AI and SaaS are becoming the same thing

On 24 August, Constellation Research wrote that the SaaS apocalypse appears to be over. I think they are late. It was never an apocalypse. It was a bad story that a lot of people repeated.

The story went like this. AI agents would do the work. Companies would stop paying for software. The most famous SaaS names would fade. Some people even said a lab like Anthropic would kill the whole industry.

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That only makes sense if you believe the best software companies would sit still and watch it happen. That was naive.

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They did not sit still. They put AI into the product. They trained it on the data they already have. They started selling work done, not just a login. Salesforce, Microsoft, SAP, Zoho and others are building their own models into the software customers already use. Workday said AI now accounts for more than a quarter of its new annual contract value.

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That is not software dying. That is software and AI becoming the same thing.

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A year ago you could still talk about them as two camps. Over here, the SaaS company with seats and a dashboard. Over there, the AI lab with a chat box. That line is getting thinner every month. Soon it will not be a line at all. You will not buy "SaaS" or "AI." You will buy a system that does the job.

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I see this every week in the European companies we lend to at Float. These are not public stocks. They are real SaaS businesses. Growth is stable. Customers are not leaving. Margins are improving. AI is helping them move faster with fewer people. It is a tailwind, not a death sentence.

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The market still cut what it would pay for software. That part was real. Buyers asked harder questions. Some products that were only a thin layer on top of someone else's system will not survive. That is a filter, not a funeral.

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What was wrong was the idea that companies with real workflows, real data, and real customers would freeze. They never do. When the ground shifts, they shift with it. They give it everything they have.

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Constellation also said the next phase is sorting winners from losers. I agree. The winners will be the ones where AI and software are already one product. The losers will be the ones still selling a seat and hoping nobody notices.

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SaaS is not dying. AI is not eating it from the outside. They are merging. Soon we will stop using two words for the same thing.