Digital Disruption, Then and Now: Tim DeStefano Weighs in on SaaS and AI
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In a recent Tech Brew feature, “How Software’s Business Model Got Remade–and Might Change Again,” Tim DeStefano, associate research professor at Georgetown University’s McDonough School of Business and senior policy scholar at the Center for Business and Public Policy, offers expert insights on the evolution of enterprise software and the economic impact of digital adoption.
“Cloud computing represents a fundamental shift in the way in which firms access digital technology,” said DeStefano. “This shift has moved the adoption of technology away from an up-front sunk investment to being able to access this technology as a service.”
The article traces the shift from traditional software delivery – think boxed programs and perpetual licenses – to the now-dominant Software as a Service (SaaS) model. This shift, he notes, also democratized access to powerful digital tools.
“Small and young firms that don’t have a lot of human capital and are financially constrained can more easily access these tools,” he added.
DeStefano, who specializes in the economics of digital transformation, studies how these changes could redefine productivity and firm reorganization across space and time. Explore his recent publication, “Cloud Computing and Firm Growth,” in the Review of Economics and Statistics.
The article also explores the next potential evolution in tech business models: generative AI. As SaaS companies increasingly integrate AI into their platforms, new tensions are emerging around whether firms will continue to rely on third-party solutions or develop their own tools in-house.
When it comes to developing AI tools, the cloud plays a critical role, enabling firms to more flexibly and cheaply collect, collate, and process large sums of data, which is critical for training advanced algorithms. This summer, the Center for Business and Public Policy will host a timely discussion exploring the importance of data for AI development. Stay tuned for full event details!