The End of SaaS: Enter the Exponential Era of AI-Driven Enterprise Renewal
- Rare Innovation
- Jan 1
- 6 min read
The Software as a Service (SaaS) model, which evolved from the problematic enterprise systems (ES) era, was once perceived as the cornerstone of enterprise software delivery. By offering tempting subscription-based solutions, SaaS platforms were said to provide organisations with (an illusion of) scalable and cost-effective access to advanced tools. However, the emergence of advanced AI technologies—generative AI, agentic AI, and composable organisations (yes, composable organisations)—is redefining both the enterprise design and technological landscape. Indeed, as data and evidence suggests, these AI-driven models expose the inherent limitations of SaaS and are driving organisations toward a new era of enablement-as-a-service (eNaaS), digital autonomy, and re-think towards enterprise design renewal.
The Rise, Peak, and Fall of SaaS
As written in the full paper, from its inception in the early 2000s, SaaS became a dominant force, growing to a market size of $186.6 billion by 2023 (Gartner). SaaS promised to eliminate costly infrastructure and complex deployments, appealing to organisations of all sizes. Yet, its reliance on vendor-controlled ecosystems brought back those familiar challenges symbollic of the ES era; limited or costly customisation, opaque pricing, and vendor lock-in that trapped clients in ecosystems ill-suited for evolving needs. Additionally, perpetual subscription fees often overshadowed the cloud's silver lining alure and surpassed the total cost of ownership for hybrid or on-premises solutions over time.
Amid aggressive upselling and disingenuous marketing, organisations faced mounting frustrations. Perceived functional richness became dysfunctional poorness at the expense of agility, leaving companies hostage to costly and restrictive platforms. As client dissatisfaction grew and the legacy of technical customisations stifled adaptability, the arrival of AI-driven technologies has accelerated the search for alternatives. In the exponential age, the irony is now that the once touted moderninity if the SaaS approach has now become synonymous with legacy thinking and the new-legacy IT, entrenching strategic drift and inhibiting innovation.
The Exponential Age and the Demise of SaaS
The exponential age, marked by rapid technological advancements and unprecedented data generation, compels organisations to fundamentally rethink enterprise approaches including that of the SaaS model that impairs change.
While SaaS platforms are rigid and reliant on standardised solutions, the demands of this era—scalability, hyper-customisation, and real-time adaptability—necessitate agile, nuance and innovative approaches.
Generative AI and agentic AI empower organisations to create flexible, composable enterprises and systems that autonomously adapt, learn, and innovate. These AI-driven models enable vast data analysis, complex workflow automation, and tailored customer experiences, positioning businesses to leverage exponential change as a competitive advantage. In contrast, the limitations of SaaS—vendor lock-in, lack of adaptability, and strategic drift—render it increasingly obsolete. By 2025, according to McKinsey, 40% of enterprises will use agentic AI to manage autonomous workflows, signaling the shift toward AI-centric architectures that prioritise agility and efficiency.
AI Disrupts the SaaS Status Quo
Generative AI Generative AI, exemplified by OpenAI’s Codex and ChatGPT, has, for example, empowered businesses to develop customised software solutions without relying on prepackaged SaaS platforms. These tools can generate code, automate workflows, and create user interfaces tailored to specific organisational needs. A 2024 IDC report found that 50% of IT departments now use generative AI to self-develop bespoke solutions, up from 15% in 2021. This trend highlights the growing appetite for tools that provide autonomy and adaptability.
Agentic AI Agentic AI further disrupts SaaS by enabling autonomous decision-making and task execution. Unlike traditional SaaS tools, which require manual configuration and input, agentic AI systems can learn, adapt, and optimise processes in real-time. Indeed, Deloitte’s 2024 study revealed that 40% of businesses already using agentic AI reported a 30% reduction in their reliance on SaaS tools, underscoring the start of a fundamental paradigm shift toward more intelligent and flexible solutions.
Thus, composable AI Platforms and architectures mean composable organisations where the integration of modular, AI-driven components into their existing ecosystems eliminates the need for monolithic SaaS platforms (which are often bloated with features irrelevant to many users). Reflecting this, Gartner predicts that by 2027, 80% of enterprises will transition to composable architectures which, for Rare, signals the end of one-size-never really-fits-all software solutions.
The Rise of Enablement-as-a-Service (eNaaS)
In contrast to SaaS, eNaaS focuses on empowering organisations to create and manage their digital ecosystems. These providers offer tools, frameworks, and expertise to drive digital transformation responsibly. Agentic AI plays a pivotal role in this transformation, enabling seamless integration across business functions such as customer acquisition, marketing, service delivery, and product fulfillment.
eNaaS providers guide organisations through enterprise renewal by fostering modular capabilities and AI-driven workflows. By leveraging real-time data, agentic AI systems personalise customer interactions, streamline operations, and reduce inefficiencies. This model creates agile and customer-centric organisations, positioning them to thrive in the exponential age.
A Rare Timeline for SaaS Market Global Decline
· 2020-2023: Generative AI tools gain traction, enabling organisations to bypass SaaS for bespoke and rapid software development.
By 2023, 25% of large enterprises implemented agentic AI in at least one business process [IDC].
The global AI software market, including agentic AI, reached $136 billion in 2023, with an annual growth rate of 37% [Statista].
· 2024-2026: Agentic AI becomes mainstream, automating complex procedures, workflows and reducing dependency on SaaS platforms.
By 2025, 40% of enterprises will use agentic AI to manage autonomous workflows, with the market projected to grow to $300 billion [McKinsey].
A Deloitte study predicts a 30% increase in enterprise productivity attributed to agentic AI by 2026
· 2025+: Composable AI platforms and architectures achieve widespread adoption, with 50% of Fortune 500 companies integrating modular solutions.
· 2026-2028: SaaS market share declines by 30 - 40% as businesses transition to client-centered models.
By 2028, 60% of enterprises will deploy agentic AI across multiple departments, from marketing to operations [Gartner].
Spending on agentic AI-enabled systems is forecast to surpass $500 billion globally [Forrester]
· 2030: SaaS survives only in niche markets, replaced by flexible, AI-driven enablement models.
By 2030, 75% of global enterprises will use agentic AI as a core part of their operations (Accenture).
The global economic impact of agentic AI is projected, conservatively, to exceed $15 trillion annually, driven by efficiency gains and new business models (PwC).
The Renaissance of Systems Thinking and Enterprise Design
As organisations shed costly long term SaaS contracts, Rare predict the SaaS era is rapidly coming to an end as driven by the rise of generative AI, agentic AI, and composable orgsanisations, platforms and architectures. As such, the demise of SaaS heralds a renaissance in systems thinking and enterprise design. Organisations must and will adopt holistic methodologies that optimise interdependencies within complex environments. Systems thinking enables enterprises to map workflows, technology stacks, and customer interactions into cohesive frameworks, fostering collaboration and strategic innovation.
By leveraging generative and agentic AI, organisations can design adaptive, scalable architectures that align with evolving needs. This paradigm shift encourages continuous improvement, driving long-term competitiveness and relevance in the exponential age. Enterprises that embrace this renaissance will excel in an era increasingly defined by digital transformation and AI-driven innovation.
In that, Rare Innovation suggest Agentic AI will become the cornerstone of enterprise renewal and digital transformation strategies today, replacing many prevailing enterprise models, traditional digital approaches and that of software solutions themselves. This will be a story told where the emergence of enterprise renewal via an Enterprise design response to competing AI-driven autonomous organisations, functions and sub-units where agentic AI handles end-to-end processes, including, for example, customer acquisition, service delivery, and product fulfillment, becomes itself, the response to extreme strategic drift (or face self-inflicting demise).
Given this, and amid the very next few years of total transformation for most industries, sectors and enterprises, to even consider how to thrive in this new era, the exponential age which is upon us, organisations must:
1. Invest in AI enabled Enterprise Design Expertise to achieve the foundations for enterprise renewal. They need to encourage at-coal face in-house capabilities to leverage generative and agentic AI effectively.
2. Adopt a “Composable Enterprise” attitude – in reference to complete renewal. To achieve this they need to transition to modular enterprise capabilities, workflows and systems for enhanced adaptability and scalability.
The future belongs to organisations that shed legacy SaaS dependencies and adopt AI-driven models emphasising agility, efficiency, and autonomy. As the exponential age accelerates, the ability to innovate and adapt will define success in the post-SaaS world.
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