SaaS Is Dead. Long Live SaaS.

There’s a tectonic shift underway.

Enterprise AI spending tripled to $37 billion in a single year. That’s a 3X increase in 12 months. Where does this money come from? It is carved out of existing software budgets, especially traditional SaaS. And therein lies the tension.

For twenty years, SaaS was the greatest business model in technology. Recurring revenue. Per-seat pricing that scaled beautifully with headcount. It turned startups into empires and minted more millionaires than any other sector in tech.

AI changes the game. But not in the way most people think.

The surface narrative goes like this: SaaS is dead because anyone can vibe-code an equivalent in a weekend. And there may be some truth to that. Most developers now use AI tools daily. Build costs have collapsed. But the real threat is NOT the weekend side project. It is serious teams assembling on top of powerful AI platforms. And even then, the same question stands: will you trust a vide-coded stack with your customer data, your compliance obligations, your reputation?

SaaS isn’t dying as a delivery model. What’s dying is thin, feature-led, per-seat SaaS that doesn’t own any real data or workflow.

The deeper reality is something I’ve been saying for years. The era of sporadic innovation is over. As Perplexity AI CEO Aravind Srinivas put it, you have to out-innovate your competition continuously. Not once a year at a product launch. Every single day. That changes what it means to be a software company.

So where’s the durable differentiator? Exactly where it’s always been: in the experience. Data quality, latency, reliability, integrations, governance, and yes, the interface you live in every day. HubSpot Cofounder Dharmesh Shah declared at INBOUND 2025 that this is “the decade of AI agents.” His agent.ai platform already has millions of users. But notice what he’s building. Not a throwaway tool. A trusted platform.

And the SaaS giants are not sitting around waiting to be disrupted. Look at what Salesforce is doing with Agentforce. AI agents resolving 85% of support inquiries internally. Benioff says AI handles 30 to 50% of the company’s work today. They’re repositioning the product around AI agents as a first-class way to work in Salesforce. When asked whether DIY AI threatens his business, Benioff was direct: “It’s always been true that companies can DIY, but only certain companies can.”

Meanwhile, vertical startups in healthcare, finance, and legal are building something you absolutely cannot replicate over a weekend: domain expertise, compliance at scale, accumulated edge cases, regulatory trust. And an entirely new category around AI governance and safety is creating buying centers that didn’t exist two years ago.

This is not the end of SaaS. It’s an evolution. An expansion. The value is migrating not disappearing. What’s changing is what earns the right to capture that value. The companies that own the data, deliver the experience, and earn the trust are going to build something far bigger than anything we saw in the first SaaS era.

The opportunity here is extraordinary. But the clock is exponential.

Until next time,

Ram

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Ram Srinivasan MIT Alum | Author, The Conscious Machine | Global Future of Work and AI Adoption Leader published in Business Insider, Fortune, Harvard Business Review, MIT Executive Viewpoints and more.

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Disclaimer:

Ram Srinivasan currently serves as an Innovation Strategist and Transformation Leader, authoring groundbreaking works including "The Conscious Machine" and the upcoming "The Exponential Human."

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