SaaS providers must adapt to grow with AI

Fears that AI will devalue software companies, otherwise known as the SaaSpocalypse, continue to dominate investor outlooks. However, I believe this fear is inflated; instead, it is a point of natural selection for the software industry, where only the innovative will survive.  

 

Extensive AI adoption is raising expectations, so software providers must prioritise delivering unique and purpose-built solutions. SaaS companies that only offer broad, undifferentiated offerings that don’t deliver growing value can be easily replaced by simple AI solutions. However, those that lead with a platform-first approach, focusing on true specialisation, deep customer knowledge, and defensible moats, are strongly positioned to evolve and succeed in the era of AI.   

 

 

Understanding through deep expertise 

In the industrial mid-market, AI development needs to be grounded in practical applications. Manufacturers operate in physical, industrial environments where the priority is building and delivering the parts and products that power the real economy. We know our customers are not looking to build the software themselves, or experiment with ‘vibe coding’, but instead they want their existing trusted technology partners to level up their platforms in a secure, structured way.  

 

Deep industry expertise, knowledge of specialised workflows, and decades of intricate data are the critical factors that pinpoint where real value can be delivered to customers. These elements are the most difficult for AI disruptors to attempt to simulate or replicate. The impact of AI will meaningfully reshape how software is developed and delivered, but providers should continue to rely on established data moats and security frameworks.   

 

The SaaS providers that own the bank of knowledge that existing software provides and capitalise on this deep expertise during AI adoption are the ones that will stand the test of time. Investing in AI platforms and agents that transform that knowledge into autonomous action will deliver exactly what customers need: improved decision making, elevated efficiency through margin expansion, and increased resilience.  

 

One thing that remains constant is the pressure businesses are under to deliver more for less. To succeed at this critical juncture, software companies need to help businesses do just that through tactical and differentiated applications of AI within workflows.  

 

 

Adopting AI securely  

Layering AI into workflows is a practical, high-impact way for businesses to scale without significantly increasing expenditure. When AI agents are embedded and trained in systems, they can automate routine tasks, surface actionable insights in context, and guide users through next-best actions. This frees up time for higher-value work.   

 

When embedding AI, providers must prioritise governance by establishing clear guardrails, processes, and secure systems. Role-specific training is critical to ensure AI is embedded in workflows effectively while keeping business data secure.   

 

Added AI capabilities play a central role in workforce development. As workflows become more intelligent, employees should be supported to build new skills to deliver higher-value work, while customers benefit from more responsive and capable systems.  

 

Recognising a natural progression beyond surface-level AI integration, focusing on analysis, judgement and continuous improvement. To achieve this, providers can embed AI agents directly into the software environments that customers already depend on. In doing so, end users can enhance capability without introducing unnecessary risk or disruption to core operations.   

 

AI does not replace expertise or SaaS; it raises the baseline and helps teams develop the skills needed to deliver more value.  

 

 

Finding certainty in periods of volatility  

The industry is now moving beyond early enthusiasm for AI towards a more grounded understanding of its true cost and impact. As organisations begin to grapple with the realities of implementation, integration, governance and ongoing running costs, the conversation is becoming more balanced. This shift will further separate those delivering meaningful, embedded value from those relying on surface-level AI features.  

 

In periods of economic uncertainty and volatile market conditions, which is increasingly a global reality, companies need to build resilience through intelligent decision making and forward thinking. Where costs, energy prices, transport, and supplier availability shift quickly, manufacturers are often relying on lagging indicators and manual spreadsheets that are outdated as soon as they are shared. This latency can be combated by AI directly embedded into SaaS that can combine internal and external data to inform likely price changes and ideal buying windows.    

 

Crucially, because these insights sit inside the platform customers utilise day to day, predictive recommendations are delivered in context with the right insight at the right moment. Real-time visibility into performance, supported by AI, allows businesses to act with greater confidence in uncertain conditions. For customers, this translates to stronger margins, better outcomes, and increased business resilience. As a result, end-point users can experience an intuitive and informative platform that makes their job easier.  

 

 

The convergence of AI and SaaS 

AI and SaaS should no longer be viewed as individual offerings; the real value can only emerge from their unification. SaaS providers that invest in technology and the relevant training will see the best returns. When implemented with the correct safeguards and guardrails, AI can significantly increase the value of SaaS, particularly when rooted in deep customer understanding.  

 

SaaS customers do not want to experiment with code; they want new capabilities that can seamlessly integrate with their existing technology. They want trusted systems that can deliver clear and reliable insights securely.  

 

This is not the end of SaaS, but a turning point for providers to differentiate solutions. The software companies that embed AI in a meaningful way while maintaining genuine specialisation will emerge on top in this period of natural selection. Combining technological capabilities with customer expertise will allow SaaS to go to the next level.  

 

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Alice Taylor is Chief of Staff and AI lead at Forterro

 

Main image courtesy of iStockPhoto.com and Supatman