Schrödinger's SaaS: How SaaS Will Evolve Alongside AI

Paul Appleby is Chief Executive Officer of Virtana, one of the World’s Deepest and Broadest Observability Platforms.

One of the great ironies of our time is that AI, expected to replace not only enterprise software companies but even work itself, will be the first to tell you that reports of SaaS’s death are greatly exaggerated. The broader industry consensus, echoed by various tech executives and analysts, is, “SaaS is not dead, but it is undergoing a massive, AI-driven evolution.​”

I am not an AI cynic. On the contrary, I think AI could be more significant than the Industrial Revolution or the shift from a manufacturing economy to the service economy. As the CEO of a SaaS company, I simply disagree that the dawn of AI spells the death of SaaS.

We have been here before. The book was not replaced by the radio, the radio was not replaced by the television, the television was not replaced by the computer nor was the computer replaced by the smartphone. Instead, each new invention led to adaptation and innovation.

AI will not replace SaaS; it will improve it. Replacement is binary. Instead, we should think of AI as a reconstitution of how we engage with our software. ​

The old SaaS model is under pressure.

The problem is that businesses across the tech industry are still doggedly asking a yes-or-no question: Is SaaS dead? The resulting market volatility has created a kind of Schrödinger’s SaaS. SaaS is, like the cat in Schrödinger’s thought experiment, simultaneously dead and alive.

In 2025, investors began reassessing software companies as AI-native tools demonstrated that some traditional software functions could be delivered faster, cheaper or with far less human intervention. Software stocks were hit particularly hard during this time, fueled in part by concerns that AI agents could disrupt the per-seat pricing model that has underpinned much of SaaS.

But the story is more nuanced than a wholesale rejection of software.