They believe that AI companies are subverting the essence of SaaS platforms, which is that SaaS platforms will rapidly transition from software-as-service to service-as-software paradigm.
In traditional software businesses, companies sell access to a platform or tool, but customers still need to use the tool to achieve their intended goals.
In the service business, the responsibility for achieving the expected goals lies with the company that sells the service.
In their article, they discussed in detail the impact of the paradigm shift to services as software (or more appropriately, software as autonomous services) and elaborated on the scale of the opportunities faced by entrepreneurs in the AI space.
After reading the full text, the following is a simplified content:
◆ AI is eating away at software, and now it is eating away at wages and services
For decades, business leaders have been using software to drive companies. But with the emergence of AI, especially agent AI, productivity is improving significantly. AI agents driven by the Big Language Model (LLM) can read and interpret content, generate output, set priorities, and direct tasks like skilled humans providing services. AI can complete tasks that once required a large number of highly skilled workers, and the scale of disruptive opportunities will far exceed that of traditional software companies.
◆ The $4.6 trillion issue-the potential market size for AI automation and service-as-software
AI+ automation and the Service-as-Software model will replace a lot of work, a $4.6 trillion issue. Wage expenditures for global jobs totaled US$2.3 trillion, and expenditures on outsourced services and wages totaled US$2.3 trillion. Spending on IT services and business process services is expected to reach US$2.3 trillion by 2028.
◆ AI applications in different business service areas
AI has huge potential in automating full-time jobs and services. In the field of DevOps, AI agents can resolve software events independently and reduce the average repair time. In the field of business process services, AI can understand context, interpret user intentions, apply reasoning, and adapt to new tasks. Jobs such as recruiting calls, answering common questions from potential buyers, entering data and identifying faxes can be completely handled by AI.
◆ Sales and marketing
In the sales world, a skilled sales representative is accustomed to writing external emails, scheduling presentations, following up, and having dinner with customers. Now,AI can do everything except eat dinner. For example, an “AI sales development representative” can handle the entire workflow of email delivery-searching for contacts, verifying information, researching target customers, writing highly personalized email sequences, etc. Sales companies ‘business models may shift to charging based on the number of qualified opportunities or contracted customers their software provides.
◆ Software engineering
There are more than 30 million software engineers and data scientists around the world, and AI is changing the way these developers build and maintain software and data systems. Whether it’s AI orchestrating code review, automating front-end design, or writing documentation completely autonomously,AI allows programmers to digest third-party code libraries and automatically debug their own code.
◆ Network security
In cybersecurity,AI can perform tasks that are too complex and time-consuming for human analysts, in an industry with chronic staffing shortages. AI allows companies to use automation to more effectively detect and respond to attacks. And they can review and mitigate vulnerabilities when creating new systems.
◆ The evolution of SaaS, not its demise
The emergence of AI-driven solutions and their push to services does not always mean the end of the SaaS model. In many markets, multiple business models may coexist and thrive. Some customer groups may choose to outsource functions, while others will keep these functions in-house. Humans are still responsible for designing the workflow. An AI-driven company may challenge or replace existing SaaS enterprises, or it may provide a complementary business that can work in parallel with.
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Original text:https://foundationcapital.com/ai-service-as-software/
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