The SaaS Sunset: Why Pay Monthly Rent When AI Builds Custom Software in 5 Minutes?

Friend, have you ever experienced that chilling realization?

You just gritted your teeth, got finance to approve a hundred thousand dollars, and renewed your company’s three-year-old CRM system. You considered it a necessary investment, crucial for a more efficient sales team.
Yet, barely two weeks after signing the contract, you discover a competitor — a smaller, newer company — whose sales pipeline flows twice as smoothly, and whose client follow-up reports are ten times more sophisticated. A knot tightens in your stomach. You discreetly inquire about their advanced software.
The answer leaves you stunned. They haven’t purchased any well-known CRM solution. Their tech lead, leveraging AI, crafted a system perfectly tailored to their unique business processes in… well, probably less time than it takes for a lunch break. The cost? Virtually zero.
Your hundred-thousand-dollar renewal instantly feels like buying a brick phone just as everyone else is upgrading to a smartphone.

This isn’t science fiction; it’s the accelerating reality hurtling towards all of us. I’m a financial veteran from finsages.org, having observed the life and death of countless businesses in banking risk management for three decades. Today, let’s not dwell on the distant future, but rather on the immediate horizon of 2026 and 2027. I want to dissect a quiet, monumental shift that’s already underway: The Twilight of SaaS.

SaaS, or Software as a Service, is essentially “cloud tenancy.” Your business doesn’t need to buy servers or maintain a development team; instead, you pay a monthly or annual “rent” to a software company to use their online services. For the past decade and a half, this has been the cutting-edge model, giving rise to giants like Salesforce and Adobe.

But there’s a seldom-spoken truth hidden here: it’s fundamentally an “efficiency levy.” Software companies, with their immense R&D investments, built formidable moats. Then, they charged every efficiency-seeking business a “toll fee.” The deeper you integrated, the more data you accumulated, the harder it became to leave — this is called “switching costs,” designed to lock you in for perpetual renewals.

But here’s the critical question. What if, one day, the cost of “building a house” — developing software — suddenly plummets to near zero? What if everyone could easily access blueprints and construction crews? Why would you still “rent,” still pay monthly fees?

That “one day” is the imminent explosion in AI code generation capabilities. Let me use an analogy you’ll grasp immediately: it’s akin to disintermediation in the financial sector.

Historically, businesses seeking capital often turned to banks, which acted as intermediaries, earning a spread. Later, as bond and stock markets matured, creditworthy companies could issue bonds or go public directly, bypassing banks and securing funds at a lower cost. This was “financial disintermediation.” Now, AI is poised to orchestrate “software disintermediation.”

AI is the “free blueprint and super construction crew” of this era. It’s relentlessly driving the “marginal cost” of software — the cost of producing one additional copy — towards zero.

What does this truly mean? Let me offer an example to illustrate the sheer power of this force.

Consider manufacturing: producing the first mold for a mobile phone is incredibly expensive. But once the mold is ready, the incremental cost of each subsequent phone (materials, assembly) is significantly lower — this is the “economy of scale.” Software takes this to an extreme: in the traditional model, developing the first Windows operating system required astronomical investment, but copying a disk cost virtually nothing.

However, the advent of AI is now slashing the cost of even that “first development”! It no longer requires thousands of programmers toiling for years. Instead, by learning from vast code repositories, AI can understand your natural language descriptions and “generate” functional programs. It’s like this: previously, to build a car, you needed blueprints, then a production line — a massive investment. Now, you tell AI, “I want a five-seater car with a 500-kilometer range and autonomous driving,” and it directly outputs a complete set of production schematics, even instructing robots to assemble the vehicle for you.

This transformation is profoundly disruptive. It shakes the very foundations of all SaaS companies whose competitive moats are built on “high switching costs.”

Let us dissect this phenomenon like a seasoned analyst examining a complex system, understanding how the underlying “weather system” operates. Any industry upheaval invariably stems from the interplay of four macro forces.

First, the Expansionary Force. The past decade was a golden age for the SaaS industry. Capital flowed freely, businesses rushed to the cloud, and software companies aggressively raised funds, expanded, and acquired, deepening their moats. Stock prices soared — a classic expansionary period, where everyone believed the “subscription model” was an inexhaustible cash cow.

But then, the Contractionary Force arrived. As economic cycles turned downward, companies began to tighten their belts, with the first cuts often targeting “non-core” IT budgets. Complaints mounted: “Why am I paying for features I don’t use?” “Why do prices increase every year?” SaaS companies felt growth stagnate, and to sustain valuations, they had to lock in existing customers even harder, earning them the moniker of “cloud landlords.”

At this juncture, the Balancing Force — regulation and policy — also began to intervene. Data security, anti-monopoly measures, and user privacy — a series of constraints emerged, preventing large platforms from indiscriminately bundling services. This opened space for challengers.

Yet, the truly fatal blow is delivered by the Evolutionary Force — the revolutionary breakthrough in technology. AI code generation is the most striking lightning bolt in this storm. It’s not an improvement; it’s a complete re-engineering of the rules of the game. It transforms “software manufacturing” from a high-skill, high-capital industry into a democratized capability where you simply “describe your needs and receive the solution.”

This is analogous to the photography industry, where Kodak’s film empire (with its high switching costs and processing network) wasn’t defeated by a better film, but by digital technology (the Evolutionary Force) that uprooted it entirely. Nokia’s Symbian operating system wasn’t bested by a superior keypad phone; it was thoroughly displaced by touchscreens and the iOS/Android ecosystem (the Evolutionary Force).

Now, it’s SaaS’s turn.

Over two decades ago, in my role in bank credit approval, I witnessed countless businesses collapse due to “path dependency.” They clung to outdated revenue models, oblivious to the fact that the riverbed itself was shifting. Many SaaS giants today stand on a similar precipice. Their business models are built on two fragile assumptions: first, that software development will always have high barriers to entry; and second, that businesses will always pay a hefty premium for “convenience.”

But AI has shattered the first assumption. How long can the second one hold?

Let’s project what might unfold in the next two to three years.

The first wave will be the rise of “guerrilla forces.” Small companies, startups, and even agile sub-teams within larger corporations will be the first to abandon cumbersome, expensive, and imperfectly fitting standardized SaaS solutions. They’ll use AI to generate core tools, rapidly iterate, and experiment at minimal cost. They’ll be like light cavalry, highly mobile and adaptable.

The second wave will be an “arms race.” Mid-to-large enterprises will face a growing sense of panic. When they realize competitors are acquiring more precisely tailored business systems at a fraction of the cost, they’ll have two choices: either embrace AI and re-architect their IT infrastructure, or pressure existing SaaS vendors to lower prices, open up their platforms, and integrate AI capabilities. In either scenario, the profit margins of traditional SaaS companies will be severely squeezed.

The third wave will be an ecological reordering. In the future, the most valuable “software” may no longer be the application you pay for, but rather the unique “business process data” and “decision-making logic” embedded within your enterprise — what I call your “Business DNA.” AI is a powerful executor, but the wisdom of “what to do” and “how to do it” (the Know-How) remains firmly in your hands.

It’s like this: AI gives everyone a potent tool, but what you create with it — a masterpiece or a simple sketch — depends on your artistic vision and conceptualization. The core asset of future enterprises will be this “blueprint in your mind” — your business processes, your management wisdom, your unique way of interacting with customers. These “genes,” rapidly “expressed” as software using AI tools, will render the software itself as ubiquitous and low-cost as electricity or water.

At this point, you might ask, as a business decision-maker, what should I do now? Should I immediately cancel all my SaaS contracts?

Hold on, I’m not trying to incite panic; I’m offering a warning. To perceive before it sprouts, and stop before it starts — this is the essence of risk management. I offer three practical pieces of advice:

First, immediately initiate a “software audit.” Pull out your list of software subscriptions and scrutinize them as you would your inventory. Ask yourself: Can the core functions of this software be replaced or augmented by existing AI tools (such as low-code platforms integrated with large language models)? Does its cost constitute an excessive proportion of your operating expenses? Is it truly deeply embedded in your core business, creating genuine “switching costs”?

Second, begin cultivating an “AI-native” mindset. When planning any new business process or digital project, don’t default to selecting a SaaS solution. Instead, ask: “Can we use AI tools to ‘assemble’ or ‘generate’ a minimum viable product ourselves?” Form a small team of business experts and young talent with AI knowledge to experiment. This isn’t just about saving money; it’s about forging your future core capability — the ability to harness AI and express your “Business DNA.”

Third, redefine the value of your IT department. The future IT department should not merely be a “software procurement and maintenance unit,” but rather evolve into a “business logic translation and engineering hub.” Their core mission will be to understand business requirements and then use AI and other tools to rapidly and cost-effectively “compile” these needs into digital solutions. This logic is more systematically elaborated in my book, Assets of the Future.

So, friend, the twilight of SaaS is not the end of software, but a colossal migration of software value. Value is shifting from the “generic tool” itself to the wisdom of the “people” using the tool, and to the unique “business process data” within the enterprise.

The future is already here, just unevenly distributed. This “software disintermediation” revolution, driven by AI, will, like every technological revolution throughout history, dismantle old giants while nurturing new champions. It forces every enterprise to answer a fundamental question: When tools become extraordinarily cheap, where does your unique value truly reside?

Finally, I am reminded of a profound idea from ancient philosophy, that a truly wise person is not merely an instrument. A genuine leader is not confined by specific tools. For businesses, the same holds true. Do not become a “prisoner” of any particular software. Your business processes, your organizational intelligence, and your agility in adapting to change are your true essence, beyond the mere instruments.

With profound principles but lacking skill, skill can still be acquired; with skill but lacking profound principles, one remains confined to mere technique. In this era where AI technology (skill) is readily accessible, honing your enterprise’s “principles of operation” (profound principles) is the fundamental key to navigating cycles and standing firm amidst the tides.

I am a financial veteran from finsages.org. In this age of technological explosion and rapid model obsolescence, I aspire to be your fellow traveler, watching the winds of change and dissecting the underlying logic. If you are also interested in anchoring value amidst transformation, please follow me, and we’ll continue this conversation next time.

This world is vast and magnificent, and we shall meet at the summit.