AI: The New Tech Stack
Remember when cloud computing was the new kid on the block? Butel draws a parallel between that era and today's AI landscape. "This was the first software people were using in the cloud," he recalls about his Xero days. "So a lot of the sales conversations were we were selling the cloud rather than selling software."
Fast forward to today, and we're seeing a similar pattern with AI. But there's a twist. As Butel points out, "AI is not just a buzzword, it's a whole new tech stack."
This shift is so profound that even seasoned developers are finding themselves out of their depth. "I found myself as a developer sitting in sales calls realizing I need to bring in an engineer because I don't understand this technology anymore,".
The Billable Hour Dilemma
For professional services, AI presents a particular challenge to traditional business models. The billable hour, long the standard in industries like law and accounting, is under threat.
Butel puts it bluntly: "If the cost to do the work is a 10th of what it used to be, can we preserve the value to the customer?" It's not just about efficiency; it's about redefining value. Some firms are considering a shift to value-based charging, but Butel warns, "I think we're going to see the value dropping."
This doesn't mean doom and gloom for professional services. Instead, it's an opportunity to redefine their offering.
"You're in a position where you can give them way more value," Butel suggests.
The key is to use AI to augment human expertise, not replace it.
Build vs. Buy: The AI Twist
AI is also shaking up the traditional "build vs. buy" decision in software development. Butel observes, "I don't need a one-size-fits-all SaaS product because we can create it ourself."
This shift could have profound implications for the software industry, and the buying model of SAAS products..
But it's not just about creating custom solutions. It's about solving problems that were previously too expensive to tackle. Butel gives an example: "To solve that problem using traditional software would be prohibitively expensive. So you rely on a SaaS model where someone's solving it and scaling that solution, right? That's the model that SaaS is great at. And I don't see AI fitting into that model. I see AI competing with that model."
The Human Side of AI Adoption
While the technology is exciting, Butel emphasizes that successful AI adoption is as much about people as it is about tech. "You're talking about an organizational change, which is a cultural change, which is a human change," he says. "These changes take time and have to be done right."
This human element is where many businesses stumble. They focus on the technology and forget about the cultural shift required. Butel's experience with Xero offers a valuable lesson here. Initially, accountants felt threatened by the software. Xero had to pivot quickly, positioning accountants as crucial partners rather than obsolete middlemen.
Enter Hoist: Bridging the AI Gap
Recognizing these challenges, Butel's company, Hoist, aims to make AI more accessible for businesses. "We're trying to really create the tools to get you started," he explains. Hoist offers a way for businesses to roll out AI capabilities across their organization, similar to an intranet.
But it's not just about providing a platform. Hoist also focuses on training. "We're training you on how to write prompts," Butel says. "It's also in a way that's repeatable." This focus on creating repeatable processes is crucial for businesses looking to scale their AI usage.
The Road Ahead
As businesses navigate this new AI landscape, Butel's insights offer valuable guidance. It's clear that AI will impact every industry, but how it does so will vary. For professional services, it might mean rethinking billing models and service offerings. For software companies, it could mean a shift in how they develop and market their products.
The key, as Butel suggests, is to start somewhere. "I do see a bunch of people realizing that they need to just start without necessarily knowing where they're going," he notes. It's about experimentation, learning, and being open to new possibilities.
AI isn't just another tool in the toolbox. It's a fundamental shift in how we approach business problems. As Butel puts it, "Innovation comes first." The businesses that thrive in this new era will be those that embrace this spirit of innovation, using AI not just to do things faster, but to do things differently.
The AI revolution is here. The question isn't whether it will impact your business, but how you'll harness its potential to stay ahead of the curve. As Andrew Butel and the team at Hoist are demonstrating, the future belongs to those who can successfully integrate AI into their business strategy, culture, and operations.
Hope you enjoyed Episode One of the Giant Steps Podcast