Key Sections
Erik Bissonnette, Senior Managing Director and Co-Head of Technology Investing at Blue Owl Capital, joins Alan Cline, Partner and Head of North America at Hg, to discuss how artificial intelligence is reshaping the enterprise software landscape.
Drawing on their experience leading two of the world's premier technology investing platforms, they explore how AI is influencing software defensibility, value creation, and investment decision-making.
Key takeaways
AI is reshaping enterprise software: AI is accelerating change across the enterprise software landscape. Platforms that primarily serve as lightweight interfaces, or that act as thin wrappers that organize data without delivering deeper workflow value, appear more vulnerable to AI disruption. By contrast, software that is deeply embedded in complex, mission-critical workflows may prove more resilient and, in many cases, may be strengthened by AI.
Certain sub-sectors may be better positioned than others: Enterprise software that supports regulated, high-stakes functions, such as finance, tax, accounting, healthcare, and infrastructure, is likely to retain its hold in an AI-driven world. These areas carry high costs of failure, strict compliance requirements, and large financial or reputational risks, reinforcing the value of established software platforms with decades of proprietary data and domain expertise.
The most defensible software providers share similar moats: According to Hg’s framework, the most defensible software providers share four key characteristics: deep proprietary data, strong domain expertise, deterministic outcomes, and embedded distribution through trusted customer relationships. In environments where accuracy, security, and reliability are critical, these attributes can create powerful switching costs, which may anchor customers to trusted third-party software providers.
Opportunities for incumbents to create value from AI: Established software companies may have meaningful advantages in capturing value from AI, both by driving cost efficiencies and by unlocking incremental revenue growth. With deep proprietary data and workflow context, incumbents have a strong foundation to embed agentic capabilities that can automate tasks and expand the scope of their offerings—advantages that are difficult for new entrants to replicate.
Revenue models and performance metrics are evolving: As AI begins to augment and enhance how work is performed, pricing models may evolve from traditional per-seat subscription models toward hybrid structures that incorporate usage- or outcome-based components. If this shift materializes, it could represent an expansion opportunity for incumbents. Traditional software KPIs, such as net revenue retention, may not accurately capture AI-driven value—underscoring the need for new performance metrics to assess how effectively AI is delivering outcomes for customers.
Featured speakers
Erik Bissonnette
Erik Bissonnette is a Senior Managing Director at Blue Owl and member of the Direct Lending Investment Team. Erik is also Co-Head of Technology Investing and a member of the Technology Lending Investment Committee for Blue Owl Technology Credit Advisors. In his role, he oversees strategies with over $25 billion in AUM, focused on making debt and equity investments in established enterprise software and technology companies.
Alan Cline
Alan Cline is a Partner at Hg and leads the firm’s North American investment strategy, focusing on software and services businesses. In this capacity and as a member of Hg’s Board of Directors he brings over two decades of private equity and startup experience. His focus at Hg is helping mentor high performing private equity leaders to find growth and joy in all aspects of their lives.
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