As artificial intelligence rapidly develops, will SaaS fail?

As software becomes increasingly commoditized in the age of artificial intelligence, there is growing speculation about the future of SaaS and enterprise software.

Water cooler conversations in Silicon Valley and beyond are downright blunt: have we reached the end of SaaS and whether companies like Salesforce Inc., Workday Inc., NetSuite Inc., ServiceNow Inc. and many others are at risk?

For the past two decades, we have praised the SaaS business model because it is sustainable and easy to adopt. Pay-per-use creates a lower barrier to entry while offering incremental improvements that minimize risk and ensure enterprises have continuous access to the most advanced features.

Then artificial intelligence came along and in some ways turned the industry on its head. One of the byproducts of its emergence has been the survival of SaaS and all that it brings.

But I would argue that SaaS is not dead. In fact, I would go so far as to suggest that these critical SaaS and enterprise software providers play an even more important role in the technology ecosystem. Still, SaaS companies that just want to embed AI capabilities into their existing software and are willing to charge extra are more vulnerable than they have been in a long time.

Where is SaaS heading?

Of course, SaaS and enterprise software will remain relevant, but not as they once were.

In the future, we will have abstractions that look similar to what we see in OpenAI and other large language models. We will have tools that can use multimodal interfaces to ask and answer questions. To search for information and, as we see with the latest models of reasoning, these tools will be able to help us reason.

The CEO will be able to wake up on Monday morning and the tool will provide him with:

• Proactive dashboard of key indicators.
• An inference engine that provides a series of recommendations for the next best action.
• A language model based on a trust layer that will be able to use data from various logging systems to answer questions in real time.
• Generative AI can abstract the image so you don’t have to open a specific app.

The possibilities are dizzying. Customer data, trends, HR insights and hiring recommendations. Supply chain threats and vulnerabilities. Any number of financial reports. All this at your fingertips and at your request.

The TLDR is that we are entering an era of consolidation and simplification. Most of our systems of record have the potential to become high-value databases that will be leveraged by a consolidated application or abstraction layer that will enable us to generate real-time dashboards and activities. The system will be more predictive in estimating needs and creating the types of visualizations and summaries that are most valuable to employees and business leaders.

Agentic artificial intelligence and what it means

As SaaS evolves in the age of AI, Agent AI will take on high-volume tasks and become more efficient and accurate in terms of deterministic characteristics. All limitations of robotic process automation will begin to disappear with the combination of agents using generative models, neural networks, reinforcement learning and other improvements.

This is an incredibly exciting time AND inflection point.

The end of SaaS and other enterprise software is not yet here, but it will be in the way we buy and use software.

Software giants Microsoft Corp., Salesforce, ServiceNow, Oracle Corp. and others will need to aggressively transform the consumption layer so that companies can extract more value from their software investments and do so in a way that is aligned with the capabilities of the AI ​​generation.

It won’t be easy. Data structure, compliance, security and governance are difficult problems to solve. However, this is an opportunity for the large installed bases of current software leaders to transform and become new and more user-friendly. I really think people will continue to subscribe and pay a recurring fee for a turnkey offering rather than rebuilding or customizing something to make it work for them.

SaaS is not dead; instead, it changes radically.

Case in point: Big business model changes like the one we saw from Salesforce CEO Marc Benioff last month at Dreamforce in San Francisco, where Agentforce debuted, are indicative of where it and other companies are headed.

Those who choose complacency and act slowly face a quick path to irrelevance.