In this episode of The Margin, MGI Research Managing Director Andrew Dailey speaks with Todd McElhatton, Chief Financial and Operating Officer at Zuora, to examine how artificial intelligence is reshaping software business models, enterprise finance, and the economics of recurring revenue. While concerns about AI have largely centered on whether it will disrupt SaaS, McElhatton argues that the more immediate challenge for finance leaders is balancing innovation with precision. As organizations introduce AI-powered products, usage-based pricing, and increasingly complex monetization models, finance teams must ensure that systems responsible for billing, revenue recognition, collections, and financial reporting remain accurate, auditable, and trusted. Drawing on executive leadership experience at Zuora, SAP, Oracle, and VMware, McElhatton explains why systems of record require deterministic outcomes rather than probabilistic AI, how enterprise software companies should evaluate monetization strategies for AI capabilities, and where finance organizations can realistically achieve productivity gains without compromising governance. The discussion also explores Zuora's transition from public to private ownership, how longer investment horizons are influencing strategic decision-making, and why operational discipline, customer value, and measurable business outcomes will ultimately determine which software companies benefit most from the AI transition. Key Analytical Takeaways AI and the Future of SaaS Economics: Why usage-based pricing and AI-enabled products are creating new monetization opportunities without necessarily replacing traditional subscription models, and how software vendors should evaluate pricing based on measurable customer value rather than AI alone.Deterministic Finance in a Probabilistic AI World: Why mission-critical systems of record, including billing, revenue recognition, and financial reporting, require precision and auditability that generative AI cannot independently deliver, making human oversight an essential component of enterprise finance.Operational AI Beyond Product Features: How finance organizations can use AI to accelerate implementations, improve forecasting, automate reconciliations, enhance customer onboarding, and increase engineering productivity while maintaining financial controls and governance.Private Ownership and Long-Term Execution: How Zuora's transition from public to private ownership has enabled greater strategic flexibility, allowing management to prioritize multi-year customer outcomes and operational investments rather than quarterly market expectations.Funding AI Through Productivity: Why enterprise software companies should finance AI innovation by systematically reinvesting productivity gains across engineering, customer operations, professional services, and go-to-market functions instead of treating AI as a standalone investment initiative.Featured Experts Andrew Dailey | Managing Director, MGI Research Andrew Dailey is a co-founder and managing partner of MGI Research. Andrew brings his 25+ years of diversified technology and financial services experience working in the enterprise software market and Fortune 500 firms to his clients. Todd McElhatton | Chief Financial and Operating Officer, Zuora Todd McElhatton is Chief Financial and Operating Officer at Zuora, where he oversees the company's financial strategy, operations, and business transformation initiatives. Previously, he held senior finance leadership positions at SAP, Oracle, and VMware, bringing more than 25 years of experience guiding enterprise software companies through major technology transitions, financial transformation, and operational growth.
