The Rise of Agentic Platforms and the Decline of SaaS

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The software landscape is undergoing a seismic shift, with traditional SaaS (Software-as-a-Service) models being eclipsed by Agentic Platform Companies (APCs). These APCs combine SaaS, software, and cloud technologies with AI-powered systems to deliver adaptive, intelligent solutions that traverse enterprise environments. According to industry insiders, SaaS is now akin to "building real estate in a bad neighborhood," as mid-market players face existential threats from AI-native startups and tech giants.

The Big Squeeze on SaaS

A recent study by AlixPartners examined 122 publicly traded enterprise software companies with annual revenue under $10 billion. The findings reveal a "big squeeze": AI-native startups are offering lower-cost, faster-evolving tools, while incumbents like Microsoft, Salesforce, and Oracle are embedding AI into their ecosystems at scale. This has led to a decline in high-growth SaaS companies, from 57% in 2023 to 39% in 2024, and a drop in net dollar retention from 120% in 2021 to 108% in late 2024.

Why SaaS Is Struggling

Microsoft CEO Satya Nadella reportedly declared "SaaS is dead," criticizing enterprise software as "crud databases with logic on top." The traditional dashboard-and-seat-license model is being replaced by AI agents—autonomous systems that learn and execute tasks without constant human input. Key drivers of this shift include:

• AI-Driven Adaptability: Static workflows are giving way to dynamic, learning-based systems.
• Cloud-Native + Edge Computing: Processing is moving closer to the user for real-time decision-making.
• Composable Architecture: Modular, mix-and-match services are replacing monolithic applications.
• Token Economics: Outcomes will be powered by autonomous agents, requiring a rebuild of consumption and pricing models.

The New Winners

Industry analysts predict that one-third to one-half of today’s SaaS companies will disappear or be reduced to API-level data feeds within 36 months. The companies best positioned to thrive in the APC era include:

1. Alphabet (Google)
2. Microsoft
3. Palantir
4. ServiceNow
5. Amazon
6. Oracle
7. Salesforce
8. IBM
9. SAP
10. OpenAI

These firms are not just adding AI as a feature—they are making it the core of their operations. For example, Palantir recently secured a $10 billion U.S. Army contract, cementing its role as a consolidation layer for AI, data, and software in secure markets.

The Future of Enterprise Software

The traditional SaaS model is under siege:

• AI Agents as Interfaces: Tasks once handled through UIs are now delegated to AI.
• Outcome-Based Pricing: Companies like Salesforce and ServiceNow are experimenting with charging for results, not headcount.
• Data Consolidation: Fragmented SaaS stacks are being replaced by centralized data hubs to feed AI systems.

However, this transformation comes with challenges. Compute-intensive AI workloads increase operating expenses, squeezing margins. Mid-market SaaS companies must reinvent themselves by making AI central to their products, adopting usage-based billing, and cutting underperforming offerings.

This is not just a technology upgrade—it’s a structural shift in how software is built, sold, and valued. The winners will be those who embrace agentic platforms; the losers will be those clinging to a pre-AI era model.