The thing about the SaaSpocalypse is not that anyone's going to build their own software - it's that any successful software will have infinite competitors cause there's 0 moat in code.
The bread paradox: why convenience always wins, and why SaaS isn't doomed
71–80 of 127 posts
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#72I work for a SaaS and we recently had an interesting situation where we lost some smaller customers but are in the process of getting dramatically larger ones at the same time. As in, we lost some customers that were roughly 20-people companies, but gained some customers that are 100+-people companies. The ones we lost seem to have just built our solution in-house, presumably with AI helping. Conventional wisdom woul…
That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think AI familiarity still varies a lot across companies and individuals. Small companies/startups often move much faster than large corporations, so that may also explain what you're seeing. Long before LLMs I worked at places where even monitoring soluti…
> That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally.
I think a lot of SaaS are actually pretty safe, if only due to organisations desiring to make compliance someone else's problem.
We don't pay $$$ for a SaaS just because it would be time consuming to replicate it - we pay it because we'd rather not have to add the in-house replacement to our SOC2/HIPAA/GDPR compliance audit every year, and legal prefers it because there is someone else to sue if things go sideways in those areas.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#73Ignoring the bread analogy, isn't decoupling a likely outcome? I make and deploy my own SaaS and pay somebody to be on-call for ongoing maintenance. This would argue for more standard interfaces and modules so that maintenance is cheap.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#74I work for a SaaS and we recently had an interesting situation where we lost some smaller customers but are in the process of getting dramatically larger ones at the same time. As in, we lost some customers that were roughly 20-people companies, but gained some customers that are 100+-people companies. The ones we lost seem to have just built our solution in-house, presumably with AI helping. Conventional wisdom woul…
1. If multiple companies use given SaaS, then "per company" cost is likely to be lower than in-house solution. Think of tools that have wide range of use cases, like Windows or Photoshop.
2. Even if SaaS has only one customer it might still be cheaper to outsource a project. Big companies tend to have lots of managerial overhead - a meeting where we discuss the prospects of designing a schedule of meetings to manage the plan of meetings. This cost might be higher than profit margin of a company consisting of five dudes and a tank truck of energy drinks.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#75Earlier quoted context omitted.
That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think AI familiarity still varies a lot across companies and individuals. Small companies/startups often move much faster than large corporations, so that may also explain what you're seeing. Long before LLMs I worked at places where even monitoring soluti…
> That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think a lot of SaaS are actually pretty safe, if only due to organisations desiring to make compliance someone else's problem. We don't pay $$$ for a SaaS just because it would be time consuming to replicate it - we pay it because we'd rather not have to…
Yeah, this is basically why I as a landlord have an agent who takes 10%+VAT just to know what the rules are and who to call when things go wrong, and then bills me on top for listing the property when empty, any works that need doing etc.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#76The risk for SaaS isn't that customers will build their own but that the barrier to entry for competitors is lower. The Chorleywood process created mega bakeries that displaced regular bakeries because they changed the economics. AI is doing the same and fundamentally changing the economics of production. What used to take years and huge teams to build can be built by much smaller teams much faster. SaaS isn't going…
This could start a race to the bottom where only large SaaS variety stores survive. They all will have a "Jira" in their portfolio.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#77Yet I bake my own bread because the "bread" you can buy isn't bread.
Its not a smart calculation to poison yourself and live shorter just because it is convenient and less work in the short term.
If anything the bread paradox should describe that it is very easy to fool 90% of the population. Eat shit and then inject ozempic. Double win... for the industry
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#78Earlier quoted context omitted.
That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think AI familiarity still varies a lot across companies and individuals. Small companies/startups often move much faster than large corporations, so that may also explain what you're seeing. Long before LLMs I worked at places where even monitoring soluti…
> That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think a lot of SaaS are actually pretty safe, if only due to organisations desiring to make compliance someone else's problem. We don't pay $$$ for a SaaS just because it would be time consuming to replicate it - we pay it because we'd rather not have to…
I'm aware of the responsibility shifting here but even then my point still stands. I've seen some SaaS companies tighten their grip thinking "they'll never bother because of the regulatory burden" only to watch large customers walk away and build in-house solutions instead. Super common? No, but this was pre-LLM and slightly later.
Compliance is an important factor in customer retention, but the cost of the other side of the equation (technical implementation) has dropped significantly and in some cases could be what tips the balance.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#79The underlying MBA principle is that companies strongly prefer to focus on their "core competencies." This makes sense because the distraction to a business could be much costlier than the extra money spent in outsourcing non-core functions. This is basically also why the cloud business was thriving even when on-prem is much cheaper in monetary terms, and why the trend will probably extend to cloud AI providers even…
> This is basically also why the cloud business was thriving even when on-prem is much cheaper in monetary terms On-prem is almost always much more expensive "in monetary terms" when you take into account the cost of staffing the operation needed to maintain those on-prem systems, especially if a company has e.g. compliance requirements etc. The idea that cloud is obviously more expensive is not actually supported by…
I am not convinced by that. What are you defining as "cloud" here? If you mean SaaS I interpreted GP as meaning the likes of AWS which still leaves you doing a lot of the expensive stuff.
> The idea that cloud is obviously more expensive is not actually supported by the economics. If it was, we'd see people leaving the cloud in droves, for competitive reasons.
You are assuming that 1) the people making the decisions have perfectly aligned incentives 2) that they have got the economics right and 3) its a significant part of their cost base. In reality it is often the case that something like AWS is the CYA choice (if an AWS data centre is down its their fault, if on-prem is down its your fault), its the shareholder's money, and its cheap compared to the rest of your costs. If something is 0.5% of your fixed costs no one is going to notice that it could be 0.1%.
Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed
#80"Accountability" is a value on paper, not in reality.
The big companies that sell services are not really accountable, and in many cases will bankrupt their customers.
See Revlon with SAP. See the Bavaria Colombian brewery, also with SAP. See the 4Hana case, again with SAP. SPAR group from South Africa.
See Tesla surviving by cancelling their SAP deployment.
It seems I have spotted a pattern here.