OpenAI's CFO poured gasoline on the fiery 'buy versus build' software debate

The software industry is currently undergoing seismic shifts as artificial intelligence (AI) continues to reshape its landscape. During a recent Goldman Sachs technology conference in San Francisco, OpenAI's Chief Financial Officer, Sarah Friar, addressed the pressing issue of whether companies should buy or build software solutions in light of these changes. At the event, Friar referenced comments made by OpenAI's CEO, Sam Altman, who hinted at a new 'fast fashion era' for software-as-a-service (SaaS). She likened this potential transformation to the dramatic evolution seen in the retail clothing sector, suggesting that the SaaS market may be at a similar tipping point. "The entire value chain is experiencing disruption. Those who fail to adopt AI swiftly risk being left behind," Friar stated. She emphasized that the real threat to businesses lies not in AI itself, but in competitors who are adeptly integrating AI solutions into their operations. This insight comes as software stocks like Salesforce and HubSpot have faced declines, fueled by concerns that AI technologies could enable companies to develop their own software rather than relying on third-party SaaS providers. The ongoing 'buy versus build' discourse has captured Wall Street's attention, with recent studies indicating that over a hundred publicly traded software companies may find themselves squeezed between agile AI startups and established tech giants equipped with AI capabilities. Friar highlighted how the availability of AI coding tools is democratizing software development, allowing firms to create tailored solutions in-house. "Why would a company purchase off-the-shelf planning software when they can develop a custom solution that meets their unique needs?" she questioned. "In this new age, leveraging a company's most valuable asset—its developers—to create bespoke software is becoming increasingly practical." Friar illustrated this shift with an example from her own finance team at OpenAI, where team members are actively coding tools to enhance their productivity. This innovative approach has allowed the finance department to operate efficiently, being approximately 18% smaller than similar teams at other firms. "I find this truly exhilarating, and it’s a testament to how AI is transforming our work dynamics," she remarked. As the conversation around software development evolves, it remains to be seen how these trends will play out in the competitive landscape of the tech industry.