Is SaaS Dead? Rethinking Software's Role

For over a decade, SaaS was worshipped as the holy grail of software business models. Recurring revenue. Infinite scalability. Predictable customer lifetime values (LTVs). Investors and entrepreneurs couldn't get enough. However, industry insiders are now questioning whether this model has lived up to its lofty expectations.

One of the primary criticisms against SaaS is the misconception of infinite LTVs. It's a fantasy that once a customer is acquired, they will continue to pay indefinitely. In reality, businesses face continuous pricing pressures and competitive threats, making customer retention an ongoing challenge.

The decline of the traditional SaaS model is attributed to several interconnected factors, all reshaping the landscape we knew.

So where does this leave us?

Instead of focusing solely on software subscriptions, innovative companies are using software to enhance and transform existing businesses' operations by 20-30% or more. By creating such powerful tools, tech companies can position themselves to acquire or partner with the businesses they've enhanced, thereby capturing a larger share of the value they've created.

For example, look at Klarna. Their decision to sever ties with enterprise SaaS providers like Salesforce and Workday is a hallmark of this shift. Rather than paying for external solutions, Klarna is building its own AI-powered tools to streamline operations. From the outside, it looks like saving pennies, but it's much more strategic than that. Klarna is using its internal software to gain a competitive advantage, reduce dependencies on third-party vendors, and ultimately control its own destiny.

For founders, this flips the script. Instead of trying to sell software to other companies, use your software to improve businesses you own or operate. The real value isn't in the software itself, but how that software transforms a business to be faster, efficient, and more profitable.

From an investor's perspective, this is even more appealing. Rather than backing the 100th SaaS startup hoping to scale through subscriptions, investors look for businesses using tech to disrupt and dominate entire industries. The risk is lower because these companies aren't selling commoditized software. They're using it to gain an edge in markets with real, tangible value.

Picture this: tech company develops an AI-powered inventory management system that dramatically improves efficiency for retailers. Instead of selling this system as a SaaS product, the company could use it as leverage to acquire successful retail operations. By implementing their proprietary software, they could significantly boost the profitability of retailers, creating value far beyond what they might have captured through traditional software licensing.

This allows tech companies to benefit from margin expansion, operational improvements, and competitive advantages in industries that might have previously seemed unrelated to their core competencies. It's a way of using software not just as a product, but as a means to enter and dominate entire sectors of the economy.

For example, we've been pushing the same strategy with Tazz, an agentic AI team of developers under senior software engineers. While we create intelligent systems, they are writing other parts of the software (currently well beyond 300,000 lines of code). Every piece is iterated through AI-powered QA to filter which can be used and implemented further in the development process.

Tazz doesn't just write code. It maps business scenarios through tested end-to-end frameworks and frees our human engineers to focus on what actually brings value, without worrying if any existing functionality has been broken.

As we look to the future, it's clear that software will continue to play a crucial role in business success. The role shifts from product to the edge that lets businesses outpace, outmaneuver, and dominate various industries.

It doesn't mean that all SaaS companies will disappear overnight. Many will continue to thrive, especially those providing essential services or niche players. But the bigger prize? It belongs to ambitious tech entrepreneurs and investors who treat software not as the finish line, but as the weapon to capture something far greater.

Agentic AI is the new frontier. One where automation works end-to-end, across functions, and where businesses only pay for outcomes delivered. Enterprises that recognize this will see clear rewards. Greater efficiency. Tangible RoI. A new era of intelligent, autonomous automation. No more seat-based, fragmented tools that end up creating more complexity than they solve.

The lesson from history is clear. Technological revolutions are rarely binary and don't typically lead to total replacement. Instead, they create convergent ecosystems where AI and SaaS will complement and compete in various ways.

Cloud computing was supposed to replace on-premises systems, but hybrid models have become the norm. Businesses now balance cloud and on-premises architectures to optimize flexibility, control, compliance, security, and cost. Perhaps my favorite example is the humble PC. Mobile phones, tablets, and other devices were foreshadowed as its "death". Yet here I am, typing this blog post on a laptop. PCs remain the most essential devices for productivity-focused tasks, coexisting alongside them.

SaaS isn't dead. But the old playbook is buried — the one that relied on simply building a decent product, slapping on a subscription price, and expecting a steady stream of customers without ongoing strategic innovation.

In today's hyper-competitive environment, just having a "good enough" product no longer cuts it. SaaS is undergoing a profound transformation, and those who fail to evolve are being ruthlessly left behind.