely better than anything an in house team could vibe code.

You don't need AI for a cheap slack alternative.

That's why I don't buy any of this.

Companies are not bothering with the free/open alternatives.

Unless the real power of LLMs is making it easy for greg in HR to self host these existing alternatives. But, that a trillion dollar market does not make.