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The SaaS selloff may be overdone
The Veeva example
Veeva is a case. Back when Olo was a listed company, its board looked at Veeva and wanted to be that company. Veeva now sits around a $30 billion market cap after falling at least 50%.
What makes software sticky
Claude and tools like it make it easy to see how software gets replaced. The less embedded a product is, the easier it is to turf out. A system running thousands and billions of real-time orders, as Olo's does, or mission-critical biotech research is much harder to dispense with.
The last 5%
What decides the outcome is the last 5%, how hard a product is to replace, and that is being underestimated. Some of the baby may be getting thrown out with the bathwater.
Why are some software products hard to replace?
Switching costs make them sticky: a customer has to migrate data, retrain staff, and reconnect every other system that depends on the product. In regulated fields such as drug development, software must be validated under rules like the FDA's 21 CFR Part 11, which covers electronic records. Replacing a validated system means repeating that validation work. The FDA issued Part 11 in 1997.
Why do real-time ordering systems resist replacement?
Restaurants take a large share of their orders during short rushes, so an outage at lunch costs revenue immediately. An ordering platform connects to point-of-sale terminals, kitchen displays, payment processors, and delivery apps, and each connection would have to be rebuilt in a new system. Switches therefore tend to happen at slow times with careful testing. Large chains run thousands of locations on a single platform, so a change has to be staged location by location.
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