Klarna CEO, Sebastian Siemiatkowski, recently announced in a call with his investors that his company is terminating two of its largest SaaS partnerships, Salesforce and Workday, as part of a complete generative AI overhaul.
Known for its payment installment plans, Klarna believes that it can phase out both providers and replace them with equivalent systems through the power of AI. Let’s take a look at the rationale behind the decision and what they hope their platform will look like beyond SaaS.
Why Have Klarna Severed Ties?
Klarna has been working with Salesforce and Workday for several years to manage aspects of their day-to-day operations, such as sales pipeline management and HR operations. However, the company now wants more flexibility in its operations and believes that AI-driven solutions are the best way to stay agile in the fintech market.
Klarna’s decision to fully invest in AI technology, specifically OpenAI, is driven by hopes of improving the overall customer and employee experience, saving a significant amount of money, and expanding its services beyond its well-known buy-now-pay-later offerings.
The platform already has an AI assistant called Kiki – which is powered by OpenAI – that handles a significant amount of customer service inquiries and is also used by 90% of their workforce. Klarna is confident they can take it a step further by replicating (and potentially improving on) Salesforce’s CRM and Workday’s HR capabilities.
In essence, they believe that they can build the equivalent of Salesforce and Workday through generative AI, which will be capable of reading the documentation or APIs of these systems to create the workflow and database structures needed to operate their new stack.
They also see it as a chance to reduce their workforce significantly by replacing roles in marketing and customer service thanks to AI automation. They’ve cut their workforce down from 5,000 employees to 3,800, with the ultimate aim of downsizing to around 2,000 workers.
Sebastian Siemiatkowski believes the company is embarking on a journey to consolidate its software stack and simplify its overall process:
“There are large ongoing internal initiatives that are a combination of AI, standardization, and simplification. As an example, we just shut down Salesforce. Within a few weeks, we will shut down Workday. We are shutting down a lot of our SaaS providers, as we are able to consolidate.”
Can Klarna Succeed Without SaaS?
Klarna’s bold move to move away from SaaS certainly raised some eyebrows in the tech industry. While it’s true that certain aspects of AI have the potential to change modern-day operations, creating a competitive in-house alternative to such powerful platforms could be a seriously difficult undertaking.
Developing AI-driven solutions that can match what established CRM and ERP systems can offer will be a long-term challenge, as these platforms have decades of experience and development behind them. They’ll also want to scale up their internal systems quickly to ensure a seamless transition, which will require countless man-hours to achieve.
Salesforce CEO Marc Benioff was quick to share his thoughts on Klarna’s decision, questioning how they’ll cope without the two widely-used SaaS platforms:
“I’ve had several of my friends reach out to him (Sebastian Siemiatkowski) because he hasn’t said where he’s managing his data…how he is managing and sharing this information? How is he achieving compliance, governance of his company? What is he doing?
“Humans aren’t going away. One of the key things about Salesforce and Agentforce, it’s deeply integrated with our applications – it’s a seamless handoff between the agent and the app. I think this is so important.”
Klarna’s ambition is certainly commendable, but going against the grain isn’t always the best strategy. Generative AI is still in its infancy and might not yet be capable of performing in the way that they’re hoping for.
Summary
It remains unclear whether this strategy will yield long-term gains for Klarna. This transition emphasizes how generative AI could impact SaaS in the future while raising concerns about abandoning established, reliable platforms, like Salesforce and Workday, in favor of emerging technologies.
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