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AI agents are starting to eat SaaS

martinalderson.com

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Re: AI agents are starting to eat SaaS

#171

Post by MangoToupe »

TeMPOraL wrote: post #167
jwr wrote: post #135

I am the founder of a niche SaaS ( https://partsbox.com/ — software for managing electronic parts inventory and production). While I am somewhat worried about AI capabilities, I'm not losing too much sleep over it. The worry is that customers who do not realize the full depth of the problem will implement their own app using AI. But that happens today, too: people use spreadsheets to manage their electronic parts (pl…

The problem IMO is simpler. You have a product, which sits between your users and what your users want. That product has an UI for users to operate. Many (most, I imagine) users would prefer to hire an assistant to operate that UI for them, since UI is not the actual value your service provides. Now, s/assistant/AI agent/ and you can see that your product turns into a tool call. So the simpler problem is that your pr…

> Many (most, I imagine) users would prefer to hire an assistant to operate that UI for them, since UI is not the actual value your service provides

That's ridiculous. A good ui will improve on assistant in every way.

Do assistants have some use? Sure—querying.

Re: AI agents are starting to eat SaaS

#172

Post by zkmon »

When you say agents, do you mean the workflow runners that can call APIs and automate the workflow steps?

Automation is not new. What's new is the capabilities of the models that can be assigned with some of the workflow steps. If these steps were served by SaaS companies so far, they will still serve it. Maybe they make it much cheaper and use a model themselves.

Re: AI agents are starting to eat SaaS

#173

Post by sublimefire »

The problem is that we are still talking only about software. If that is the only thing agents can do then they are just better IDE’s for programmers. This would be an enabler for building stuff faster. Think about it, there is already a huge market for SAAS, but most of the companies have contracts in place, so what we’ll have is just more competition which will drive prices down. Companies will not start changing internal tools, refactoring is a bad investment in general, if you choose that over some new features or products it signals larger issues, so nobody will replace existing cheap stuff that is working.

Going back to the beginning, I think we just lack good tools for other cases where agents could be used. Copilot is not great, chatgpt alone lacks some features to use it for business as is. I think what will happen is that we will see a lot more new tooling pop up that relies on agents in niche markets which will just amplify the power users. It will be another category of SAAS the companies will adopt.

Re: AI agents are starting to eat SaaS

#174

Post by ben_w »

Bombthecat wrote: post #143
benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

Yap. AI and agents help to centralise, not decentralise

For now.

I'm expecting this to be a bubble, and that bubble to burst; when it does, whatever's the top model at that point can likely still be distilled relatively cheaply like all other models have been.

That, combined with my expectations that consumer RAM prices will return to their trend and decrease in price, means that if the bubble pops in the year 20XX, whatever performance was bleeding edge at the pop, runs on a high-end smartphone in the year 20XX+5.

Re: AI agents are starting to eat SaaS

#175

Post by InvertedRhodium »

re-thc wrote: post #161
InvertedRhodium wrote: post #147

Earlier quoted context omitted.

How do you/I know that? I implemented OpenTelemetry in a project of mine recently and was shocked to see the number of AI authored commits in the git repository.

> How do you/I know that? I implemented OpenTelemetry in a project of mine recently and was shocked to see the number of AI authored commits Do you pay for OpenTelemetry? How is this related?

If I did, I likely wouldn't have access to the source code and wouldn't be able to verify the degree of AI input.

So, I ask again - how do you know that the service you're paying for is all of those things?

Re: AI agents are starting to eat SaaS

#176

Post by cpursley »

MLgulabio wrote: post #144
benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

The basic assumption is, that we already see that an LLM can do basic level of software engineering. This wasn't even an option for a lot of people before this. For example, even for non software engineering tasks, i'm at an advantage. "Ah you have to analyse these 50 excel files from someone else? I can write something for it" I myself sometimes start creating a new small tool i wouldn't have tried before but now in…

God, please no more firebase and mongo. AI coding is really really good at sql/relational data and there are services like supabase and neon that make it dead simple.

Re: AI agents are starting to eat SaaS

#177

Post by lonelyasacloud »

jwr wrote: post #135

I am the founder of a niche SaaS ( https://partsbox.com/ — software for managing electronic parts inventory and production). While I am somewhat worried about AI capabilities, I'm not losing too much sleep over it. The worry is that customers who do not realize the full depth of the problem will implement their own app using AI. But that happens today, too: people use spreadsheets to manage their electronic parts (pl…

Coding agents like Claude are just one line of AI making inroads. There are lot of nearly tasks that can be almost, but not quite, implemented effectivly with existing tools like Excel and Word. As they seek a return on their investments, are MS likely to target those nearly cases with AI in their Access, Excel, Word etc product lines?

Re: AI agents are starting to eat SaaS

#179

Post by ben_w »

MangoToupe wrote: post #171
TeMPOraL wrote: post #167

Earlier quoted context omitted.

The problem IMO is simpler. You have a product, which sits between your users and what your users want. That product has an UI for users to operate. Many (most, I imagine) users would prefer to hire an assistant to operate that UI for them, since UI is not the actual value your service provides. Now, s/assistant/AI agent/ and you can see that your product turns into a tool call. So the simpler problem is that your pr…

> Many (most, I imagine) users would prefer to hire an assistant to operate that UI for them, since UI is not the actual value your service provides That's ridiculous. A good ui will improve on assistant in every way. Do assistants have some use? Sure—querying.

> A good ui will improve on assistant in every way.

True.

"Good" UI seems to be in short supply these days, even from trillion dollar corporations.

But even with that, it is still not "ridiculous" for many to prefer to "hire an assistant to operate that UI for them". A lot of the complexity in UI is the balance between keeping common tasks highly visible without hiding the occasional-use stuff, allowing users to explore and learn more about what can be done without overwhelming them.

If I want a spaceship in Blender and don't care which one you get — right now the spaceship models that any GenAI would give you are "pick your poison" between Diffusion models' weirdness and the 3D equivalent of the pelican-on-a-bike weirdness — the easiest UI is to say (or type) "give me a spaceship", not doing all the steps by hand.

If you have some unformatted time series data and want to use it to forecast the next quarter, you could manually enter it into a spreadsheet, or you could say/type "here's a JPG of some time series data, use it to forecast the next quarter".

Again, just to be clear, I agree with everyone saying current AI is only mediocre in performance, it does make mistakes and shouldn't be relied upon yet. But the error rates are going down, the task horizons they don't suck at are going up. I expect the money to run out before they get good enough to take on all SaaS, but at the same time they're already good enough to be interesting.

Re: AI agents are starting to eat SaaS

#180

Post by aszen »

Some of the risk outlined here are real for SaaS businesses that rely on user licenses. Automation, APIs and AI are going to reduce the no of people needed which means businesses buying less licenses overall. That's why smarter SaaS solutions are moving towards pay per usage.

This is inevitable, you can't rely on user licenses as a growth metric

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