Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

CxOs say that software-as-a-service business models that include consumption are going to require a learning curve as well as a few surprise bills. Nevertheless, there may be benefits to consumption-based models even with drawbacks.

As previously detailed, SaaS vendors are all-in on consumption-based models for generative AI and agentic AI. Vendors are keeping seat and subscription models, but pricing AI usage based on consumption pricing.

With our monthly meeting of BT150 CxOs, consumption models were a key topic. Our CxO call, which is operated under Chatham House rules, highlighted a bevy of puts and takes about SaaS consumption models. Here's the breakdown:

Potential benefits

• Cost efficiency and scalability. A few CxOs noted that consumption models force enterprises to get savvy about only paying for what they do. As a result, these companies can avoid overprovisioning. Consumption models can be more cost-effective in unpredictable usage scenarios.
• Forced efficiency. If you don’t want nastygrams from your CFO, CIOs are likely to monitor and optimize usage. Consumption models force efficiency relative to three-year contracts.
• Price and performance alignment. With consumption models, IT costs can be better aligned with business success. When usage is high, costs increase and in downturns you’ll get a break. A consumption model allows software pricing to mirror utilities like water and electricity.
• Consumption models enable AI and genAI adoption. As AI usage varies significantly, consumption models enable dynamic scaling rather than committing to rigid, high-cost contracts that would restrict usage. Also see: BT150 zeitgeist: AI, efficiency, vendor angst and finding the right IT structure | AI agents bring consumption models to SaaS: Goldilocks or headache?

Challenges of consumption-based models

• Unpredictable budgets. Many enterprises struggle to predict costs, leading to surprise bills. Unpredictable costs were common in the early days of cloud computing adoption. Today, there are far more controls available. CIOs are likely to initially resist consumption pricing due to budgeting norms.
• Unpleasant conversations. CFOs favor fixed pricing to ensure budget certainty. In the early going of AI agent adoption, enterprises may over-budget for consumption, leading to "use it or lose it" spending behaviors. How leaders need to think about AI, genAI | Enterprise software 2025: Three big shifts to watch
• Governance and control issues. Consumption models requires strong cost tracking and governance to prevent runaway expenses. These controls will be even more critical with SaaS vendors because they lack the cost management tools that are common with cloud hyperscalers such as AWS, Microsoft Azure and Google Cloud
• Behavioral and cultural impact on users. One CxO noted that a paradox with consumption models may be that employees avoid using AI due to cost concerns. This defeats the purpose of AI and creates inefficiencies as well as shadow IT. In addition, encouraging consumption may clash with cost-control strategies within enterprises.
• Pricing confusion. GenAI and agentic AI with consumption models may introduce new costs that are difficult to quantify. Vendors are going to shift from seat-based pricing to AI-driven consumption, but customers lack the reference points to evaluate costs. There was healthy debate among CxOs about the likelihood of a cost-plus model (base cost and margin) because it torpedoes traditional software margins. Agentic AI: Three themes to watch for 2025 | Agentic AI without process optimization, orchestration will flop
• Justifying AI returns on investment as well as total cost of ownership. CxOs said enterprises will push to justify returns and it’s unclear whether vendors or customers have the maturity to model returns.

What’s next?

• Standardization of consumption models across SaaS vendors. There is no universal consumption pricing framework that exists and enterprises will struggle to evaluate AI and cloud service costs.
• ROI-based pricing. Vendors are shifting toward outcome-based pricing, forcing companies to justify AI investments.
• CFOs and CIOs need to align. Finance teams need better forecasting tools to integrate consumption models into enterprise budgets.
• Market pushback. Excessive consumption-based pricing may face customer resistance, especially for AI tools without clear ROI.

More from the BT150 calls:

• 2024 in review: What we learned from our BT150 CxOs
• BT150 zeitgeist: AI agent questions, SaaS ate the opex and job woes
• BT150 Zeitgeist: GenAI projects and culture, performance management
• BT150 zeitgeist: Dear SaaS vendors: Your customers are pissed
• BT15O CXO zeitgeist: Vendor procurement, cool projects and margin compression
• BT150 CXO zeitgeist: Data lakehouses, large models vs. small, genAI hype vs. reality
• BT150 CXO zeitgeist: Low marks for SAP RISE, process automation, change management, AI risk
• BT150 CXO zeitgeist: AI trust, AI pilots to projects, VMware angst, projects ahead
• BT150 nominations | 2024-2025 class

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Broadcom has made VMware more profitable and has kept large customers in the fold, but the next wave of competitors, notably HPE and Platform9, is ramping up efforts to migrate them to a new virtualization platform.

To date, Nutanix has been the largest beneficiary of the angst from the VMware customer base. But HPE and Platform9 are ramping efforts and seeing gains.

• Broadcom CEO Tan takes VMware victory lap: Will he go shopping again?
• Rivals up pressure on VMware for enterprise migrations
• Nutanix lands larger deals in Q4, ups outlook, plays long game vs. VMware
• Broadcom CEO Hock Tan aims to woo VMware customers with private cloud, simplification pitch
• Nutanix product additions, partnerships designed to capitalize on VMware customer angst
• Nutanix winning deals vs. VMware, but Broadcom punching back with pricing

HPE outlined its virtualization plans at Discover 2024 and now is leveraging its large channel base to poach VMware customers. In a blog post, Gilles Thiebaut, SVP, Worldwide Hybrid Cloud Sales, said HPE will offer HPE VM Essential Software as standalone via the channel globally.

Customers will get the option to use HPE VMware Essential Software standalone or as part of its broader Morpheus stack. The subtext here is that HPE is leveraging its partner network as Broadcom largely cut out the channel. For good measure, HPE said VM Essentials is now supported by its latest HPE ProLiant Compute Gen12 servers.

HPE didn't exactly hide the target market. The blog post noted:

"HPE VM Essentials enables customers to manage VMs deployed across both existing VMware hypervisors and the HPE VM Essentials hypervisor (KVM-based). This approach allows our channel partners to guide customers toward a more open and flexible virtualization future."

The HPE news landed just a few days after Platform9 noted that it is migrating thousands of VMware virtual machines to Platform9's private cloud offering via its vJailbreak open source products. The money quote from the press release (literally) is this:

"Industry analysts estimate large-scale VMware migrations will take 18-48 months to complete, with costs ranging from $300 to $3,000 per VM. With Platform9, migrations can happen in weeks to months and at one-tenth of the cost."

The ability to lift and shift from VMware to Platform9 isn't all that surprising given leadership has a lot of VMware experience. Platform9 Co-founder and VP of Product Madhura Maskasky was behind VMware's vSphere product suite. Chief Growth Officer Sirish Raghuram is also a VMware alum.

I caught up with Platform9's Maskasky for a briefing along with Constellation Research analyst Holger Mueller. What we can say is that Platform9 is at an inflection point with VMWare customers. The company's Private Cloud Director can match VMware features and enable an easy migration path.

Platform9's secret sauce is that it can work with any storage provider including VMware's Tintri and that works well for virtual machine migrations. Platform9's plan is to match VMware vSphere features line by line.

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Hershey has to navigate inflation, supply chain disruptions, consumer tastes and GLP-1 obesity drugs and their impact on demand. But at least the company has reached the finish line moving to SAP S/4HANA and one instance.

The Hershey journey is worth noting since it's just one example of how SAP's large enterprise customer base is migrating. Yes, SAP launched a program that can give companies more time, but the migration to cloud ERP instances is going to happen.

Hershey is using SAP S/4HANA, SAP Business Technology Platform (BTP), SAP Analytics Cloud and SAP Datasphere.

• SAP launches Business Data Cloud, partnership with Databricks: Here's what it means
• SAP launches SAP ERP, private edition, transition option: What you need to know

Hershey's latest SAP upgrade is also notable since it has gone well relative to the company's history. In the 1990s, the Hershey SAP implementation was a disaster, hurt financial results and wound up being a business school case study on the importance of change management.

We'll let Hershey CFO Steve Voskuil highlight how that SAP finish line feels. Let's just finishing an ERP implementation is sweet (or maybe suite). Speaking at an investor conference, Voskuil said: "As we look forward, we can look at what we did last year and we talked about ERP. No one's happier to have the ERP program behind us than me and that's a big one for us."

Voskuil also said Hershey is seeing benefits from the SAP upgrade. "Over 95% of our global business is on one instance of that ERP platform, and there are more efficiencies to be had in the go-to-market space," he said. "It's also allowed us to accelerate innovation and the focus this year on bigger, bolder, more impactful innovation."

There's also a financial tailwind now that Hershey won't have to spend on the ERP implementation and the consultants and integrators that tag along. Here's the breakdown of Hershey's annual capital expenditures via SEC filings including capitalized software and the ERP implementation.

• 2024 capex: $605.9 million.
• 2023 capex: $771.1 million.
• 2022 capex: $519.5 million.
• 2021 capex: $495.9 million.
• 2020 capex: $441.6 million.

In 2023, Hershey explained that its capex increased due to "continued investments in digital infrastructure including the build and upgrade of the new ERP system across the enterprise." The 2024 capex figures fell due to the completion of the SAP project. Based on Hershey's SEC filings, the company has been spending in earnest on the SAP ERP implementation since 2020.

Now that the SAP implementation is complete, here's a look at Hershey's digital plans on tap.

Planogram wins. Michelle Buck, CEO of Hershey's, said the company is putting science behind its shelves. "We're implementing our gold standard planogram in at least 40% of C-stores this year. That planogram uses a shopper decision tree along with some other proprietary pieces of information to get to an optimized shelf set that can drive results at retail," said Buck. "What we've seen with that shelf is where we have implemented that we see the category doing two times the growth versus where we have not implemented it."

Integrated demand planning. Voskuil said Hershey is planning to tie demand signals to supply chain and fulfillment processes. "In this case, we're using a product from Kinaxis, a best-in-class tool that uses a combination of machine language, data and some AI to make real time adjustments to the way that manufacturing and supply chain responds to demand," he said.

Data, analytics and AI-driven optimization. Hershey is looking to blend data on shopping and consumer behaviors, promotion feedback and effectiveness and AI to optimize the company's promotional spend via an in-house system. Hershey has deployed this system in about 40% of its portfolio. "We're going to continue to expand a proprietary solution that we have built with an outside partner," said Voskuil.

The integrated demand planning and promotional optimization efforts account for 15% to 20% of Hershey's transformation savings today, said Voskuil.

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Five9 is betting that the contextual data layer above AI models will be just as critical to enterprises, and potentially be the difference in return on investment.

Executives at the customer experience and communications as a service company, which reported better-than-expected fourth quarter results, fielded the typical questions about how agentic AI would impact its business. Five9 has key partnerships with the likes of Salesforce and ServiceNow. Why wouldn't the AI spoils go to Five9's much larger partners?

Five9 CEO Mark Burkland said contextual data is critical for future-proofing AI and driving returns. Here's what he said:

"Brands are learning that if they want to offer AI-driven self-service, AI agents need to be accurate and personalized. CCaaS platforms like Five9 are uniquely positioned to deliver these accurate and personalized AI agents. This is our moat and this is why we believe we will continue to win in AI for customer experience."

He said AI agents need four ingredients to deliver.

• Access to large language models, which are being commoditized.
• Contextual data about the consumer and the brand.
• Historical data on consumer interactions with the brand.
• Channels to connect consumers via self-service and an escalation path to a human.

Burkland said Five9 has taken an LLM agnostic approach to focus on the AI application layer. He said:

"We believe Five9's approach allows our customers to future-proof their AI decision. And when it comes to our competitive moat, it's clear that the layer above these engines is what matters. And that layer includes our AI applications that require business logic, that require workflows, that require important data and integrations to back-end systems. The second ingredient, contextual data is what is fed into the LLM in real time and provides true context around an interaction. This includes customer-specific details as well as brand-specific knowledge, both of which are often distributed across many back-end systems."

Burkland added that Five9 typically connects to more than 20 back-end systems in a deployment to harvest historical data as well as current customer experiences.

Five9 has partnered with Salesforce, ServiceNow, Microsoft, Verint and Google on agentic AI to combine humans and digital agents. The game plan for Five9 is to meld its CX suite with its partner platforms--CRM for Salesforce, Now Platform for ServiceNow and Verint's bot army.

Will those larger partners cut Five9 out over time? Burkland is betting they won't. He said:

"It's about contextual data. AI is only as good as the data it has access to. And our platform is a control point for a lot of that contextual data. Not just information about the customer and about the brand but also about recent interactions between that consumer and the brand.

The question at hand is whose AI is the customer going to choose. It's going to be a mix. We're very convinced of that. And the good news for us is, even if in each use case, for a given business unit that organization wants to use Salesforce for their AI. The good news is they still need access for that AI to do its job, they need access to all the contextual data in our platform."

Burkland added that big partners are helping Five9 land larger deals across verticals.

• Five9 acquires Acqueon, cuts Q3 outlook
• ServiceNow launches AI governance tools, contract management, Five9 partnership
• Unlocking the Power of AI in Customer Experience: Lessons from the Five9 CX Summit

The results

Five9 projected 2025 revenue of $1.14 billion with non-GAAP earnings of $2.58 a share to $2.62 a share. First quarter revenue will be between $271.5 million to $272.5 million with non-GAAP earnings of 47 cents a share to 49 cents a share.

For the fourth quarter, Five9 reported net income of $11.6 million, or 13 cents a share, on revenue of $278.7 million, up 17% from a year ago. Non-GAAP earnings in the fourth quarter were 79 cents a share, 9 cents better than estimates.

Five9 said its 2024 revenue topped $1 billion for the first time. The company reported a 2024 net loss of $12.8 million, or 17 cents a share, on revenue of $1.04 billion, up 14% from a year ago.

The company said separately that CFO Barry Zwarenstein is retiring and Bryan Lee will become interim CFO.

Constellation Research's take

Constellation Research analyst Liz Miller said Five9's AI strategy is focused. Here's her take:

"The real Five9 story here is the AI strategy and continued march upmarket with continued success with enterprise customers working to resolve data, workflow and engagement orchestration across a broad range of communications channels. Five9 has been laser focused on where and how AI can make an impact on all aspects of CX delivery through customer service and contact center environments, including how to leverage AI to enhance human workforces while scaling capacity with a new agentic workforce.

The Five9 Genius AI platform has been evolving quickly and arguably ahead of the market thanks to leaders like Jonathan Rosenberg refusing to settle for CCaaS AI to be limited to an intelligent bot or assistant. I’d also point to additions to their leadership team like bringing on a new Chief Product Officer, Ajay Awatramani, as a sign that Five9 intends to stay ahead of the market curve.

Five9 will have a big decision to make in 2025. Will it follow the service market and double down on trying to run the board on engagement tools and battle other commoditized solutions across marketing and sales platforms over who gets to "own" email campaigns and contact management? Or will Five9 really break out and bring their unique service-driven AI and data rich superpowers to other critical operations spaces that could use a shake up and a round of innovation? The reality here is that Five9 has done a terrific job securing the right partners and developed a robust marketplace and ecosystem that will allow it to shift and pivot to meet the needs of adjacent markets. The trick is going to be not to pick the limited spaces and places where the market is already oversaturated with options."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Walmart continues to bet on leveraging AI, optimizing its supply chain and developing a host of related businesses that'll grow operating profits.

The retail giant reported fourth quarter earnings of 65 cents a share on revenue of $180.6 billion, up 4.1%. For Walmart, it's the first time its quarterly sales were below Amazon sales. For fiscal 2025, Walmart reported earnings of $2.41 a share on revenue of $681 billion.

Walmart projected fiscal 2026 net sales growth of 3% to 4% with operating income growing from 3.5% to 5.5%. Capital expenditure will be between 3% and 3.5% of sales as Walmart invests in technology to optimize its supply chain, remodel stores and open new ones.

Here's a look at what Walmart CEO Doug McMillon and CFO John David Rainey had to say on the earnings conference call.

Walmart has introduced Wally, a new AI agent for the company's merchants. "Wally is learning to help us get to the root cause of issues related to things like out of stocks or overstocks with more accuracy and speed," said McMillon.

Developers at Walmart are leveraging AI for coding and deployments and the company saved 4 million developers hours last year. This year, all of the AI coding tools will be available to all developers in North America and India.

• Sam's Club CEO Nicholas on AI, frictionless commerce, focus on members
• Walmart's big tech, AI bets paying off going into 2024 holiday shopping

Walmart's complementary businesses will grow operating profits. The company's global advertising business delivered annual sales of $4.4 billion, up 27% from a year ago. Walmart US Marketplace revenue was up 37% and 45% of orders were filled by Walmart Fulfillment Services. And global membership income was up 21% to $3.8 billion for fiscal 2025. These businesses will grow operating profits faster than sales.

Walmart data is becoming a business. Rainey said: "Within data analytics and insights, Walmart Data Ventures continues to grow rapidly with net sales up double digits. Our client base nearly doubled over the past year, and we're excited about continuing to broaden our reach to new markets with the launch of the platform in Canada."

Walmart's business is 18% e-commerce today and the percentage will increase in the future. Since the selling, general and administrative expenses (SG&A) related to an e-commerce transaction are higher than physical retail, Walmart is betting on automation. Rainey said:

"As you think about our cost structure going forward, one of the big drivers is going to be the improvements that we see in supply chain automation. We're already seeing that. We're encouraged by some of the early productivity metrics. But still today, less than half of the stores in the U.S. are served fully by automation. And so, there's a lot of benefit still to come here as we automate our supply chain as we continue to automate our stores that will drive improvements in SG&A."

Walmart will highlight its investments in supply chain automation in April at its investor conference, said McMillon.

The retailer is honing its delivery game with same-day pharmacy delivery and various shipping offers at Walmart and Sam's Club. McMillon said Walmart is taking the lessons from markets such as China and applying them elsewhere.

Walmart is also trying to lower its cost to serve. Rainey said drivers are aiming to deliver to more houses on a street, add volume and create more dense networks.

Walmart's return on investment improved 50 basis points to 15.5%, a level that was last achieved in 2016.

The company is prepped for a potential volatile economy and customers are looking for value. Rainey said: "Our outlook assumes a relatively stable macroeconomic environment but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions. As a result, we've taken a similar approach to our initial guidance view for the year as we have in the past couple of years, balancing known risk with what we can control. We remain confident that Walmart is well positioned to navigate as it has over the last several years."

Tariffs. Like most enterprises, part of the potential supply chain volatility revolves around tariffs. McMillon said: "tariffs are something we've managed for many years, we'll just continue to manage that. We've got a great team. We know how to do that. We can't predict what will happen in the future, but we can manage it really well. And we're wired to try and save people money. So that will be our ultimate goal."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Alibaba's cloud computing business delivered 13% revenue growth and the company said it is "committed to advancing multi-modal AI technology and expanding our opensource initiatives."

While DeepSeek models have garnered the attention, Alibaba has continued to advance its Qwen large language models (LLMs). For the enterprise, Qwen may be more scalable and a better option than something with a bunch of unknowns like DeepSeek.

DeepSeek's real legacy: Shifting the AI conversation to returns, value, edge

Alibaba's Cloud Intelligence Group reported fiscal third quarter revenue of $4.35 billion, up 13% from a year ago. Excluding Alibaba subsidiaries, Alibaba's cloud unit delivered growth of 11% from a year ago. Adjusted EBITA for the third quarter was $430 million.

The surge in demand "mainly driven by the double-digit revenue growth of public cloud products including AI-related products," said Alibaba. The company also noted that AI-related product revenue has maintained triple-digit revenue growth for six consecutive quarters and will continue to invest in AI infrastructure.

Alibaba noted:

“We remain committed to advancing multi-modal AI technology and expanding our open source initiatives. In January 2025, we open-sourced Qwen2.5-VL, our next-generation multi-modal model, and launched our flagship MoE-based model Qwen2.5-Max. Both models deliver globally leading results across recognized benchmarks and are available to users and enterprises through Qwen Chat and our Bailian platform. Since August 2023, we have open-sourced various large models under the Qwen family. As of January 31, 2025, more than 90,000 derivative models had been developed on Hugging Face based on the Qwen family of models, making it one of the largest AI model families worldwide."

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

For Fiverr, artificial intelligence isn't about replacing creative labor. The plan is to meld digital and human labor in a way that's not zero sum.

Fiverr, a marketplace for freelancers, launched Fiverr Go, an AI platform that enables creators to tune models based on their portfolio of work. The idea behind Fiverr Go is to enable creators to use AI to refine workflows and customer experience, and deliver mockups and first drafts based on their style.

The Fiverr take on AI is notable because it is less zero-sum than what's being pitched by most of the tech industry. Let's face it. Technology giants are increasingly talking about digital labor as replacing humans. And if you follow the money--actually it's more like layoffs--human worker concerns about AI are justified.

This AI digital labor game puts a company like Fiverr in a pickle given generative AI can replace freelancers--and the need for its platform. Fiverr CEO Micha Kaufman positioned Fiverr Go this way on the company's fourth quarter earnings conference call:

"Different from other AI platforms that often exploit human creativity without proper attribution or compensation, Fiverr Go is uniquely designed to reshape this power dynamic by giving creators full control over their creative process and rights. It allows freelancers to become a one-person production house, making more money while focusing on the things that matter creating."

With Fiverr Go, freelancers can create personalized AI models without collecting datasets or understanding the engineering. Fiverr's dataset of 6.5 billion interactions and 150 million transactions on its marketplace round out the training.

Kaufman said AI results are generic and hard to edit and many customers are using Fiverr freelancers to refine images and results. "Every delivery on Fiverr Go is backed by the full faith of the creator behind it, with an included revision as the freelancer defines. This means that the quality and service you get from Fiverr Go is no different from a direct order from the freelancers themselves," said Kaufman.

Fiverr Go's Personalized AI Assistant can communicate with potential clients and handle routine tasks. The Fiverr Go AI Creation Model can create mockups and first drafts based on the freelancer's work. Kaufman said the company also launched a Freelancer Equity Program that will give shares of Fiverr to top-performing freelancers.

The bet is that Fiverr Go, which launched with 60 categories, can convert sales faster for freelancers. The personal AI assistant "is essentially encapsulating the entire knowledge of the freelancer and basing itself on it being able to address any possible question and bring it to conversion," said Kaufman.

In addition, the AI creation model "allows customers to get the confidence that this is the freelancer, this is the style that they're looking for" without the back-and-forth of delivering samples and essentially working for free, said Kaufman.

The Fiverr Go experiment is one worth watching.

Fiverr's outlook

Fiverr said it is expecting to grow revenue at double-digit rates in 2025 with sales of $422 million to $438 million, up 8% to 12%. For the first quarter, Fiverr projected revenue of $103.5 million to $108.5 million.

Kaufman said Fiverr has services revenue momentum going into the first quarter.

For the fourth quarter, Fiverr reported net income of $12.8 million, or 33 cents a share, on revenue of $103.7 million, up 13.3% from a year ago. Marketplace revenue was down 4% from a year ago with 3.6 million active buyers at the end of 2024, down from 4 million a year ago.

For 2024, Fiverr reported net income of $18.2 million, or 48 cents a share, on revenue of $391.5 million, up 8.3% from 2023.

More on digital labor:

• Anthropic's Economic Index highlights AI augmenting mid-to-high salary jobs
• Workday aims to be system of record for AI agents, digital labor
• Agentic AI without process optimization, orchestration will flop
• CxOs upbeat on economy, plan to invest heavily on genAI, AI agents
• Agentic AI: Three themes to watch for 2025

Larry Dignan

Editor in Chief of Constellation Insights Constellation Research

About Larry Dignan: Dignan was most recently Celonis Media’s Editor-in-Chief, where he sat at the intersection of media and marketing. He is the former Editor-in-Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in CNET, Knowledge@Wharton, Wall Street Week, Interactive Week, The New York Times, and Financial Planning. He is also an Adjunct Professor at Temple University and a member of the Advisory Board for The Fox Business School's Institute of Business and Information Technology.&nbsp; <br>Constellation Insights does the following: Cover the buy side and sell side of enterprise tech with news, analysis, profiles, interviews, and event coverage of vendors, as well as Constellation Research's community and… Read more

Box launched new AI features for Enterprise Advanced customers and said it will add consumption-based pricing via Box AI Units.

The moves highlight how SaaS vendors are increasingly moving toward hybrid seat-subscription-consumption models with generative and agentic AI. This consumption model also lands as large language models (LLMs) are commoditizing at a rapid clip.

• AI agents bring consumption models to SaaS: Goldilocks or headache?
• DeepSeek: What CxOs and enterprises need to know
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Under Box's consumption model, the company will introduce Box AI Units, a metric that tracks and manages AI API usage. The transparency can be used to scale and optimized without unpredictable costs. Also: Box acquires Alphamoon Technology, aims to integrate LLMs, OCR into Box AI

In addition, Box said its customers on Business, Business Plus and Enterprise plans will have unlimited AI querying for docs and images. Customers on Individual, Personal Pro and Starter plans will have Box AI capabilities in the months ahead.

As for the features, Box launched the following:

• Box AI Extract Agents, which automate metadata creation and provide insights from documents and images. Extract agents are built into Box experiences natively.
• Custom Agents, which can be created via Box AI Studio API. Box AI Studio launched last month.
• Multi-Doc Querying, which queries multiple documents at once to help with research, legal and business analysis.
• Box Forms and Box Doc Gen. Box Forms gives customers the ability to collect information and start business processes via web and mobile forms. Once the data is collected, workflows can be automated for onboarding, service requests and claims processing. Box Doc Gen gives customers the ability to generate unlimited custom documents natively in Box, Salesforce and via API.

Box's AI strategy revolves around embedding AI throughout its platform and multiple layers including metadata, user experiences and workflows.