Q: Recently, David Friedberg was asked for his prediction for the worse performing asset in 2024. He said he would be short vertical market software (SaaS) and be long cloud providers that have AI tools and platforms that will allow enterprises to build their own custom applications in a low-cost, low code way. If things play out this way, do you feel it could pose a risk to CSU’s business model?
5i Research Answer:
Maybe at some point but that time is likely quite far away. Part of the problem/advantage with a lot of vertical market software is that it tends to be niche and very customer specific with each customer or software provider having unique and custom features. The software also tends to integrate with oher systems that are they themselves a bit niche or unique. If they were easy systems to supplant simply by programming work (even if it took a lot of coding hours), many of these likely would get supplanted. Often times it is a legacy issue or an 'if it's not broke don't fix it' kind of scenario. A ways down the road this could be a risk but we think it is a long way in the future still if at all.