The claim that “SaaS is dead” has reverberated through the tech industry in recent months, sparking debate and contributing to market volatility. While seemingly provocative, the assertion, most notably made by Satya Nadella, points to a fundamental shift in how software is conceived, delivered and valued. The narrative isn’t about the outright demise of Software-as-a-Service, but rather its evolution – and potential subordination – to a new paradigm centered around agentic AI and what some are calling the “agent economy.”
Is SaaS Really Dead?
The anxiety surrounding SaaS isn’t unfounded. Investor scrutiny of SaaS business models has increased, coinciding with revised growth expectations for major players like ServiceNow, Salesforce, and Oracle. Alexander Puutio, writing in Forbes, posited that “SaaS Is Dead. Long Live Service-As-A-Service,” reflecting a growing sentiment that the traditional SaaS model is reaching its limitations. This shift in perception is fueled by recent earnings reports and company guidance that have prompted a reassessment of growth trajectories.
However, the reality is far more nuanced. SaaS isn’t disappearing; its role is changing. Even on-premises applications aren’t necessarily becoming obsolete. The core function of these platforms is evolving from simply being “systems of record” to becoming the foundational data layer for increasingly powerful agentic AI systems.
From Systems of Record to ‘Systems of Action’
For years, software has largely focused on capturing and storing data – journal entries, customer records, financial transactions. Now, the emphasis is shifting towards leveraging that data to drive action. Increasingly, platforms will function as systems of record, providing the data foundation that drives value from agentic AI. This transition is already underway, with a significant portion of software companies actively implementing agentic AI solutions. According to research, 67.5% of software companies report having already implemented agentic AI solutions.
Peter Ballis, CTO of Workday, highlights this transformation, suggesting that agents will help turn ERP from systems of record into systems of action. This means moving beyond simply documenting business processes to actively automating and optimizing them. Howard Dresner of Dresner Advisory Services echoes this sentiment, stating that agentic AI won’t eliminate applications or business intelligence systems, but rather “democratize access and drive business transformation, as agents reshape what work is performed by humans and what work is automated.”
This shift is reminiscent of a prediction made years ago by consultants who foresaw web services enabling higher-order business capabilities, with applications receding into supporting infrastructure. While that specific vision didn’t fully materialize, the evolution of APIs into essential business capabilities demonstrates a similar pattern – a move towards more integrated and dynamic systems.
Guidance for CIOs and Investors
The assertion that SaaS is “dead” is, a mischaracterization. Google’s “The ROI of AI 2025” survey reveals that 12.5% of organizations surveyed are early adopters of agentic AI and are already realizing measurable value. However, the report also underscores a critical challenge: data maturity. Only 32% of firms have successfully implemented business intelligence solutions, and those successes were predicated on the “unglamorous work of industrializing data” – improving data quality, governance, integration, and scalability.
Without a solid data foundation, the potential of agentic AI remains unrealized. This isn’t about replacing existing systems; it’s about strengthening the underlying infrastructure. The current wave of technological change is blurring the lines between software categories. The traditional separations between low-code platforms, process development tools, business intelligence, data warehousing, and enterprise applications are eroding, leading to increased competition and potential industry consolidation.
For CIOs, the priority should be strategic investment in data maturity. Focus on tools and approaches that accelerate data quality, governance, and integration. This isn’t about chasing the latest technology; it’s about building a robust foundation for the agent economy and developing a long-term strategy that balances tactical execution with strategic change.
Investors should similarly focus on companies positioned to enable agentic solutions and help organizations overcome data maturity challenges. The companies that can facilitate the fastest progress in data quality and integration – much like Nvidia’s success in the chip sector – will be the winners in this evolving landscape. This isn’t a story of rip-and-replace, but rather one of strengthening the foundation needed to move towards true systems of action.
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