[EON] Hiding in Plain Sight: AI and Software Costs | Paper Napkin Wisdom

AI is changing something very specific. It's not just changing how we write or correspond or deal with emails. It's not just changing how we search for knowledge or contacts or information. And it's not just changing how we create or summarize meetings and speed up admin, because it's doing all of those things for sure.

But AI is starting to eat the value-added edges of expensive enterprise software. And for a leader, This can be one of the biggest opportunities that are hiding in plain sight. Hi, I'm Govindh Jayaraman and this is Paper Napkin Wisdom, episode number 368, and another in the Edge of the Napkin series. So this is number 39 in the series.

There are 38 other episodes. You can find them with the little square tags E-O-N throughout the playlist. Look, here's where we take wisdom collected from hundreds of conversations with entrepreneurs, leaders, and athletes, and difference makers. And we sit with what it means for the way we lead and live right now.

Sometimes the biggest opportunity in our business is not the thing that we are chasing. Sometimes it's the thing that we've even stopped seeing. A line item, a system, a renewal for software, a piece of software that has become so normal, so embedded, so accepted that no one even questions it anymore. And maybe for a long time that made a lot of sense.

Maybe the software helped us grow. It solved a real problem. Maybe it gave your team a place to work from, a structure to rely on, and a way to keep things moving. But what happens when the world changes faster than the assumptions behind that decision?

What happens when the tools that used to cost thousands of dollars a month now can be partially rebuilt, supported, or replaced entirely by AI for pennies on the dollar? And that's what's happening. What happens when software companies you rely on are under pressure too? Pressure from the economy, pressure from investors, pressures from missed sales targets, pressures from customers asking harder questions, pressures from AI itself, which is now starting to replace the little value-added pieces that used to make expensive enterprise software platforms feel untouchable.

And this is what this conversation is really about. Not AI hype. Not replacing people, not chasing the newest shiny tool because everyone else is talking about it. This is about leadership attention.

This is about looking at the things your business, in your business, that became absolutely invisible because they became too familiar, too much like a tool, like a hammer that we always use. And this conversation is about asking a much better question. What are we still paying for? Because five years ago there was no other way to get it.

For the proven entrepreneur and leader, this matters because you have real systems, people, contracts, and most of all, consequences. You can't afford to be reckless. You also can't afford to be asleep at the wheel. There are so many opportunities hiding inside your software stack, and there may be margin hiding in those old assumptions.

There may be simpler ways to support your team, serve your customers, and free your business from tools. That no longer earn the space they occupy. So today we're gonna sit with that idea. We're gonna look at what AI is really changing inside the business, and we're gonna talk about some of the biggest enterprise software companies that are currently under enormous valuation pressure.

We're also gonna ask what it means for leaders who are willing to look at their books, the workflows, the add-ons, and the systems with a fresh pair of eyes. Because sometimes the edge is not out. There. It's inside the business, quietly waiting, hidden in absolutely plain sight.

And this is Paper Napkin Wisdom, Edge of the Napkin number 39. Let's dive in. There's a strange thing that happens in business once it starts to work. The obvious problems get a lot of attention.

The loud problems get meetings. The urgent problems get solved. But some of the biggest problems just sort of sit there quietly, month after month, line item after line item. They hide in absolutely plain sight.

And this is especially true for most organizations with their software. Not the little subscriptions and not just the $29 tools that someone forgot to cancel. And there are plenty of those under the covers of most companies. But I mean the big software, the expensive platforms, the kind of things that you feel like you can't live without.

Sometimes they're very industry specific. The tools that were once hard to find or afford, and so hard to implement, and impossibly hard to replace. So that they almost become invisible. They become part of the toolbox that people leave the shop with in the morning.

They sit like books on our shelves, but they also are the ones that are sort of permanent and useful. We keep on going back to them and so much so that leaders stop questioning them. And this is the part that I want us to sit with today because AI is changing something very specific. It's not just changing how we write or correspond or deal with emails.

It's not just changing how we search for knowledge or contacts or information. And it's not just changing how we create or summarize meetings and speed up admin, because it's doing all of those things for sure. But AI is starting to eat the value-added edges of expensive enterprise software. And for a leader, This can be one of the biggest opportunities that are hiding in plain sight.

The question is not: can AI replace my software? That's too simple. The better question is this: what am I still paying a premium for? Because five years ago there was no other way to get it.

And that's the question that really matters. Because a lot of software was not purchased because it was perfect. It was purchased because it was the only option, maybe the only realistic option, or the option that everybody in the industry accepted. The industry has a workflow.

The workflow needed a system. The system needed reporting. And reporting needed customization. And the customization needed support.

So software industries gathered to build platforms and add-ons and train the users and lock in contracts and become part of the operating rhythm. Of the business. And for a while, that made a lot of sense for a long while. But now the ground is moving very quickly.

Recent reports show that software and services stocks have lost about 830 billion, billion in market value over six trading days as to as investors really started. Wondering whether AI is becoming a real threat to traditional software models. Reuters has recently described AI as moving into the application layer where enterprise software companies have historically made very long-term profitable revenue. They're hard softwares to get into and almost impossible to conceive of getting out of until recently.

And this is just not a Wall Street or Bay Street story, it's an operating story. Because the same pressure that affects their valuation, those software companies' valuation, eventually and really pretty quickly starts to affect your impact or your experience as a cons as a customer, even a loyal enterprise customer. So most leaders look at AI as a productivity tool and they ask simple questions. Can this help my team produce content faster?

Can Can this help me summarize calls and meetings so I can provide better service to my clients and better training and support to my team? Can this help with marketing? Can this help with proposals? And those are really good questions.

But they're not the biggest ones. The bigger opportunity may be the in the cost structure of the very business that you're operating. The bigger opportunity may be in the parts of the business that leaders have stopped seeing because they've been there for so long. It's like infrastructure.

A proven entrepreneur does not miss obvious waste, usually. We all notice bad labor, bad margin, poor pricing. Notice trucks sitting idle. And once remember hearing an entrepreneur talk about driving by one of their competitors and seeing 10 or 20 trucks sitting there in the middle of the day and seeing the obvious opportunity in that.

They notice low close rates, but software spend. Often escape scrutiny because it's wrapped in fear. What if we break something? How would we do it without it?

What if the team rejects the change? What if we lose data? What if support for our customers or team gets worse? What if implementation takes too long?

And those are real concerns. But they also can become excuses, especially right now. They can be a way of protecting an old operating model. Because the old operating model feels safe.

And that's where the opportunity really hides. Not in reckless replacement, not in chasing signing tools, but in disciplined questioning. And here's the reframe: AI is not asking leaders to rip out every system, just pulling them apart. That would be lazy thinking.

Some systems are still mission critical. Some systems are systems of record. Some software holds the operational spine of the business. And they don't usually, and we don't usually casually replace a spine.

But there are a lot of expensive software is not the spine. It's padding, it's reporting, it's workflow, it's document creation or search, it's customer communication, it's training and dashboarding. It's the add-on that used to cost thousands because there was no better option. And that's where AI really starts to matter fast.

Gartner. Is focused is forecasting that AI agent software spending will rise from $86 billion in 2025 to 200 billion in 2026 and 376 billion in 2027. And I think that number's small, ish is is is short. Like I think it's gonna be much higher than that.

And that tells us something important. Companies are not just experimenting anymore, budgets are moving fast. The leader who waits until everything is perfect will be late. The leader who moves too fast will create chaos for their teams and their customers.

But the leader who moves through this transition with confidence, congruence, calm, and contribution will start asking better questions now. And that sounds like this. With confidence, you ask, what are we afraid to look at? And go at it cleanly and without charge right away.

Congruence asks, are we paying for value or were we paying because we always have? Calm asks, can we test this without panicking the organization or our clients? Contribution asks, can this free people to do more meaningful work? And that is the frame.

Not AI instead of people, not AI instead of judgment or decision or thinking, not. AI instead of actual discernment, but AI instead of unexamined cost, AI instead of bloated add-ons, AI instead of software dependency that no longer earns its place, with customer service fading, with response fading, and prices jumping. So here's the part that most leaders just don't understand. Some of the vendors that rely, that we all rely on.

In all kinds of industry are under pressure from both sides. On one side, their customers are moving more cautiously, customers like you and I. And the economy is still carrying real pressure. In Canada, the Bank of Canada has pointed to moderate growth, adjustment to US tariffs, higher oil prices linked to conflict in the Middle East, and inflation expected to ease back towards target in 2027.

SAS Canada is also noted. That real GDP contracted in the fourth quarter of 2025, goods production declined, and trade tensions continue to affect conditions early into 2026. Around the world, people are talking about tariffs, trade tensions, conflicts abroad, and cost pressures. Everywhere, this is the theme.

Weaker growth, risks as part of current economic certainty are absolutely everywhere. We hear this refrain. So naturally, buyers are cautious, boards are cautious, owners are cautious. Cash matters.

Cash has always mattered. Revenue is vanity, profit is sanity, and cash is king. Debt costs still matter. Margins still matter.

That alone makes enterprise software sales harder and harder. But the second side, aside from the customer side for these software companies, is interesting. AI isn't just lowering demand, it's replacing pieces of the value proposition. A company that used to sell a reporting module now competes with an AI tool that can pull from a database and create a dashboard instantly, customized.

A company that used to sell a document workflow now competes with an AI assistant that can draft, summarize, and compare. A company that used to sell a knowledge base now competes with an internal AI layer that can search. Company documents and answer questions. A company that used to sell specialized analysis now competes with an AI model that can perform a fast pass in seconds.

Not perfectly and not always safely and not without human oversight yet, but cheaply enough that can force a question. And when that question gets asked enough times, the vendor feels it. Sales teams miss quotas, customer success. Teams get stretched and support quality drops.

Implementation teams get thinner and thinner, and product teams get asked to ship AI features quickly, bells and whistles. Investors want the old growth curve back on a quarterly basis that is not there. And leaders inside those software companies start cutting costs, flattening teams, and reorganizing around AI. Wix, the great online hosting and web design company, recently announced layoffs.

Affecting about 20% of its workforce. And its CEO cited the fast evolution of AI capabilities as one of the reasons the company needed to become faster, leaner, and flatter. That's just one company. And this pattern is really important because the vendor still has a good product.

The company and still the company, the company, the people inside the company rather may still care. And the support team may still be trying. But the economic pressure is real. And if you're the customer, the pressure eventually lands on your desk.

It lands as slower responses, weaker support, confusing product changes, and it lands as price increases dressed up as innovation. It lands as an AI feature that you didn't ask for attached to a renewal increase that you did not want. And here's the story I keep seeing. I keep seeing leaders discover.

That the thing that they thought was fixed is actually optional. Not everything, but way more than they expected. They look at a line item and realize they're not paying for software anymore. They're paying for the memory of a decision.

A decision that was made when the company was smaller, when it when options were fewer, made when the risk of switching felt bigger than the pain of staying. And that decision may have been right then, but it's not right now. I have been enough in enough room with enough entrepreneurs and leaders to know that this happens. The business grows, the team gets busier, the software gets embedded, and someone says, that's just the way we do it.

That's what we use. And once that sentence starts to enter the culture, the questioning stops. But leadership is not about making just making new decisions. Leadership is sometimes about reopening old ones, revisiting old ones, not because they were wrong, because the world around those decisions has changed.

And this is where Focus Align Act becomes useful. Focus is looking at the real cost, not the subscription cost, the real cost, what you want, the cost of the license, the cost of the add-ons, the cost of the support, the workarounds, and most importantly, the cost of people exporting data into spreadsheets because the software does not do what the business needs. Align is Telling the truth without drama, getting into the present moment. No vendor bashing, no panic, no complaining, no ABCD, no assuming, blaming, complaining, or defending, no pretending AI is magic, just a clean look at the gap between what is being paid for and what is being received.

ACT is running small tests. One workflow, one department, one report, one add-on, one process that costs too much. And delivers too little. And that's where the opportunity begins.

So here's where I think leaders should start. The first place I would look is reporting. A lot of companies pay heavily for dashboards that are not actually used to make better decisions. They exist and look impressive and have lots of data.

They get opened before meetings, but the real conversation still happens from someone's spreadsheet that they're building. And that's the clue. If If someone is looking at a dashboard and then building a spreadsheet, there's a clue. If the report needs to be rebuilt outside of the system to become useful, the system is no longer doing the full job.

And AI may not yet replace the core platform, but it may replace the reporting layer. The second place I would look at is customer communication. Not the whole relationship and not the human judgment part, but the repetitive pieces. The status updates, the follow-ups, the basic explanations, internal subs summaries, service notes, renewal reminders, training responses.

A lot of companies pay for specialized communication tools when what they really need is a better layer between their data and their customer. The third place I would look is the internal knowledge. This is one of the most overlooked areas. Businesses collect knowledge everywhere: emails, PDFs, FOPs.

Training manuals, job notes, customer histories, transcripts, and documents, vendor documents, customer documents, internal documents. And then people ask the same questions over and over again because nobody can find the answer quickly. For years, companies bought expensive systems to organize knowledge, you know, built incredible wikis. Now AI can increasingly sit on top of internal documents and help people retrieve what they actually need.

Again, not yet. Perfectly and not yet without controls, but well enough to test. The fourth place I would look is at the vertical add-ons. Every industry has them.

The base software does the core job, and then the vendor sells extra modules that layer on top: scheduling, forms, analytics, marketing, customer surveys, maybe proposal writing, training, lead scoring, workflow automation. Some of these add-ons are really valuable, but some of them are. And some of them are really expensive because the vendor had a captive audience. AI gives leaders a way to challenge that captivity.

So here's the trap. The trap is to make this about technology. It's really not. It's not about the tech.

It's about attention. The proven entrepreneur does not need another trend. They need a sharper eye. Because the opportunity is not hiding in the future.

It's hiding in your books, it's hiding in renewals. It's hiding in the sentence, we've always done that. We've always used that. It's hiding in the place where nobody wants to ask the question because the system feels too big to touch.

And that's where leadership gets tested. Confidence is the willingness to look. Congruence is the willingness to admit that the current setup may no longer match the current business. Calm is the discipline to test without creating fear or charge.

And contribution is the commitment. To use savings and simplicity to make the business healthier for the people inside it. The wrong leader turns AI into a threat. The better leader turns it into a lens, a lens for seeing what no longer earns its place, a lens for seeing where people are trapped inside systems that were supposed to help them.

So here's five key takeaways for today. Your software spend may be hiding your next margin opportunity. So pull your top 10 software costs and rank each one by actual business value, not familiarity. AI will set number two, AI will not replace every system, but it may replace the expensive layers around the system.

So identify one reporting, communication, or workflow add-on that could be tested. And Built around an AI supported alternative. Vendor pressure may eventually become customer friction. So track support response times from your current software vendors, renewal pressure, contract or product changes, and service quality from your manager, service, and software vendors.

Look more closely at the ones that are starting to slip. The safest move is not waiting, the safest move is testing. So choose one low-risk workflow and run a 30-day AI comparison side by side, the current process, and see what works, what doesn't. Be honest about it.

And number five, this is a leadership issue before it is a technology one. Ask your leadership team: what are we paying for? Because we have stopped questioning it. So the reality is, this is not a technology strategy.

This is a leadership reminder. The biggest opportunity in the business may not be announcing itself as an opportunity and may re arrive in quiet ways. A renewal notice or a support ticket that takes too long to answer, a report that nobody trusts, somebody taking a report and turning it into a spreadsheet before you make a decision, a system everyone complains about but no one challenges. And maybe this is the moment to stop treating that as normal.

Maybe this is the moment to look again. So if you find something, write it on a napkin and share it. Tag it with the hashtag paper napkin wisdom because ideas small enough to fit on a napkin are often large enough to change your world. Make it a great day.