The Rise of Agentic Platforms and the Decline of SaaS
SaaS is being replaced by Agentic Platform Companies, which leverage AI to deliver adaptive, intelligent systems for enterprise software.
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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:
- Alphabet (Google)
- Microsoft
- Palantir
- ServiceNow
- Amazon
- Oracle
- Salesforce
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About the Author
Dr. Emily Wang
AI Product Strategy Expert
Former Google AI Product Manager with 10 years of experience in AI product development and strategy formulation. Led multiple successful AI products from 0 to 1 development process, now provides product strategy consulting for AI startups while writing AI product analysis articles for various tech media outlets.