Why Rumours of the Death of SaaS Have Been Greatly Exaggerated

In a recent interview with Bloomberg, Salesforce CEO Marc Benioff revealed that the company was “remarkably on track” to having more than a billion AI agents deployed by the end of this year.

This lofty target had originally been announced last year with the big unveiling of Agentforce, the company’s new platform which allows clients to customise and build AI agents able to autonomously execute processes from optimising media campaigns to resolving customer enquiries. The clearly prolific use of the platform by Salesforce clients underscores how rapidly this technology is impacting how human workers carry out their day-to-day tasks. Moreover, it draws attention to a fundamental paradigm shift that’s currently taking place within the Enteprise Software market. 

This shift was hinted at in Benioff’s declaration that the rollout of Agent-as-a-Service technology is by far “the fastest growing, most exciting thing we’ve ever done”. And it was more explicitly articulated by Microsoft CEO Satya Nadella several months earlier, when he described how human workers will increasingly interact with an “AI tier” of cross-platform agents rather than individual SaaS interfaces. 

Nadella’s words triggered much debate in the tech community around whether we’re looking at “the death of SaaS”. But while this makes an eye-catching headline, it doesn’t really reflect what’s actually going on. Namely, evolution rather than extinction.

The issue of enterprise SaaS oversaturation has become a talking point on LinkedIn, Reddit and everywhere else people in the tech industry like to talk shop. This kind of speculation is perhaps inevitable, given the SaaS boom of the past decade (accelerated by global digitalisation and hybrid working) and the subsequent growth of the SaaS ecosystem into a vast thicket of tech firms and platforms whose value propositions are increasingly difficult to differentiate.

Yet, while the landscape is undeniably crowded and labyrinthine, it’s equally undeniable that SaaS remains essential to enterprises of all stripes. Indeed, industry watchers expect the global SaaS market to reach almost USD 1tn by 2030. 

As Jonathan Simnett, managing director at Hampleton Partners, observes, “It’s not accurate to say we’re at the end of the SaaS innovation cycle, but the traditional subscription-based SaaS model has matured and is facing significant headwinds. Market saturation, slowing growth multiples, rising cost of customer acquisition and churn, subscription fatigue and software stack rationalisation are all putting pressure on the space.” 

The maturation of the space has spurred specialisation, with a steep rise in vertical SaaS solutions tailored to the workflows of particular enterprise environments like healthcare, finance and construction. And now we have AaaS, which, while sometimes framed in discussions as a kind of SaaS killer, should properly be thought of as the next big step within SaaS.

“AaaS is rapidly evolving from hype to mainstream in enterprise settings, with AI agents orchestrating workflows, interacting directly with data, and replacing UI-centric tools,” says Jonathan Simnett. “From a historical point of view, the shift mirrors earlier SaaS transitions, but with far more agency and intelligence built in.” 

Both long-established tech giants and intrepid startups are jockeying for position in the AaaS era, fuelling M&A activity in the Enterprise Software sector. 

Referring back to Salesforce, the company has been undertaking significant strategic acquisitions to bolster its AI agent capabilities. This year, it made the blockbuster USD 8bn purchase of enterprise cloud data management company Informatica, as part of its plan to “supercharge Agentforce”. Another recent acquisition target was Convergence.ai – a UK agentic AI startup which was only founded last year. This deal was also made with the aim of improving the autonomous capabilities of Agentforce.

The HR and financial management solutions supplier Workday is another big tech firm making advances in this space. As well as enhancing its AI capabilities by purchasing AI-powered platforms HiredScore and Evisort (which optimise recruitment and contract management respectively), the company has developed a range of AI agents to carry out specific tasks such as sourcing and onboarding new talent, and negotiating contracts.  

Investors are also jostling to back relative newcomers specialising in agents. A prime example is Synthflow, a developer of voice AI agents for enterprises which last month completed a USD 20m fundraise. The company’s human-like agents can interact with customers and clients, schedule appointments, qualify leads and manage data, all without human intervention. 

Another startup on investor radars is Pletor, a platform which allows marketers and creatives to build custom design agents capable of generating ad content, analysing competitor campaigns, and brainstorming ideas with human workers in a collaborative fashion. Last month, the company raised EUR 2m in investment, with one VC hailing the startup for going “beyond AI visuals” to provide a holistic solution for marketing campaigns.

These are fast-moving times for founders involved in AaaS or any form of SaaS. If you’re interested in feeling out the M&A possibilities for your business in this rapidly evolving space, get in touch with Hampleton Partners managing director Jonathan Simnett, who has more than three decades of experience working with enterprise technology businesses.

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