Why SaaS Isn’t Dead, But Its Advantage Has Been Commodified

Max Votek, co-founder and managing partner at Customertimes.

getty

For years, SaaS was the great equalizer. It gave companies access to world-class capabilities without having to build them. CRM, ERP, commerce, analytics—everything became available on demand, neatly packaged and endlessly scalable.​

That model hasn’t disappeared. In fact, global software spending continues to grow, projected to reach roughly $1.43 trillion in 2026. Platforms like Shopify still power millions of businesses globally, proving that SaaS remains foundational to modern operations.​

But something quieter and more structural has changed. SaaS is no longer where competitive advantage lives.​

Everyone Has The Same Tools, To No Advantage

Standardized SaaS tools are now widely accessible, deeply integrated and increasingly similar across competitors. What once differentiated companies has become baseline infrastructure. As a result, businesses no longer compete on software, but on how they operate beyond it.​

This dynamic is reinforced by broader industry data. While 88% of organizations already use generative AI in at least one function, only a small fraction has translated that into measurable financial impact. Software no longer creates an advantage by being present. It creates an advantage by being shaped.​

The New Moat: Context, Not Code​

The strongest signal from the market is consistent: value is shifting from applications to context.​

Gartner highlights that organizations achieving the best results with AI are not simply deploying tools—they are investing in data quality, governance and organizational readiness at significantly higher levels. Similarly, research shows that workflow redesign, not tool use, correlates most strongly with performance gains. This reframes the role of software entirely.​

Competitive advantage now emerges from how systems encode:​

• Proprietary data

• Internal processes

• Decision logic and policies

• Execution pathways across tools​

These elements cannot be purchased with a subscription. They must be built, curated and continuously refined.​

Why Enterprise SaaS Still Matters​

Declaring the “death of SaaS” misses a critical distinction. There is a category of software that remains not only relevant, but increasingly indispensable: systems of record and control.​

Modern enterprise platforms are evolving into governed environments where AI agents operate within strict boundaries: identity, permissions, auditability and policy enforcement. Gartner describes this shift as a move toward agent orchestration that is tightly coupled with system-of-record access and governance layers.​

In practice, this means:​

• AI operates within permission models, not outside them

• Data access is controlled, traceable and auditable

• Systems enforce policy, not just functionality

This shift reinforces SaaS by concentrating its value in the layers where control, governance and reliability matter most.​

Build Vs Buy No Longer A Binary Decision​

What has changed dramatically is the feasibility of building. Open-source models, agent frameworks and infrastructure advancements have lowered the barrier to creating custom software. Internal tools, automation pipelines and AI-driven workflows can now be developed faster and with smaller teams than ever before.​

Industry forecasts suggest that by 2028, 90% of enterprise developers will use AI coding assistants, and more than half of engineering teams will actively build LLM-powered features.​

This unlocks a new strategic option: building the layers that matter. But there is a nuance that often gets overlooked. It has become easier to build software, but not equally easy to run it.​

The Reality Of Production​

Prototype velocity and production reliability are not the same thing. Studies show mixed results on developer productivity gains from AI, with some environments even experiencing slower performance despite perceived acceleration. At the organizational level, increased AI adoption has been linked to declines in delivery stability and throughput, even as code quality metrics improve.​

At the same time, governance gaps remain significant, with only a minority of organizations fully assessing the risks associated with AI-generated code, while fewer than a quarter of IT leaders express strong confidence in their ability to manage AI-related security and governance effectively.

Building custom systems introduces new responsibilities—identity management, security, compliance, observability—that SaaS providers historically absorbed. The trade-off is no longer technical capability. It is operational maturity.​

What E-Commerce Already Understood​

Few industries illustrate this shift as clearly as e-commerce. Major players like Mercado Libre, Target, Zalando and Walmart have invested heavily in building their own platforms for critical functions: pricing, checkout, fulfillment and customer experience. These are the layers where differentiation directly impacts revenue and margin.​

Simultaneously, platforms like Shopify continue to thrive by standardizing vast layers of commerce infrastructure at global scale, highlighting a clearer model for what comes next: companies win by owning and differentiating the parts of the stack that directly shape their revenue, experience or risk, while relying on standardized solutions everywhere else—a balance that is quickly becoming the most practical and effective framework for CTOs navigating today’s build-versus-buy decisions.​

Build When

• The process is tightly coupled to revenue, risk or margin

• The logic depends on proprietary data or internal workflows

• Execution requires coordination across multiple systems and policies​

Buy When

• The value lies in standardization and reliability

• Regulatory coverage and compliance are critical

• Ecosystem integration and operational maturity outweigh customization​

The Real Shift​

SaaS is not disappearing. It is being repositioned. Commodity applications will remain everywhere. Enterprise SaaS will deepen in importance where governance, control and auditability are required. Meanwhile, companies will increasingly build their own layers on top—closer to their data, their workflows and their strategic priorities.​

The competitive landscape is adjusting accordingly. The new moat is not software you use. It is software that you can only run, because it encodes how your business actually works.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?