The whole SaaSpocalypse narrative is based on the assumption that AI can just build whatever application you need and replace existing enterprise Software as a Service applications. That implies applications are just the code deployed on a server. It is a reasonable assumption but it is wrong.
To be clear applications depend on code deployed on a server, that much we can agree on. Since applications meet us much like other tools, a hammer, a toothbrush, an airfryer, we make the mistake of assuming it is similar, that it is a product that once produced will retain its functional characteristics. The implied reasoning is thus: a hammer is designed (coded) produced (deployed) and used to hammer nails into wood and it will continue to do so for generations. For no application in the world is this true. There are four primary reasons why this reasoning breaks down.
Requirements – The greatest challenge in software is actually not developing it, although developers might tell you that. It is plenty difficult of course, but the real challenge is figuring out what to develop. No matter how impressive a development team you have, if you can’t tell them precisely what to develop, the result will be worthless. There is no AI that goes out and elicits the requirements by itself from users and figures out regulatory requirements and industry standards.
Design – No application, perhaps with the exception of trivial ones like an alarm clock, are as simple functionally as a hammer. They need to be designed. They need an architecture, a data structure, and for enterprise applications, they need interfaces. If you are designing a greenfield application you can get away with a lot in the first iteration but for an enterprise application it always exists in an eco-system and therefore needs to be designed for continuous change and adaptation.
Change – Unlike a hammer, the conditions of usage changes for software. Just the security aspect is a matter of continuous focus because vulnerabilities appear continuously. Keeping the software safe and functional alone requires continuous adaptation. Conceivably, AI could do much of this though. But the world is changing as well. There are regulatory changes that may require changes to how the application works. There are changes in end user expectations. An app from the 90s will be hard to use for modern users. There may be more local changes as well such as the business dynamics and competitive situation.
Quality – SaaS vendors also benefit from more intangible advantages like network effects, domain knowledge and information. Adoption of enterprise software is often driven by the wish for following industry standards and regulatory requirements. If you vibe code your own app, you would have to figure a way to get to that, which is not critical since your competitors will most probably not let you in on their business processes.
All in all, software is nothing like a common tool. While you may be successful in vibe coding a first version of your CRM system yourself, it is unlikely that it will remain useful. Successful applications, especially in the enterprise SaaS space, are developed and adapted over many iterations and have large teams maintaining them, making sure they are safe, operational and useful. The code they generate is an almost trivial byproduct in the larger scheme of things. So, the fact that AI can generate the code does very little to undermine SaaS. The software is not the product. The product is the knowledge, organisation and processes that make it possible to produce the software and you can’t vibe code that.
Software is therefore less like a hammer and more like the Hydra of Greek mythology. The Hydra was a many headed serpent that grew two new heads every time one was chopped off. It couldn’t be defeated by a simple blow and it took Hercules and his nephew Iolaeus to develop a special technique and approach to defeat it. Every time the regulatory landscape shifts or a new security vulnerability is discovered, two new heads appear. If you vibe coded a solution today, you’re just chopping off the first head. Without a plan for what comes next, you’ll soon be overwhelmed by the heads you didn’t see coming. SaaS isn’t just the code; it’s the specialized team (your Hercules and Iolaeus) that knows exactly how to manage those necks so the beast stays useful and doesn’t devour you.
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