SaaS applications are being architecturally disrupted because the agent tier is replacing the old business-logic tier that used to be tightly coupled with data and UI, and low-ARPU/high-usage products like Microsoft 365 are best positioned for this shift.

53:49you doing to make sure that software is not disrupted but is instead superpowered by AI? Yeah, I think that's a Yeah, that's right. So, the last time we talked about this, my my point really there was the architecture of SAS applications is changing because this agent tier is replacing the old business logic tier. And so, because if you think about it, the way we built SAS applications in the past was you had the

54:13data, the logic tier, and the UI all tightly coupled. Uh, and AI quite frankly doesn't respect that coupling because it requires you to be able to decouple. And yet the context engineering is going to be very important. I mean take you know something like uh office 365. One of the things I love about uh our Microsoft 365 offering is it's low arpoo uh high usage right I mean if you think

54:39about it right outlook or teams or sharepoint you pick word or excel like people are using it all the time creating lots and lots of data which is going into the graph and our arpoo is low. So that's sort of what gives me real confidence that this AI tier with I can meet it by exposing all my data. In fact, one of the fascinating things that's happened uh Brad with both GitHub

55:04and Microsoft 365 is thanks to AI, we are seeing alltime highs in terms of data that's going into the graph or the repo. >> I mean think about it. The more code that gets generated, whether it is codeex or cloud or wherever, where is it going? GitHub, more PowerPoints that get created, Excel models that get created, all these artifacts and chat conversations. Chat conversations are new docs, they're all going in to the

55:31graph and and all that is needed again >> for grounding. Uh so that's what you know you turn it into a forward index into an embedding and basically that semantics is what you really go ground any agent request. And so I think the next generation of SAS applications will have to sort of if you are high RPO low usage then you have a little bit of a

55:55problem. But if you are we are the exact opposite. we are low RPO, high usage and I think that anyone who can structure that and then use this AI as in fact an accelerant because I mean like if you look at the M365 copilot price I mean it's higher than any other thing that we sell and yet it's getting deployed faster and with more usage and so I feel