SAP is pushing back against growing concerns that artificial intelligence could make traditional software companies irrelevant. The German enterprise software giant has seen its stock fall by more than 20% over the past year amid a broader sell off in software stocks, often referred to as the “SaaSpocalypse.” Jan Gilg, SAP’s global president of customer success and Americas, said he believes the market reaction has been excessive. Speaking to Business Insider, Gilg argued that the industry is going through a major transition rather than facing an end to the traditional software business. Gilg’s message to the industry was optimistic.

He said the recent shift in investor sentiment could eventually reverse, adding that SAP expects to be among the companies that emerge stronger from the disruption. The comments come as AI coding tools and other generative AI products raise questions about whether businesses will continue paying for large software platforms when increasingly capable AI systems can create applications and automate tasks. Rather than treating AI purely as a threat, SAP is incorporating the technology into its own products and operations. The company is investing in business AI and expanding its data capabilities while exploring new ways to charge customers for AI-powered services. SAP is also moving towards more consumption based pricing for some AI capabilities, allowing costs to be linked more closely to actual usage and business outcomes.

The company has also been strengthening its position in data and AI through investments and acquisitions, while developing technology that could put it into greater competition with newer AI-focused companies. SAP’s confidence comes as parts of the software sector have begun recovering from the earlier sell off. SAP shares have gained significantly since the company reported strong results in July, while other software companies have also benefited from stronger than expected AI related demand. The debate is unlikely to disappear anytime soon. AI is making software development faster and potentially cheaper, putting pressure on companies whose products can be easily replicated or replaced. But SAP’s argument is that enterprise software serves functions that go far beyond writing code. For businesses handling finance, supply chains, employees and other mission critical operations, reliability, security and governance remain important.