Is it the end of SaaS?
Microsoft CEO Says SaaS is DEAD.
The Software as a Service (SaaS) model has significantly transformed product development by offering streamlined data hosting and infrastructure management. However, organisations increasingly seek to regain control over their data, revealing some limitations of traditional SaaS. While transferring large volumes of data to vendors can be convenient, it often results in losing ownership. Heavy reliance on a specific SaaS provider can create dependency, making it challenging for businesses to transition to alternative solutions without considerable effort and time.
The Bring Your Own Cloud (BYOC) approach addresses this issue by allowing customers to run SaaS applications on their own cloud infrastructure. This model combines the benefits of SaaS with the ownership advantages of on-premises solutions, enabling predictable costs, improved compliance, and customized performance. Successful examples include Meta's Llama and ARM processors, which thrive on user-controlled infrastructure. Additionally, major cloud providers are now offering flexible managed solutions based on open standards.
To enhance the appeal of their SaaS solutions, some larger providers have begun integrating Agentic AI features into their offerings. This shift reflects the growing significance of artificial intelligence in streamlining operations, improving user experiences, and enhancing decision-making processes. Agentic AI refers to systems that autonomously achieve complex goals and manage workflows with minimal human oversight. These systems can make independent decisions, strategise, and adaptively execute multi-step tasks. Gartner predicts that by 2028, nearly 33% of enterprise software applications will incorporate agentic AI, up from less than 1% in 2024, with a compound annual growth rate (CAGR) of 45.8% from 2025 to 2030 due to increased demand for automation and personalized experiences.
Oracle AI Agent Studio
Oracle has launched a new AI Agent Studio for its Fusion Cloud applications, providing a no-code toolkit for creating and managing agents. This addition reflects the growing necessity for major enterprise platforms to integrate AI for relevance in a generative AI-powered market. Key features include agent templates, orchestration, extensibility, and integration with Fusion and third-party systems. While this enhances the functionality of Fusion Applications, analysts suggest it may not entirely qualify as agentic AI, as it primarily focuses on basic task automation.
In contrast, companies like Salesforce and ServiceNow are pursuing more ambitious agentic frameworks. ServiceNow has invested approximately $3 billion in AI startups like Moveworks and Cuein to incorporate their technologies into its platforms. This significant financial commitment indicates a shift toward AI-first service management strategies. Moreover, companies like Atlassian and ServiceNow create "AI-understandable" data layers, facilitating effective decision-making across various technology ecosystems. Access to accurate data is crucial for the success of these agentic systems. By 2025, it is expected that 52% of organizations will incorporate AI agents into their workflows.
AI Agents ServiceNow
Competition in the tech industry intensifies as agile AI startups rapidly outpace traditional SaaS providers in application development. These nimble startups leverage cutting-edge technologies and innovative solutions to create more efficient and adaptable products to the changing needs of businesses and consumers.
As these AI-driven companies introduce products capable of analysing vast amounts of data in real-time, automating complex processes, and delivering personalized user experiences, traditional SaaS providers are finding it increasingly challenging to keep pace. This shift prompts established players to reevaluate their business models and strategies as they seek to integrate AI capabilities into their offerings or risk losing market share. The speed at which these startups can iterate and deploy new features gives them a significant advantage in meeting customer demands quickly. This dynamic landscape fosters an innovative environment where new ideas can flourish, compelling traditional companies to adapt or evolve to remain competitive.
In this race to stay relevant, investment in research and development, partnerships, and talent acquisition has never been more critical. Traditional SaaS providers that successfully harness AI technology and integrate it into their services stand a better chance of surviving—and thriving—in this competitive environment.
