The software market has experienced significant upheaval in recent months. The penetration of artificial intelligence created investor panic that resulted in a sharp drop of dozens of percentage points in the shares of leading SaaS companies such as Salesforce Wix and Monday.
New AI models are capable of performing tasks that previously required dedicated software from transcription and translation to automated code writing. If a machine can generate software automatically the future of software companies appears questionable.
What is all the panic about? Is the fear justified? The answer is of course complex. Let us try to break down the subject a bit.
The first important thing to understand is that this is an advanced stage of technological progress not the end of the road. The market is undergoing an adjustment to a new reality not a total collapse of the industry. Initial market reactions are sweeping and emotional and sometimes even exaggerated. Many stocks in the industry have never been so cheap and it is possible that investors are eulogizing these companies too early. Not all companies are the same as there are companies that are easy to replace with AI tools while others provide added value to large organizations and therefore have time to reinvent themselves.
In the current situation, bright spots and opportunities can also be identified. In most organizations worldwide artificial intelligence tools have not yet been deeply implemented and there is a growing demand for smart and automated solutions to integrate into business processes.
Israeli software companies can take advantage of this vacuum since Israeli high tech has a reputation for innovation and rapid adoption of technologies. Such companies with unique expertise are able to offer AI solutions tailored to the needs of organizations and gain new market shares even in an era of uncertainty.
Additionally, veteran software companies have a competitive advantage that does not disappear in an instant. They hold assets that are difficult to replicate such as vast data repositories process knowledge and years of professional experience that still require the human touch and wisdom. The combination of these with AI capabilities is expected to keep the collision less forceful and can even significantly improve service and efficiency. Artificial intelligence may even turn from a threatening tool into an accelerating tool for established companies and serve as a growth engine through the rapid development of new products in their fields of expertise.
Wix, for example, is changing the structure of development teams based on a vision that artificial intelligence will produce most of the code and developers will focus on aspects of architecture and quality which is a clear sign that leading companies are adapting to the new reality instead of collapsing.
Revolutions always come with fears uncertainty and volatility across many sectors. Is the current earthquake high on the Richter scale? Perhaps. But what is certain is that those who innovate promote and become more efficient based on what exists will survive the period while those who do not will have to reinvent themselves.
Marsel Vaida is the CEO and founder of Good Quality, a company specializing in software testing and automation development, based in Ofakim, with operations in the United States and South America.
