The key to unlocking new revenue sources for software producers

The software industry is on the cusp of a revolution thanks to artificial intelligence (AI). While the potential of artificial intelligence is widely recognized, its impact on software business models remains largely untapped. Traditionally, software has focused on enabling existing work, but AI-enabled software can deliver results by changing the way companies operate.

The dominant SaaS business model is currently per-seat, which limits growth potential. However, AI-based software can deliver specific business outcomes independent of employee utilization. This change opens up new markets, allowing the software to reach small businesses, under-resourced teams, and new geographic locations.

The consequences are significant. Artificial intelligence will expand Total Addressable Markets (TAM) across categories, enabling niche categories to grow and large categories to continue to grow. New monetization variables will emerge as companies pay for results, not just software.

The per-seat model is the cornerstone of SaaS business models, but it has limitations. The total number of positions is limited by the number of suitable employees in the organization, limiting the potential for growth. For example, legal software is limited by the size of the legal team, while audit software is limited by the size of the audit team. This means that customers must have both a demand for the solution and an existing workforce to become users of the software.

As a result, many SaaS products are targeted at horizontal productivity categories to maximize potential users. However, AI-based software can deliver specific business outcomes independent of employee utilization. This transformation opens up new markets, enabling the software to reach small businesses, under-resourced teams, and new geographies.

This shift is reminiscent of innovations in other marketplaces such as Uber and Ola, which have increased the size of the taxi market by making the offering more accessible. Likewise, AI will unlock new monetization variables as companies will pay for results, not just software.

The impact of AI on software business models is still in its early stages, but it is clear that removing existing limitations will lead to significant developments in TAM. As the industry navigates this uncharted territory, new business models and monetization strategies will emerge, unlocking unprecedented growth potential for software companies.

The transformative power of AI will transform the software industry, enabling software to deliver results and expand market size. The future of software is exciting and it’s time to embrace the AI ​​transformation.

To summarize, artificial intelligence is the key to unlocking new revenue sources for software companies. By delivering specific business outcomes, AI-powered software can expand the total number of addressable markets, unlock new monetization variables, and reshape the software industry. As the industry continues to evolve, software companies that harness the transformative power of AI will be at the forefront of this revolution, unlocking unprecedented growth potential.

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